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Recently, issues relating to international
labor standards have climbed to the top of the political agenda. The demonstrations
associated with the Seattle meeting of the World Trade Organization (WTO)
in late 1999 were the most recent manifestation of this concern. Other
examples include the 1997 refusal of the United States Senate to provide
President Clinton with "fast track" authority to negotiate trade agreements,
the public concern over low labor standards associated with the manufacture
of apparel sold in the United States, and the debate over U.S.-China trade
relations.
The debate derives from two factors. The first is that there is no mechanism
for creating true enforceable, international labor standards, while, at
the same time, there exist systems that focus on international labor standards.
The second is an unproven belief that labor standards matter in international
trade.
International Labor Standards Systems
There are several international systems that address international labor
standards. The largest such system is the International Labor Organization
(ILO), created in 1919 as an arm of the League of Nations and continued
under the United Nations in 1945. The ILO is a tripartite organization
governed by labor representatives, employer representatives, and government
representatives from each member country. The ILO proposes labor standards
for its members in the form of conventions, which, if ratified by a member
country, become comparable to a treaty for that country. Currently, the
ILO has adopted 182 conventions, with ratification rates varying. The
United States has ratified 12 conventions, while the United Kingdom has
ratified 81. In June, 1998, the ILO adopted a Declaration of Fundamental
Principles on freedom of association, nondiscrimination, and child labor,
which the ILO says should apply to all countries. But neither of these
mechanisms constitutes true international labor standards because both
permit variation by country depending on circumstances.
The European Community issues directives that come as close as possible
to international labor standards. Once the directives are issued, they
are binding on all members of the Community. Labor issues, however, have
long been among the most controversial in the Community, and directives
have been issued only on safety and health, nondiscrimination, restrictions
on the movement of labor, and worker consultations. Moreover, the effect
of such directives is limited because they apply only to members of the
Community.
In 1993, Canada, Mexico, and the United States ratified the North American
Agreement on Labor Cooperation (NAALC), the labor-side agreement of NAFTA.
The NAALC does not create international labor standards. Rather, the NAALC
only requires each country to enforce its own labor standards.
The United States, through various pieces of legislation such as the
Trade Act of 1974, the Omnibus Trade and Competitiveness Act of 1988,
among others, has the right to deny trading partners most favored nation
status if the trading partner fails to meet certain labor eligibility
requirements, such as permitting workers freedom of association and the
right to bargain collectively, a minimum age for employment of children,
and the prohibition of forced labor. To date, seven countries have been
fully suspended from trading privileges under this legislation.
A fifth mechanism is voluntary standards. The Apparel Industry Partnership,
established by industry, human rights, and labor representatives, attempted
to establish a code of conduct and a monitoring system for the manufacture
of apparel. In November 1998, however, the labor representatives withdrew
because an agreement approved by the industry and human rights representatives
failed to provide for a living wage, respect for worker rights, and frequent
monitoring.
In addition, an organization called the Council on Economic Priorities
Accrediting Agency has attempted to establish a certification called SA
(Social Accountability) 8000. Firms who receive this certification agree
to meet minimum requirements on labor standards. The success of such a
certification depends on proper labeling and a willingness of consumers
to buy only products with the label, even if the cost is higher than comparable
products without the label.
The Belief That Labor Standards Matter
The second main factor underlying the debate over international labor
standards is the unproven belief that labor standards matter in international
trade, that "low labor standards" give some countries an "unfair" advantage
in trade. This belief has manifested itself in a debate in the World Trade
Organization with the developed countries, supported by the ILO on one
side, and the less developed countries on the other side. The developed
countries believe that if a country wishes to avail itself of the benefits
of the established world trading system, it has an obligation to adopt
minimum labor standards for its workers. The fruits of a country's success
in global trade should be distributed throughout the economy, and a requirement
of minimum labor standards makes it more likely than otherwise that the
benefits of trade will be widespread. Therefore, there should be a linkage
between trade privileges and labor standards, a so called "social clause"
in trade agreements.
On the other hand, the developing countries have argued that it is inappropriate
for one country or an international organization to dictate to another
country a matter of domestic policy. If the labor standards in developing
countries are low, even such "low standards" employment is superior to
the alternative-subsistence either through agriculture or an underground
activity. Finally, it is pointed out that workers in less developed countries
are often less productive than workers in developed countries; therefore,
it is not clear that low labor standards mean an "unfair advantage" for
these companies. Somewhat less benignly, the developing countries view
an attempt to link international labor standards and trade agreements
as an attempt by the developing countries to "unfairly" protect domestic
industries and workers.
The WTO continues to side with the developing countries, taking the
position that there should be no linkage between trade and labor standards.
The WTO position is that labor standards is not a trade issue. As the
WTO is concerned with trade, and the ILO with labor standards, labor standards
matters should properly be addressed through the ILO.
Conclusion
The debate over international labor standards is likely to intensify.
Global trade is expanding, and matters that are thought to affect trade
will come under continuing scrutiny. It may be that the what was once
thought to be "domestic" policy is now part of "foreign" policy. Global
trade has changed the way that firms compete. It may also change the way
policy makers govern.
-Richard N. Block, Professor, MSU School
of Labor and Industrial Relations
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