The Recognition of Labour Standards within the World Trade Organisation
Encyclopedia
Labour Standards in the World Trade Organization are binding rules, which form a part of the jurisprudence
and principles applied within the rule making institutions of the World Trade Organization
(WTO). Labour standards play an implicit, but not an overt role within the WTO, however it forms a prominent issue facing the WTO today, and has generated a wealth of academic debate.
The debate about the extent to which the WTO should recognise labour standards is typically based on the principles found in Conventions of the International Labour Organisation (ILO), as well as mainstream human rights treaties, most prominently, the International Bill of Human Rights.
, [and] ensuring full employment…”. This is achieved through a series of trade liberalising agreements based on consensus from the WTO’s 150 members who form the General Council. The General Council, sitting as the Dispute Settlement Body (DSB) has the jurisdictional power to solve disputes brought before it, and is able to approve trade restrictive measures to enforce compliance with agreements. The WTO’s dispute settlement process is compulsory and the DSB’s recommendations and rulings immediately become binding international law
.
which was convened by the Allied nations towards the end of World War II with the aim of establishing an international economic order. Although the International Monetary Fund
(IMF) and the International Bank for Reconstruction and Development
(now known as the World Bank) were created, the International Trade Organisation (ITO), the forerunner of the WTO, was only a proposition at this point. It was not until 1947 that negotiations were concluded and the ITO came into being. In the Havana Charter
, the text of the ITO, Article 7 pertained specifically to fair labour standards, requiring that members of the organisation must, amongst other things, “take fully into account the rights of workers under inter-governmental
declarations, conventions and agreements” and recognise “that all countries have a common interest in the achievement and maintenance of fair labour standards related to productivity, and thus in the improvement of wages and working conditions as productivity may permit”. In the interim period before the ratification of the charter, states decided to follow an interim agreement, known as the General Agreement on Tariffs and Trade
(GATT), which was to be later incorporated into the ITO’s legal framework. This temporary arrangement did not include any references to labour rights
. The requisite number of states failed to ratify the ITO and so it failed and GATT became the basis for the current world trade system.
The WTO was established 1 January 1995 as a result of the Uruguay Round
of negotiations (1986–1994). It was formed from the GATT, which became one of the core agreements annexed to the Marrakesh Agreement, the document establishing the WTO. None of the other WTO agreements concluded at the end of the Uruguay Round include labour rights obligations. The effects of GATT are still felt and some commentators have described the WTO as the one major international governance organisation that does not examine the impact of its policies upon the ability of member states to advance human rights.
to uphold human rights standards, inclusive of their activities in the economic sphere. The United Nations (UN) Charter states that in "the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement
, their obligations under the present Charter shall prevail".‘Charter of the United Nations’, Chapter XVI, Article 103 of Charter. The UN Charter explicitly advocates the upholding of human rights and fundamental freedoms.‘Charter of the United Nations’, preamble, art. 62(2). This means that respect for human rights, and within this, labour standards, effectively trumps any conflicting WTO Agreements. However, not all WTO members
are members of the UN
(e.g. Taiwan), which raises issues.
standards. They are not intended to undermine the comparative advantage
that developing countries
may hold. Core labour standards are important human rights and are recognised in widely ratified human rights instruments including the Convention on the Rights of the Child (CROC), the most widely ratified human rights treaty with 193 parties, and the ICCPR with 160 parties. The core labour standards are:
~freedom of association: workers are able to join trade union
s that are independent of government and employer influence;
~the right to collective bargaining: workers may negotiate with employers collectively, as opposed to individually;
~the prohibition of all forms of forced labour: includes security from prison labour
and slavery, and prevents workers from being forced to work under duress;
~elimination of the worst forms of child labour: implementing a minimum working age
and certain working condition requirements for children;
~non-discrimination in employment : equal pay for equal work
.
Very few ILO member countries have ratified all of these conventions due to domestic constraints yet as these rights are also recognised in the UDHR, and form a part of customary international law
they are committed to respect these rights.
and economics, but also of politics and ethics. Interplay between states and interest groups cloud the already complex issue further. Recognising human rights and specifically core labour standards in the WTO raises a series of thorny political, and in some cases moral, questions. Because each state is acting primarily according to its national interest, even technically viable solutions that could benefit the majority may become politicised. The highly democratic nature of the WTO compounds this problem because consensus needs to be reached before any major decisions are made, meaning each country effectively carries the power of veto, sometimes making it difficult to achieve real progress.
Secondly, this issue occurs at the intersection between trade and human rights which raises a series of unique questions. Although the trade and human rights regimes developed alongside each other following WWII, in some ways they are very different. This is because human rights law, unlike other types of international law that are more contractual in nature, governs how states treat their own citizens. Since the Treaty of Westphalia
in 1648, sovereignty has been a key principle of the international system, with states being free from any higher legal authority
with the entitlement to exclusive, unqualified, and supreme rule within a delimited territory. The atrocities committed by the Nazi regime
in WWII however resulted in the establishment of a human rights regime
where states have a responsibility to protect
the rights of their citizens, and may be subject to international condemnation and even intervention if they fail to do so. Human rights law results in an unprecedented number of controls on domestic behaviour, “challenging the traditional legal concept of state sovereignty”.
Trade liberalisation
on the other hand places constraints on domestic policy
making ability, and the ability of states to fulfil their treaty obligations. For example, it is trade liberalisation that has led developing countries to deregulate in order to attract investment and retain a competitive advantage
. The governments are therefore restricted in providing key workplace rights and satisfying core labour standards. This is known as the ‘race to the bottom’. In simple terms, it is a phenomenon where interstate competition results in the progressive dismantling of regulatory standards, and in this case, those governing labour standards. In order to gain a comparative advantage and attract foreign investment
, countries deregulate which leads to a decrease in working conditions and wages. The race to the bottom
becomes a vicious circle with states competing to deregulate even further resulting in major human rights problems.
Many developing countries express their concern that labour standards will have a deleterious effect on their economy. The comparative wage advantage is an essential part of the world economic order so there is a general opposition to the incorporation of labour standards within the WTO. Developing countries also hold legitimate fears that the attempts to incorporate labour standards may be used as a thinly veiled protectionist measure. Tariffs can have a devastating effect on a developing economy. Although the threat of protectionism
is valid and justified, in some cases it is just trade language being used to justify heinous human rights abuses such as slave labour
and exploitive forms of child labour
. The recognition of labour standards in the WTO may “alienate Members who negotiated the agreement with different expectations” and cause further unrest. However a country is unlikely to leave the WTO altogether as the disadvantages of leaving the system would be too great. In short, the disadvantages of leaving the system would be too great.
Using the General Agreement of Tariffs and Trade
In theory, it is possible to use existing measures within the WTO to protect certain human rights. Within the WTO Agreements there are general exceptions (GATT Article XX) that can be used for the protection of specific human rights. GATT Article XX paragraphs (a), (b) and (d) can be used to impose unilateral trade restrictive measures on countries for unacceptable labour standards. However, the wording of the exceptions has resulted in extreme difficulty for those who try to invoke trade measures, as is evidenced by 48 years of GATT where no country restricted trade through these sections. One of the reasons for this is that even when trade restrictive measures are successfully applied to a state, GATT Article 1, the principle of most favoured nation
treatment, comes into play. This prescribes in essence, that any country which treats a state in a particular way then has to grant the same treatment to all other states. In regards to sanctions this means that if trade sanctions are applied to one country for a certain human rights abuse, they must then be applied to all countries who abuse the same right. This can have massive economic and political ramifications.
The political aspect of GATT Article XX aside, there are technical legal problems involved with invoking the clause in the first place. The wording in the relevant sections of GATT Article XX means that it must be proved that it is “necessary” to restrict a product in order to protect human, animal or plant life or health. For a state to legally take unilateral trade restrictive measures under these sections, the ‘necessity test’ must first be passed. There are three components. Firstly, it must be determined whether the interests protected are vital. Secondly, there is an assessment as to whether or not alternative measures are reasonably available and thirdly it is determined whether these alternate measures are less inconsistent with GATT (are the measures being proposed ‘necessary’ to combat the risk?). This means that a link must be established between both the targeted risk, the product being targeted and the trade measures being undertaken, with the burden of proof is solely upon the party seeking to uphold the clause. According to Black’s Law dictionary
, ‘necessary’ does not have to carry the meaning ‘indispensable’ but can refer to the most appropriate or convenient option. In the Korea- Beef case it was taken to mean ‘nearly indispensable’, and this definition has become a benchmark by which other cases are evaluated. Context is very important, and the greater the risk posed by a product the more lenience is granted when proving a link. For example, if there is a danger to human life, the evaluation is less stringent. However it is still extremely difficult to justify cases of labour standards abuse under GATT XX. Even if the necessity test is satisfied, the chapeau to Article XX must also be satisfied- the laws must not be applied in a manner so as to constitute arbitrary or unjustifiable discrimination, nor be a disguised restriction on international trade. This last requirement is particularly important because there is often a suspicion that the insertion of labour standards into free trade agreements/other measures, for example, are really disguised restrictions on trade.
Furthermore, the ‘necessity test’ ensures that only when the products themselves present a threat can they be restricted. Therefore protecting labour rights through GATT Article XX is impossible, even if the production of the product may threaten human life. For example, the worst forms of child labour are a heinous practice which fall within the Article XX exception (b) yet children cannot be protected under this because it is their work conditions which are harmful, not the products themselves. In order to assist in removing constraints on states’ ability to protect labour rights through GATT Article XX, the word ‘necessary’ should be replaced in Article XX(b) with ‘relating to’, as is used in GATT XX (c) and (g), or ‘involving’ as is the wording in (i). In the Korea- Beef case this was decided to be “more flexible textually”, not requiring such stringent linkage. This would allow trade measures to be implemented to combat labour standards with more ease, whilst ensuring that the exceptions are not used indiscriminately. However due to the political concerns expressed above it would be quite difficult to amend the GATT, especially Article XX.
Incorporation of a Social clause
A solution that is widely talked about by some trade unionists and human rights groups is the incorporation of a social clause into the WTO Agreement. Essentially, this means that the core labour standards would inserted into an article within the WTO Agreements which could be a more viable option than amendment of the Agreements themselves. If a state violated the social clause, the breach could become subject to WTO scrutiny, through the usual WTO dispute settlement provisions (provided provision is made for this when inserting a social clause). As a result of dispute settlement proceedings, the DSB could, at the request of the complaining party, recommend that retaliatory trade measures be taken against the offending country. At first glance this might seem to be a good solution, as labour rights could not only be recognised, but enforced within the dispute settlement mechanisms of the WTO.
However one of the main problems which impinge on the viability of this solution is the potency of the social clause. Given the huge amount of controversy surrounding labour standards, such a strong stance in support of them is not likely to succeed. The incorporation of a social clause would give the DSB the power to decide on human rights issues, which is not an optimal state of affairs
because the members of the General Council, panel members and the Appellate Body are trade specialists, often with no grounding in human rights. This problem could be corrected by the introduction of amicus briefs, human rights training or a requisite for a human rights specialist to sit on the panel or to be an expert when it reviews labour standards issues however this requires that the clause contain wording to this effect. If the clause was not potent enough, the WTO would be left with a veneer of compliance with human rights regimes whilst not actually making meaningful progress on core labour standards, arguably a position worse than doing nothing. Furthermore, there are considerable issues associated with the excessive use of unilateral trade measures as discussed below. So although attractive at first glance, this is not likely to be a panacea to the labour standards problem.
Problems with Unilateral Trade Sanctions as an Enforcement Mechanism
Within the international system it is difficult to enforce international law, particularly with regard to human rights. So using trade sanctions as a coercive measure is an appealing prospect to ensure cooperation. However there are many reasons why trade sanctions are an inappropriate mechanism for enforcing labour standards. They are generally against WTO principles, and can only be used in very limited circumstances that are authorized by the WTO agreements, such as anti-dumping
and countervailing measures. Politically, it is unlikely that unilateral action would be allowed for breaches of labour standards. Even assuming that labour standards are able to be enforced through trade measures within the WTO, either through amendments to GATT XX, the introduction of a social clause or any other measure, they do not provide a solution to the complexity of the labour standards issue and should not be used to deal with disputes over labour standards.
Firstly, trade measures have the effect of constraining access to markets, which is why they are effective as a deterrent. However this may be counterproductive, resulting in developing countries becoming even poorer without helping the workers. “Trade sanctions are a blunt instrument, penalizing the country as a whole, not just those responsible for rights violations.” The linkage and inalienability between civil & political, and economic, social & cultural rights means that without a strong economic foundation, not only ICESCR rights are jeopardised, but ICCPR rights also. For example, in ensuring that civil & political rights
such as the prohibition of forced labour
are protected, there must be sufficient funds available to legislate against this practice, and monitor and ensure that the legislation is carried out. Therefore, when a country is denied access to global markets, the resulting poverty can mean that the capability of the country to protect human rights is diminished, even if the political will is present. Not only may the government be affected, but individual businesses and workers may experience increased hardship as a result of trade barrier
s. For example, wages may be lowered to retain a competitive edge, which is the direct opposite of the intended effect of the sanctions.
Secondly, social clauses and the resulting sanctions are only applicable to export sectors. This causes considerable problems. For example, if sanctions were applied to the export sector because of the use of child labour, affected children would simply move into employment opportunities in the non-export sector (assuming full labour moveability). Working in the unregulated and non-accountable ‘shadow economy’ can lead to even worse conditions and human rights abuses. Studies show that child labour in the export sector is only 5% of overall child labour. Therefore, sanctions may not improve the situation at all and may force children into even worse working conditions. Because sanctions only apply to exported goods, abuse of core labour standards can occur domestically with few legal repercussions. One of the core conventions, that condemning forced labour, is blatantly violated in the US where prison inmates make commercial products
. However because they are supplied solely to the domestic market
, the WTO does not have jurisdiction and trade sanctions cannot be applied.
Thirdly, poor labour standards are usually rooted in poverty and this is not something that sanctions can solve. If the root cause
of the problem is not addressed and the a worker loses their job because of a heavy handed approach such as trade measures resulting in mass lay-offs, the family may lose its income and be plunged into greater poverty.
Furthermore, sanctions have the potential be used in an unfair way or for protectionist purposes. One reason for this is because when the DSB rules that trade sanctions are allowed in response to a violation of one of the agreements, it is up to the wronged country to choose what products it will restrict. This has seen the US restrict a variety of imports from the EU
including telecommunications products and cheese, after winning a case in the WTO over bananas. This is different to GATT XX in that the targeted product does not have to be directly related to the perceived threat. The problem with the indiscriminate restrictions of products is that it gives the complainant a huge amount of power which could lead to protectionism. Trade penalties can have a much larger effect on developing countries than developed. Although legally they have the same power as other nations, developing countries are at a disadvantage when it comes to pursuing trade measures because unilateral trade measures often have deleterious consequences for the punishing country as well as the offender. In addition, hostile regimes can gain control of the black market and charge exorbitant prices. Trade sanctions are not necessarily an effective way to deal with “wayward” governments as it simply gives them greater control of the countries resources.
Furtherance of the WTO and ILO Relationship
Although not a suitable long term solution, a way to break the current deadlock would be to further institutionalise the relationship between the WTO and ILO. The WTO Secretariat has some restricted interaction with the ILO “compiling statistics, research and technical assistance and training”. Originally however, the ITO was supposed to have a strong working relationship with the ILO and “consult and co-operate” in all labour related matters, as well as cooperating in regards economic development
and reconstruction. The current system is but a shadow of this, with very limited collaboration. When the issue of labour standards was raised at the 1996 Singapore Ministerial conference, Article 4 of the resultant Ministerial Declaration ruled that “the WTO and ILO Secretariats will continue their existing collaboration”. The Chairman of the Singapore Ministerial Conference Yeo Chow Tong later clarified in his concluding remarks that this collaboration “respects fully the respective and separate mandates of the two organisations”. During the Geneva Ministerial Conference, the US, EU and South Africa
pushed again for a more substantive relationship between the two organisations which was opposed by a group of developing countries, led by Brazil. But despite the amount of controversy and discussion about the issue, the Ministerial Declaration failed to make a mention of it.
The obvious reluctance of the WTO to deal with labour standards and the unlikelihood of recognition in this field in the near future means that the link between the WTO and ILO is crucial in regulating labour standards. However this relationship has never been formalised within the WTO and so will remain ineffective at best without proactive change. Within the Agreement Establishing the WTO, Article III ‘Functions of the WTO’ Par. 5 of reads: “With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies.” The ILO should be inserted into this section. Furthermore, in order to establish a formal, more meaningful relationship, a Ministerial Declaration should be written acknowledging the high level of cooperation and interconnectedness of the organisations, similar to the Ministerial Declarations regarding the relationship with the IMF and World Bank. The advantage of this relationship is that the ILO would not be undermined by the WTO, maintaining its authority in regards to labour standards. The mandates of each organisation would be respected, and there would be no recourse to trade sanctions whilst maintaining a degree of basic protection for labour rights. Collaboration between the ILO and WTO should also make use of the joint research facilities available, and a series of reports on labour rights should be created, similar to the ILO and WTO report “Joint Study on Trade and Employment”, but with a focus on labour standards. In the thinking of ILO Director General Michel Hansenne in the aftermath of the Singapore Ministerial Conference, a good working relationship could be established by pressuring states to ratify the relevant ILO conventions comprising the core labour standards. A scheme was established where those states who do not choose to ratify have to present a brief every 4 years “showing the extent to which effect has been given, or is proposed to be given, to any of the provisions of the Convention by legislation, administrative action, collective agreement or otherwise and stating the difficulties which prevent or delay the ratification of such Convention”. Although the ILO is unable to enforce labour standards and can simply make recommendations, relying on moral suasion, Hansenne’s scheme once improved could lead to increased transparency and lead to regular discussion about labour standards, which is obviously to be desired. More regular reports, and increased pressure on non-ratifying state are necessary. Following the Singapore Ministerial Conference Hansenne further opined that it would be beneficial if a complaints committee were set up which could recommend that
(a) A case does not require further consideration
(b) The offending government rectify the labour standards abuse
(c) The matter be referred to the Fact-finding and Conciliation Commission of the ILO with the agreement of the offending government.
Unfortunately, the committee idea failed to gain support.
It has been suggested that another way in which to increase the importance of the relationship between the WTO and ILO is that countries wishing to join the organisation must first ratify the relevant ILO convention. Within the WTO, existing members set the standards of accession. However this use of double standard
s is completely unjust, and does nothing to address the labour standard abuses of existing members. This is still no way of coercing uncooperative states into respecting core standards, and not including labour standards expressly within the WTO has the possible result of sidelining the issue and so is no means an ideal solution
, but remains a worthy first step.
Increased Civil Society Participation
One suggestion for the improvement of the WTO system is to allow for increased civil society
participation. This would result in the centralisation of social issues
, and within this, core labour standards. Furthermore, civil society groups are in an ideal position to put pressure on governments to uphold their human rights commitments, and monitor any progress in this field. Within civil society, Non-Government Organisations
(NGOs) would play a particularly crucial role. The term NGO passed into popular usage in the early 1970s and has come to mean a non-profit organisation
that has specific objectives that is independent from the government, non-criminal, non-violent
, not a political party. Within the UN under Article 71 there are 2,350 (2004) NGOs with consultative status
. This successful system has set a precedent for formalised NGO participation and should be used as a model for the WTO. There is provision for NGO participation within the WTO already under Article 5:2 ‘Relations with Other Organisations of the Marrakech Agreement’: “The General Council may make appropriate arrangements for consultation and cooperation with non-governmental organizations concerned with matters related to those of the WTO”. The WTO is a strictly intergovernmental organisation
, which means that civil society has no direct input, and much decision-making takes place behind closed doors. This system is appropriate when dealing with tariff reduction issues, but as large scale protests outside WTO meetings continue to demonstrate, social issues which concern civil society at large are forming a part of the WTO agenda. Globalisation means that decisions made at the WTO have come to affect everyone’s lives, and hence there has been an increase in interest in the goings-on of the WTO by civil society. Allowing NGOs to have a say could increase transparency of the system, put pressure on non-compliant governments and provide specialist knowledge and support. Many organisations such as Oxfam, the International Confederation of Trade Unions
and One World have already investigated the link between trade and labour standards- it does not make sense to ignore their expertise in this field. Unlike many domestic judicial systems, the WTO does not allow public scrutiny of proceedings, and it is this, rather than lack of any textual mechanism, that impedes NGO involvement. Forums are an effective way to allow NGOs to express their opinion and present information and regular forums should be held to discuss current, relevant issues. This idea has certainly won some support. In the aftermath of the Geneva Ministerial Conference in 1998, US President
Bill Clinton
said that “The WTO was created to lift the lives of ordinary citizens’, it should listen to them. I propose the WTO, for the first time, provide a forum where business, labour, environmental and consumer groups can speak out and help guide further evolution of the WTO. When this body convenes again, I believe that the world’s trade ministers should sit down with representatives of the broad public to begin this discussion”. It is not only NGOs who should have increased participation, but expert UN human rights bodies who are also highly proficient in exploring the trade and human rights intersection. For example, the UN Sub-Commission on the Promotion and Protection of Human Rights has regrettably not been included in WTO processes.
Recognition within the WTO Preamble
One of the first steps to enforcing core labour standards is to acknowledge them explicitly within the WTO. Specific amendments to the body of the agreements on how to include labour standards within the WTO will take time as there are myriad proposed ways in which to do this. Therefore, incorporating the importance of labour standards into the preamble of the Agreement Establishing the WTO is an important action- with both symbolic and legal value. Although this does not place any binding obligations upon states to take immediate action on the labour standards issue, it can be used for the purposes of interpretation according to the Vienna Convention
on the Law of Treaties: “The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text... its preamble and annexes”. There are oblique references to human rights already within the WTO preamble, but more explicit recognition is desirable. The importance of the preamble has been recognised by the Appellate Body report in many cases so if labour rights were inserted into the preamble, the DSB when interpreting the agreements would be forced to take the preamble into account, and decisions with more favourable conclusions for labour rights would hopefully be passed down. So although this measure seems ineffective, once consensus has been established to include labour standards, this is one of the first steps that should be taken.
Incorporation of core labour standards into the preamble would also lead to the examination of human rights abuses through existing WTO review mechanisms. In 1988 the decision was made to make regular reviews of state’s trade policy conducted by the WTO, a key part of the transparency of the organisation. Governments submit information to the WTO Secretariat who issue a report which is then examined by the General Council sitting as the Trade Policy Review Body. Government policies are reviewed in relation to the “functioning of the multilateral trading system” so as to encourage adherence to commitments under the agreements, and greater transparency. At present, the reviews are focusing solely upon the issue of trade liberalisation, and whether a member’s policies support this. Although free trade is an important issue, it is not the overall objective of the multilateral trading system and should not be examined to the exclusion of all else. The real objectives of the WTO, with the aim of “raising standards of living, [and] ensuring full employment…” are conspicuously ignored. If labour rights were incorporated into the Marrakech Agreement Preamble, it would be even easier to address labour standards through the trade policy review mechanism.
One of the problems with the system is that the member state has the responsibility to supply the information to the WTO Secretariat. With no one checking on them, this could lead to problems however NGOs could play an important role in overcoming this. A second issue is that the regularity of reviews is calculated by a state’s share of world trade. This means that the top 4 countries (the “Quad”): US, EU, Japan and Canada must review their policy every 2 years. The next 16 countries must submit reviews every four years and developing countries every 6 years. Although the system may work currently, when it comes to human rights this is a problem. This is because the labour standards and human rights abuses of developing countries are no less egregious than those in developed countries
and so do not deserve to be monitored any less. Each state should have to submit a report addressing the “real” objectives of the WTO every 2 years or so, as well as a report addressing trade liberalisation according to the current system. By reporting on labour standards, the issue is opened to discussion, which can only be positive. Although states are not forced to act on any labour standards abuses that may be found within their territories, the public acknowledgement of their existence could provide fuel for human rights groups and victims. The very act of raising the labour standards issue is the first step because the power of shame should never be underestimated.
Jurisprudence
Jurisprudence is the theory and philosophy of law. Scholars of jurisprudence, or legal theorists , hope to obtain a deeper understanding of the nature of law, of legal reasoning, legal systems and of legal institutions...
and principles applied within the rule making institutions of the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO). Labour standards play an implicit, but not an overt role within the WTO, however it forms a prominent issue facing the WTO today, and has generated a wealth of academic debate.
The debate about the extent to which the WTO should recognise labour standards is typically based on the principles found in Conventions of the International Labour Organisation (ILO), as well as mainstream human rights treaties, most prominently, the International Bill of Human Rights.
WTO Overview
The WTO is an international institution that deals with the rules of trade between countries with the view of inter alia “raising standards of livingStandard of living
Standard of living is generally measured by standards such as real income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods , or measures of health such as...
, [and] ensuring full employment…”. This is achieved through a series of trade liberalising agreements based on consensus from the WTO’s 150 members who form the General Council. The General Council, sitting as the Dispute Settlement Body (DSB) has the jurisdictional power to solve disputes brought before it, and is able to approve trade restrictive measures to enforce compliance with agreements. The WTO’s dispute settlement process is compulsory and the DSB’s recommendations and rulings immediately become binding international law
International law
Public international law concerns the structure and conduct of sovereign states; analogous entities, such as the Holy See; and intergovernmental organizations. To a lesser degree, international law also may affect multinational corporations and individuals, an impact increasingly evolving beyond...
.
History of the WTO
The WTO has its origins in the 1944 Bretton Woods ConferenceUnited Nations Monetary and Financial Conference
The United Nations Monetary and Financial Conference, commonly known as the Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, to regulate the international monetary and financial order after...
which was convened by the Allied nations towards the end of World War II with the aim of establishing an international economic order. Although the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) and the International Bank for Reconstruction and Development
International Bank for Reconstruction and Development
The International Bank for Reconstruction and Development is one of five institutions that compose the World Bank Group. The IBRD is an international organization whose original mission was to finance the reconstruction of nations devastated by World War II. Now, its mission has expanded to fight...
(now known as the World Bank) were created, the International Trade Organisation (ITO), the forerunner of the WTO, was only a proposition at this point. It was not until 1947 that negotiations were concluded and the ITO came into being. In the Havana Charter
Havana Charter
Havana Charter was the charter of the defunct International Trade Organization . It was signed by 53 countries on March 24, 1948. It allowed for international cooperation and rules against anti-competitive business practices. The charter ultimately failed because the Congress of the United States...
, the text of the ITO, Article 7 pertained specifically to fair labour standards, requiring that members of the organisation must, amongst other things, “take fully into account the rights of workers under inter-governmental
Intergovernmentalism
-A theory of regional integration:The theory is not applied on European integration which rejects the idea of neofunctionalism. The theory, initially proposed by Stanley Hoffmann suggests that national governments control the level and speed of European integration. Any increase in power at...
declarations, conventions and agreements” and recognise “that all countries have a common interest in the achievement and maintenance of fair labour standards related to productivity, and thus in the improvement of wages and working conditions as productivity may permit”. In the interim period before the ratification of the charter, states decided to follow an interim agreement, known as the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
(GATT), which was to be later incorporated into the ITO’s legal framework. This temporary arrangement did not include any references to labour rights
Labor rights
Labor rights or workers' rights are a group of legal rights and claimed human rights having to do with labor relations between workers and their employers, usually obtained under labor and employment law. In general, these rights' debates have to do with negotiating workers' pay, benefits, and safe...
. The requisite number of states failed to ratify the ITO and so it failed and GATT became the basis for the current world trade system.
The WTO was established 1 January 1995 as a result of the Uruguay Round
Uruguay Round
The Uruguay Round was the 8th round of Multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 123 countries as “contracting parties”. The Round transformed the GATT into the World Trade Organization...
of negotiations (1986–1994). It was formed from the GATT, which became one of the core agreements annexed to the Marrakesh Agreement, the document establishing the WTO. None of the other WTO agreements concluded at the end of the Uruguay Round include labour rights obligations. The effects of GATT are still felt and some commentators have described the WTO as the one major international governance organisation that does not examine the impact of its policies upon the ability of member states to advance human rights.
Problems with the Current Approach
The WTO currently does not have jurisdiction over labour standards and the only place in which they are mentioned in the entire set of WTO Agreements is in GATT Article XX e) “relating to the products of prison labour”. Since the formation of the WTO in 1995 there have been increasing calls for action on the labour standards issue, and requests for a “human face on the world economy”. The United Nations is among those bodies which have criticised the current system, and have called for a shift to a human rights oriented approach to trade, with steps to be taken "to ensure that human rights principles and obligations are fully integrated in future negotiations in the World Trade Organization", as the “primacy of human rights law over all other regimes of international law is a basic and fundamental principle that should not be departed from”. It is clear that states have both a legal and a moral obligationMoral obligation
The term moral obligation has a number of meanings in moral philosophy, in religion, and in layman's terms. Generally speaking, when someone says of an act that it is a "moral obligation," they refer to a belief that the act is one prescribed by their set of values.Moral philosophers differ as to...
to uphold human rights standards, inclusive of their activities in the economic sphere. The United Nations (UN) Charter states that in "the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement
Treaty
A treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...
, their obligations under the present Charter shall prevail".‘Charter of the United Nations’, Chapter XVI, Article 103 of Charter. The UN Charter explicitly advocates the upholding of human rights and fundamental freedoms.‘Charter of the United Nations’, preamble, art. 62(2). This means that respect for human rights, and within this, labour standards, effectively trumps any conflicting WTO Agreements. However, not all WTO members
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
are members of the UN
United Nations member states
There are 193 United Nations member states, and each of them is a member of the United Nations General Assembly.The criteria for admission of new members are set out in the United Nations Charter, Chapter II, Article 4, as follows:...
(e.g. Taiwan), which raises issues.
Core Labour Standards
Identified by the International Labour Organisation (ILO) in the ‘Declaration of the Fundamental Principles and Rights at Work’, core labour standards are “widely recognised to be of particular importance”. They are universally applicable, regardless of whether the relevant conventions have been ratified, the level of development of a country or cultural values. These standards are composed of qualitative, not quantitative standards and don’t establish a particular level of working conditions, wages or health and safetyOccupational safety and health
Occupational safety and health is a cross-disciplinary area concerned with protecting the safety, health and welfare of people engaged in work or employment. The goal of all occupational safety and health programs is to foster a safe work environment...
standards. They are not intended to undermine the comparative advantage
Comparative advantage
In economics, the law of comparative advantage says that two countries will both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods...
that developing countries
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
may hold. Core labour standards are important human rights and are recognised in widely ratified human rights instruments including the Convention on the Rights of the Child (CROC), the most widely ratified human rights treaty with 193 parties, and the ICCPR with 160 parties. The core labour standards are:
~freedom of association: workers are able to join trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s that are independent of government and employer influence;
~the right to collective bargaining: workers may negotiate with employers collectively, as opposed to individually;
~the prohibition of all forms of forced labour: includes security from prison labour
Penal labour
Penal labour is a form of unfree labour in which prisoners perform work, typically manual labour. The work may be light or hard, depending on the context. Forms of sentence which involve penal labour include penal servitude and imprisonment with hard labour...
and slavery, and prevents workers from being forced to work under duress;
~elimination of the worst forms of child labour: implementing a minimum working age
Legal working age
The legal working age is the minimum age required by law for a person to work, in each country or jurisdiction.Some types of labor are commonly prohibited even for those above the working age, if they have not reached yet the age of majority. Activities that are dangerous, harmful to the health or...
and certain working condition requirements for children;
~non-discrimination in employment : equal pay for equal work
Equal pay for women
Equal pay for women is an issue regarding pay inequality between men and women. It is often introduced into domestic politics in many first world countries as an economic problem that needs governmental intervention via regulation...
.
Very few ILO member countries have ratified all of these conventions due to domestic constraints yet as these rights are also recognised in the UDHR, and form a part of customary international law
Customary international law
Customary international law are those aspects of international law that derive from custom. Along with general principles of law and treaties, custom is considered by the International Court of Justice, jurists, the United Nations, and its member states to be among the primary sources of...
they are committed to respect these rights.
Barriers to promoting labour standards
There are same major roadblocks to the process of recognising core labour standards within the WTO. Firstly, incorporating labour rights into the WTO is not simply a question of lawQuestion of law
In jurisprudence, a question of law is a question which must be answered by applying relevant legal principles, by an interpretation of the law. Such a question is distinct from a question of fact, which must be answered by reference to facts and evidence, and inferences arising from those facts...
and economics, but also of politics and ethics. Interplay between states and interest groups cloud the already complex issue further. Recognising human rights and specifically core labour standards in the WTO raises a series of thorny political, and in some cases moral, questions. Because each state is acting primarily according to its national interest, even technically viable solutions that could benefit the majority may become politicised. The highly democratic nature of the WTO compounds this problem because consensus needs to be reached before any major decisions are made, meaning each country effectively carries the power of veto, sometimes making it difficult to achieve real progress.
Secondly, this issue occurs at the intersection between trade and human rights which raises a series of unique questions. Although the trade and human rights regimes developed alongside each other following WWII, in some ways they are very different. This is because human rights law, unlike other types of international law that are more contractual in nature, governs how states treat their own citizens. Since the Treaty of Westphalia
Peace of Westphalia
The Peace of Westphalia was a series of peace treaties signed between May and October of 1648 in Osnabrück and Münster. These treaties ended the Thirty Years' War in the Holy Roman Empire, and the Eighty Years' War between Spain and the Dutch Republic, with Spain formally recognizing the...
in 1648, sovereignty has been a key principle of the international system, with states being free from any higher legal authority
Rational-legal authority
Rational-legal authority is a form of leadership in which the authority of an organization or a ruling regime is largely tied to legal rationality, legal legitimacy and bureaucracy...
with the entitlement to exclusive, unqualified, and supreme rule within a delimited territory. The atrocities committed by the Nazi regime
Nazi Germany
Nazi Germany , also known as the Third Reich , but officially called German Reich from 1933 to 1943 and Greater German Reich from 26 June 1943 onward, is the name commonly used to refer to the state of Germany from 1933 to 1945, when it was a totalitarian dictatorship ruled by...
in WWII however resulted in the establishment of a human rights regime
International human rights instruments
International human rights instruments are treaties and other international documents relevant to international human rights law and the protection of human rights in general...
where states have a responsibility to protect
Responsibility to protect
The responsibility to protect is a norm or set of principles based on the idea that sovereignty is not a privilege, but a responsibility. RtoP focuses on preventing and halting four crimes: genocide, war crimes, crimes against humanity, and ethnic cleansing, which it places under the generic...
the rights of their citizens, and may be subject to international condemnation and even intervention if they fail to do so. Human rights law results in an unprecedented number of controls on domestic behaviour, “challenging the traditional legal concept of state sovereignty”.
Trade liberalisation
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
on the other hand places constraints on domestic policy
Domestic policy
Domestic policy, also known as public policy, presents decisions, laws, and programs made by the government which are directly related to all issues and activity within the country....
making ability, and the ability of states to fulfil their treaty obligations. For example, it is trade liberalisation that has led developing countries to deregulate in order to attract investment and retain a competitive advantage
Sustainable competitive advantage
Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving competitive advantage strengthens and positions a business better within the business environment....
. The governments are therefore restricted in providing key workplace rights and satisfying core labour standards. This is known as the ‘race to the bottom’. In simple terms, it is a phenomenon where interstate competition results in the progressive dismantling of regulatory standards, and in this case, those governing labour standards. In order to gain a comparative advantage and attract foreign investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
, countries deregulate which leads to a decrease in working conditions and wages. The race to the bottom
Race to the bottom
A race to the bottom is a socio-economic concept that is argued to occur between countries as an outcome of regulatory competition, progressive taxation policies and social welfare spending...
becomes a vicious circle with states competing to deregulate even further resulting in major human rights problems.
Many developing countries express their concern that labour standards will have a deleterious effect on their economy. The comparative wage advantage is an essential part of the world economic order so there is a general opposition to the incorporation of labour standards within the WTO. Developing countries also hold legitimate fears that the attempts to incorporate labour standards may be used as a thinly veiled protectionist measure. Tariffs can have a devastating effect on a developing economy. Although the threat of protectionism
Protectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
is valid and justified, in some cases it is just trade language being used to justify heinous human rights abuses such as slave labour
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
and exploitive forms of child labour
Child labor
Child labour refers to the employment of children at regular and sustained labour. This practice is considered exploitative by many international organizations and is illegal in many countries...
. The recognition of labour standards in the WTO may “alienate Members who negotiated the agreement with different expectations” and cause further unrest. However a country is unlikely to leave the WTO altogether as the disadvantages of leaving the system would be too great. In short, the disadvantages of leaving the system would be too great.
Mechanisms to Incorporate Core Labour Standards into the WTO
Taking these tensions into account, there are some possible ways to incorporate core labour standards into the WTO.Using the General Agreement of Tariffs and Trade
In theory, it is possible to use existing measures within the WTO to protect certain human rights. Within the WTO Agreements there are general exceptions (GATT Article XX) that can be used for the protection of specific human rights. GATT Article XX paragraphs (a), (b) and (d) can be used to impose unilateral trade restrictive measures on countries for unacceptable labour standards. However, the wording of the exceptions has resulted in extreme difficulty for those who try to invoke trade measures, as is evidenced by 48 years of GATT where no country restricted trade through these sections. One of the reasons for this is that even when trade restrictive measures are successfully applied to a state, GATT Article 1, the principle of most favoured nation
Most favoured nation
In international economic relations and international politics, most favoured nation is a status or level of treatment accorded by one state to another in international trade. The term means the country which is the recipient of this treatment must, nominally, receive equal trade advantages as the...
treatment, comes into play. This prescribes in essence, that any country which treats a state in a particular way then has to grant the same treatment to all other states. In regards to sanctions this means that if trade sanctions are applied to one country for a certain human rights abuse, they must then be applied to all countries who abuse the same right. This can have massive economic and political ramifications.
The political aspect of GATT Article XX aside, there are technical legal problems involved with invoking the clause in the first place. The wording in the relevant sections of GATT Article XX means that it must be proved that it is “necessary” to restrict a product in order to protect human, animal or plant life or health. For a state to legally take unilateral trade restrictive measures under these sections, the ‘necessity test’ must first be passed. There are three components. Firstly, it must be determined whether the interests protected are vital. Secondly, there is an assessment as to whether or not alternative measures are reasonably available and thirdly it is determined whether these alternate measures are less inconsistent with GATT (are the measures being proposed ‘necessary’ to combat the risk?). This means that a link must be established between both the targeted risk, the product being targeted and the trade measures being undertaken, with the burden of proof is solely upon the party seeking to uphold the clause. According to Black’s Law dictionary
Law dictionary
A law dictionary is a dictionary that is designed and compiled to give information about terms used in the field of law.Nielsen 1994 discusses different types of law dictionaries. A distinction is made between different types of law dictionaries. A monolingual law dictionary covers one language, a...
, ‘necessary’ does not have to carry the meaning ‘indispensable’ but can refer to the most appropriate or convenient option. In the Korea- Beef case it was taken to mean ‘nearly indispensable’, and this definition has become a benchmark by which other cases are evaluated. Context is very important, and the greater the risk posed by a product the more lenience is granted when proving a link. For example, if there is a danger to human life, the evaluation is less stringent. However it is still extremely difficult to justify cases of labour standards abuse under GATT XX. Even if the necessity test is satisfied, the chapeau to Article XX must also be satisfied- the laws must not be applied in a manner so as to constitute arbitrary or unjustifiable discrimination, nor be a disguised restriction on international trade. This last requirement is particularly important because there is often a suspicion that the insertion of labour standards into free trade agreements/other measures, for example, are really disguised restrictions on trade.
Furthermore, the ‘necessity test’ ensures that only when the products themselves present a threat can they be restricted. Therefore protecting labour rights through GATT Article XX is impossible, even if the production of the product may threaten human life. For example, the worst forms of child labour are a heinous practice which fall within the Article XX exception (b) yet children cannot be protected under this because it is their work conditions which are harmful, not the products themselves. In order to assist in removing constraints on states’ ability to protect labour rights through GATT Article XX, the word ‘necessary’ should be replaced in Article XX(b) with ‘relating to’, as is used in GATT XX (c) and (g), or ‘involving’ as is the wording in (i). In the Korea- Beef case this was decided to be “more flexible textually”, not requiring such stringent linkage. This would allow trade measures to be implemented to combat labour standards with more ease, whilst ensuring that the exceptions are not used indiscriminately. However due to the political concerns expressed above it would be quite difficult to amend the GATT, especially Article XX.
Incorporation of a Social clause
Social clause
Within the context of international trade, a social clause is the integration of seven core ILO labour rights conventions into trade agreements.-Background:...
A solution that is widely talked about by some trade unionists and human rights groups is the incorporation of a social clause into the WTO Agreement. Essentially, this means that the core labour standards would inserted into an article within the WTO Agreements which could be a more viable option than amendment of the Agreements themselves. If a state violated the social clause, the breach could become subject to WTO scrutiny, through the usual WTO dispute settlement provisions (provided provision is made for this when inserting a social clause). As a result of dispute settlement proceedings, the DSB could, at the request of the complaining party, recommend that retaliatory trade measures be taken against the offending country. At first glance this might seem to be a good solution, as labour rights could not only be recognised, but enforced within the dispute settlement mechanisms of the WTO.
However one of the main problems which impinge on the viability of this solution is the potency of the social clause. Given the huge amount of controversy surrounding labour standards, such a strong stance in support of them is not likely to succeed. The incorporation of a social clause would give the DSB the power to decide on human rights issues, which is not an optimal state of affairs
State of affairs
The state of affairs is that combination of circumstances applying within a society or group at a particular time. The current state of affairs may be considered acceptable by many observers, but not necessarily by all. The state of affairs may present a challenge, or be complicated, or contain a...
because the members of the General Council, panel members and the Appellate Body are trade specialists, often with no grounding in human rights. This problem could be corrected by the introduction of amicus briefs, human rights training or a requisite for a human rights specialist to sit on the panel or to be an expert when it reviews labour standards issues however this requires that the clause contain wording to this effect. If the clause was not potent enough, the WTO would be left with a veneer of compliance with human rights regimes whilst not actually making meaningful progress on core labour standards, arguably a position worse than doing nothing. Furthermore, there are considerable issues associated with the excessive use of unilateral trade measures as discussed below. So although attractive at first glance, this is not likely to be a panacea to the labour standards problem.
Problems with Unilateral Trade Sanctions as an Enforcement Mechanism
Within the international system it is difficult to enforce international law, particularly with regard to human rights. So using trade sanctions as a coercive measure is an appealing prospect to ensure cooperation. However there are many reasons why trade sanctions are an inappropriate mechanism for enforcing labour standards. They are generally against WTO principles, and can only be used in very limited circumstances that are authorized by the WTO agreements, such as anti-dumping
Dumping
Dumping may refer to a subject......in computing:*Recording the contents of memory after application or operating system failure, or by operator request, in a core dump for use in subsequent problem analysis.*Recording a file or medium as a backup....
and countervailing measures. Politically, it is unlikely that unilateral action would be allowed for breaches of labour standards. Even assuming that labour standards are able to be enforced through trade measures within the WTO, either through amendments to GATT XX, the introduction of a social clause or any other measure, they do not provide a solution to the complexity of the labour standards issue and should not be used to deal with disputes over labour standards.
Firstly, trade measures have the effect of constraining access to markets, which is why they are effective as a deterrent. However this may be counterproductive, resulting in developing countries becoming even poorer without helping the workers. “Trade sanctions are a blunt instrument, penalizing the country as a whole, not just those responsible for rights violations.” The linkage and inalienability between civil & political, and economic, social & cultural rights means that without a strong economic foundation, not only ICESCR rights are jeopardised, but ICCPR rights also. For example, in ensuring that civil & political rights
Right
Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
such as the prohibition of forced labour
Unfree labour
Unfree labour includes all forms of slavery as well as all other related institutions .-Payment for unfree labour:If payment occurs, it may be in one or more of the following forms:...
are protected, there must be sufficient funds available to legislate against this practice, and monitor and ensure that the legislation is carried out. Therefore, when a country is denied access to global markets, the resulting poverty can mean that the capability of the country to protect human rights is diminished, even if the political will is present. Not only may the government be affected, but individual businesses and workers may experience increased hardship as a result of trade barrier
Trade barrier
Trade barriers are government-induced restrictions on international trade. The barriers can take many forms, including the following:* Tariffs* Non-tariff barriers to trade** Import licenses** Export licenses** Import quotas** Subsidies...
s. For example, wages may be lowered to retain a competitive edge, which is the direct opposite of the intended effect of the sanctions.
Secondly, social clauses and the resulting sanctions are only applicable to export sectors. This causes considerable problems. For example, if sanctions were applied to the export sector because of the use of child labour, affected children would simply move into employment opportunities in the non-export sector (assuming full labour moveability). Working in the unregulated and non-accountable ‘shadow economy’ can lead to even worse conditions and human rights abuses. Studies show that child labour in the export sector is only 5% of overall child labour. Therefore, sanctions may not improve the situation at all and may force children into even worse working conditions. Because sanctions only apply to exported goods, abuse of core labour standards can occur domestically with few legal repercussions. One of the core conventions, that condemning forced labour, is blatantly violated in the US where prison inmates make commercial products
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
. However because they are supplied solely to the domestic market
Domestic market
A domestic market is a financial market. Its trades are aimed toward a single market. A domestic market is also referred to as domestic trading...
, the WTO does not have jurisdiction and trade sanctions cannot be applied.
Thirdly, poor labour standards are usually rooted in poverty and this is not something that sanctions can solve. If the root cause
Root cause
A root cause is rarely an initiating cause of a causal chain which leads to an outcome or effect of interest. Commonly, root cause is misused to describe the depth in the causal chain where an intervention could reasonably be implemented to change performance and prevent an undesirable outcome.In...
of the problem is not addressed and the a worker loses their job because of a heavy handed approach such as trade measures resulting in mass lay-offs, the family may lose its income and be plunged into greater poverty.
Furthermore, sanctions have the potential be used in an unfair way or for protectionist purposes. One reason for this is because when the DSB rules that trade sanctions are allowed in response to a violation of one of the agreements, it is up to the wronged country to choose what products it will restrict. This has seen the US restrict a variety of imports from the EU
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
including telecommunications products and cheese, after winning a case in the WTO over bananas. This is different to GATT XX in that the targeted product does not have to be directly related to the perceived threat. The problem with the indiscriminate restrictions of products is that it gives the complainant a huge amount of power which could lead to protectionism. Trade penalties can have a much larger effect on developing countries than developed. Although legally they have the same power as other nations, developing countries are at a disadvantage when it comes to pursuing trade measures because unilateral trade measures often have deleterious consequences for the punishing country as well as the offender. In addition, hostile regimes can gain control of the black market and charge exorbitant prices. Trade sanctions are not necessarily an effective way to deal with “wayward” governments as it simply gives them greater control of the countries resources.
Furtherance of the WTO and ILO Relationship
Although not a suitable long term solution, a way to break the current deadlock would be to further institutionalise the relationship between the WTO and ILO. The WTO Secretariat has some restricted interaction with the ILO “compiling statistics, research and technical assistance and training”. Originally however, the ITO was supposed to have a strong working relationship with the ILO and “consult and co-operate” in all labour related matters, as well as cooperating in regards economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
and reconstruction. The current system is but a shadow of this, with very limited collaboration. When the issue of labour standards was raised at the 1996 Singapore Ministerial conference, Article 4 of the resultant Ministerial Declaration ruled that “the WTO and ILO Secretariats will continue their existing collaboration”. The Chairman of the Singapore Ministerial Conference Yeo Chow Tong later clarified in his concluding remarks that this collaboration “respects fully the respective and separate mandates of the two organisations”. During the Geneva Ministerial Conference, the US, EU and South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
pushed again for a more substantive relationship between the two organisations which was opposed by a group of developing countries, led by Brazil. But despite the amount of controversy and discussion about the issue, the Ministerial Declaration failed to make a mention of it.
The obvious reluctance of the WTO to deal with labour standards and the unlikelihood of recognition in this field in the near future means that the link between the WTO and ILO is crucial in regulating labour standards. However this relationship has never been formalised within the WTO and so will remain ineffective at best without proactive change. Within the Agreement Establishing the WTO, Article III ‘Functions of the WTO’ Par. 5 of reads: “With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies.” The ILO should be inserted into this section. Furthermore, in order to establish a formal, more meaningful relationship, a Ministerial Declaration should be written acknowledging the high level of cooperation and interconnectedness of the organisations, similar to the Ministerial Declarations regarding the relationship with the IMF and World Bank. The advantage of this relationship is that the ILO would not be undermined by the WTO, maintaining its authority in regards to labour standards. The mandates of each organisation would be respected, and there would be no recourse to trade sanctions whilst maintaining a degree of basic protection for labour rights. Collaboration between the ILO and WTO should also make use of the joint research facilities available, and a series of reports on labour rights should be created, similar to the ILO and WTO report “Joint Study on Trade and Employment”, but with a focus on labour standards. In the thinking of ILO Director General Michel Hansenne in the aftermath of the Singapore Ministerial Conference, a good working relationship could be established by pressuring states to ratify the relevant ILO conventions comprising the core labour standards. A scheme was established where those states who do not choose to ratify have to present a brief every 4 years “showing the extent to which effect has been given, or is proposed to be given, to any of the provisions of the Convention by legislation, administrative action, collective agreement or otherwise and stating the difficulties which prevent or delay the ratification of such Convention”. Although the ILO is unable to enforce labour standards and can simply make recommendations, relying on moral suasion, Hansenne’s scheme once improved could lead to increased transparency and lead to regular discussion about labour standards, which is obviously to be desired. More regular reports, and increased pressure on non-ratifying state are necessary. Following the Singapore Ministerial Conference Hansenne further opined that it would be beneficial if a complaints committee were set up which could recommend that
(a) A case does not require further consideration
(b) The offending government rectify the labour standards abuse
(c) The matter be referred to the Fact-finding and Conciliation Commission of the ILO with the agreement of the offending government.
Unfortunately, the committee idea failed to gain support.
It has been suggested that another way in which to increase the importance of the relationship between the WTO and ILO is that countries wishing to join the organisation must first ratify the relevant ILO convention. Within the WTO, existing members set the standards of accession. However this use of double standard
Double standard
A double standard is the unjust application of different sets of principles for similar situations. The concept implies that a single set of principles encompassing all situations is the desirable ideal. The term has been used in print since at least 1895...
s is completely unjust, and does nothing to address the labour standard abuses of existing members. This is still no way of coercing uncooperative states into respecting core standards, and not including labour standards expressly within the WTO has the possible result of sidelining the issue and so is no means an ideal solution
Ideal solution
In chemistry, an ideal solution or ideal mixture is a solution with thermodynamic properties analogous to those of a mixture of ideal gases. The enthalpy of solution is zero as is the volume change on mixing; the closer to zero the enthalpy of solution is, the more "ideal" the behavior of the...
, but remains a worthy first step.
Increased Civil Society Participation
One suggestion for the improvement of the WTO system is to allow for increased civil society
Civil society
Civil society is composed of the totality of many voluntary social relationships, civic and social organizations, and institutions that form the basis of a functioning society, as distinct from the force-backed structures of a state , the commercial institutions of the market, and private criminal...
participation. This would result in the centralisation of social issues
Social issues
Social issues are controversial issues which relate to people's personal lives and interactions. Social issues are distinguished from economic issues...
, and within this, core labour standards. Furthermore, civil society groups are in an ideal position to put pressure on governments to uphold their human rights commitments, and monitor any progress in this field. Within civil society, Non-Government Organisations
Non-governmental organization
A non-governmental organization is a legally constituted organization created by natural or legal persons that operates independently from any government. The term originated from the United Nations , and is normally used to refer to organizations that do not form part of the government and are...
(NGOs) would play a particularly crucial role. The term NGO passed into popular usage in the early 1970s and has come to mean a non-profit organisation
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
that has specific objectives that is independent from the government, non-criminal, non-violent
Nonviolence
Nonviolence has two meanings. It can refer, first, to a general philosophy of abstention from violence because of moral or religious principle It can refer to the behaviour of people using nonviolent action Nonviolence has two (closely related) meanings. (1) It can refer, first, to a general...
, not a political party. Within the UN under Article 71 there are 2,350 (2004) NGOs with consultative status
Consultative Status
Consultative Status is a phrase whose use can be traced to the founding of the United Nations and is used within the UN community to refer to "Non-governmental organizations in Consultative Status with the United Nations Economic and Social Council." Also some international organizations could...
. This successful system has set a precedent for formalised NGO participation and should be used as a model for the WTO. There is provision for NGO participation within the WTO already under Article 5:2 ‘Relations with Other Organisations of the Marrakech Agreement’: “The General Council may make appropriate arrangements for consultation and cooperation with non-governmental organizations concerned with matters related to those of the WTO”. The WTO is a strictly intergovernmental organisation
International organization
An intergovernmental organization, sometimes rendered as an international governmental organization and both abbreviated as IGO, is an organization composed primarily of sovereign states , or of other intergovernmental organizations...
, which means that civil society has no direct input, and much decision-making takes place behind closed doors. This system is appropriate when dealing with tariff reduction issues, but as large scale protests outside WTO meetings continue to demonstrate, social issues which concern civil society at large are forming a part of the WTO agenda. Globalisation means that decisions made at the WTO have come to affect everyone’s lives, and hence there has been an increase in interest in the goings-on of the WTO by civil society. Allowing NGOs to have a say could increase transparency of the system, put pressure on non-compliant governments and provide specialist knowledge and support. Many organisations such as Oxfam, the International Confederation of Trade Unions
Confederation of Trade Unions
Confederation of Trade Unions may mean:*Hong Kong Confederation of Trade Unions*Confederation of Trade Unions...
and One World have already investigated the link between trade and labour standards- it does not make sense to ignore their expertise in this field. Unlike many domestic judicial systems, the WTO does not allow public scrutiny of proceedings, and it is this, rather than lack of any textual mechanism, that impedes NGO involvement. Forums are an effective way to allow NGOs to express their opinion and present information and regular forums should be held to discuss current, relevant issues. This idea has certainly won some support. In the aftermath of the Geneva Ministerial Conference in 1998, US President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
said that “The WTO was created to lift the lives of ordinary citizens’, it should listen to them. I propose the WTO, for the first time, provide a forum where business, labour, environmental and consumer groups can speak out and help guide further evolution of the WTO. When this body convenes again, I believe that the world’s trade ministers should sit down with representatives of the broad public to begin this discussion”. It is not only NGOs who should have increased participation, but expert UN human rights bodies who are also highly proficient in exploring the trade and human rights intersection. For example, the UN Sub-Commission on the Promotion and Protection of Human Rights has regrettably not been included in WTO processes.
Recognition within the WTO Preamble
One of the first steps to enforcing core labour standards is to acknowledge them explicitly within the WTO. Specific amendments to the body of the agreements on how to include labour standards within the WTO will take time as there are myriad proposed ways in which to do this. Therefore, incorporating the importance of labour standards into the preamble of the Agreement Establishing the WTO is an important action- with both symbolic and legal value. Although this does not place any binding obligations upon states to take immediate action on the labour standards issue, it can be used for the purposes of interpretation according to the Vienna Convention
Vienna Convention
Vienna Convention can mean any of a number of treaties signed in Vienna. Notable are:* several treaties and conventions resulted from the Congress of Vienna which redrew the map of Europe, only partially restoring the pre-Napoleonic situation, and drafted new rules for international relations*...
on the Law of Treaties: “The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text... its preamble and annexes”. There are oblique references to human rights already within the WTO preamble, but more explicit recognition is desirable. The importance of the preamble has been recognised by the Appellate Body report in many cases so if labour rights were inserted into the preamble, the DSB when interpreting the agreements would be forced to take the preamble into account, and decisions with more favourable conclusions for labour rights would hopefully be passed down. So although this measure seems ineffective, once consensus has been established to include labour standards, this is one of the first steps that should be taken.
Incorporation of core labour standards into the preamble would also lead to the examination of human rights abuses through existing WTO review mechanisms. In 1988 the decision was made to make regular reviews of state’s trade policy conducted by the WTO, a key part of the transparency of the organisation. Governments submit information to the WTO Secretariat who issue a report which is then examined by the General Council sitting as the Trade Policy Review Body. Government policies are reviewed in relation to the “functioning of the multilateral trading system” so as to encourage adherence to commitments under the agreements, and greater transparency. At present, the reviews are focusing solely upon the issue of trade liberalisation, and whether a member’s policies support this. Although free trade is an important issue, it is not the overall objective of the multilateral trading system and should not be examined to the exclusion of all else. The real objectives of the WTO, with the aim of “raising standards of living, [and] ensuring full employment…” are conspicuously ignored. If labour rights were incorporated into the Marrakech Agreement Preamble, it would be even easier to address labour standards through the trade policy review mechanism.
One of the problems with the system is that the member state has the responsibility to supply the information to the WTO Secretariat. With no one checking on them, this could lead to problems however NGOs could play an important role in overcoming this. A second issue is that the regularity of reviews is calculated by a state’s share of world trade. This means that the top 4 countries (the “Quad”): US, EU, Japan and Canada must review their policy every 2 years. The next 16 countries must submit reviews every four years and developing countries every 6 years. Although the system may work currently, when it comes to human rights this is a problem. This is because the labour standards and human rights abuses of developing countries are no less egregious than those in developed countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
and so do not deserve to be monitored any less. Each state should have to submit a report addressing the “real” objectives of the WTO every 2 years or so, as well as a report addressing trade liberalisation according to the current system. By reporting on labour standards, the issue is opened to discussion, which can only be positive. Although states are not forced to act on any labour standards abuses that may be found within their territories, the public acknowledgement of their existence could provide fuel for human rights groups and victims. The very act of raising the labour standards issue is the first step because the power of shame should never be underestimated.
See also
- UK labour law
- European labour lawEuropean labour lawEuropean labour law is the developing field of laws relating to rights of employment and partnership at work within the European Union and countries adhering to the European Convention on Human Rights.-Treaties:...
- International labour law
- World Trade OrganizationWorld Trade OrganizationThe World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...