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Manufacturing is still critical to the economy United States. Clyde Prestowitz, says it's time to start realizing the positive spillovers that manufacturing creates... Read more  

Events & Activities

Stephen Olson at Chinese Development Institute Conference


 Clyde Prestowitz giving presentation to CDI...


Steve Olson teaching trade negotiations at the Mekong Institute...


Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

International Trade

Labor Standards in the Global Trading System

Click Here to Download the Full Report in PDF Format

At the 1999 Ministerial Meeting in Seattle, the World Trade Organization (WTO) failed to launch a new round of multilateral trade negotiations, because member governments could not agree about how much WTO rules should constrain their policymaking prerogatives. 

The purpose of the WTO is to promote trade that raises incomes and growth by regulating tariffs and other government policies that limit imports and artificially boost exports - i.e., to encourage trade based on comparative advantages, which results in a more efficient global allocation of resources. In this context, WTO members recognize the importance of ensuring that developing countries share in the benefits of this trade

Labor standards are just one arena where some governments see stronger international rules enhancing the benefits of globalization, while others view them as threatening their competitive advantages and sovereignty. Labor standards offers a window on the challenges national governments face in reaching consensus about how the WTO system should evolve.

Governments should ask five questions to assess whether labor standards should be the subject of a WTO agreement, referred to another forum, or remain outside the purview of international agreements:

  1. Can members agree on standards and principles for national governments' policies and practices?
  2. Would better international enforcement of these standards and principles promote trade that raises incomes and growth in industrialized and developing countries?
  3. Are violations of these standards and principles widespread enough to have significant effects on trade?
  4. Would applying WTO dispute settlement to complaints about derogations from these standards and principles promote trade that raises incomes and growth?
  5. Is the WTO the most appropriate and potentially effective forum for addressing these problems?

Of these five questions, the answers to the first four appear to be yes:

  1. A clear consensus has emerged in the international community that governments have an obligation to respect, promote and protect four core workers' rights.
  2. Better enforcement of these rights would likely promote trade that increases incomes and growth, both in industrialized and developing countries.
  3. Estimates of the numbers of child workers, violations of freedom of association, and their effects on manufacturing labor costs are widespread and significantly affect competitiveness and trade.
  4. Applying WTO dispute settlement to violations of the four core standards would promote trade that promotes economic efficiency, much as it does for other policies that artificially boost exports and violate WTO rules.

Regarding the fifth question, the WTO could be an effective forum for addressing the relationship between workers' rights and trade. Whether it would be the most appropriate forum is a more complex matter.

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