The trade-labour nexus is not new in the international debates. This question can be traced to the early debates on free trade and it was also at the core of the problems the ILO was created to solve. After WWII, when the United Nations (UN) system was created, employment and labour standards were integrated to the Havana Charter, which aimed to create a far reaching rule-based trade system that included several trade related issues (investment, restrictive commercial practices, development, ...). The Havana Charter was abandoned and the international community built the international trading system around the GATT (General Agreement on Tariffs and Trade), which did not include labour related issues, except for some provisions found in article XX.

The social dimension of the international trade order was never formally internationalised. Yet, there was an implicit consensus that contributed to pacify international and industrial relations as welfare states, in many parts of the world, developed national social policies and labour laws. In the 1970s and 1980s, this consensus shifted towards neoliberalism and the Washington Consensus, thereby lifting many constraints standing in the way of the globalization process. Trade-labour issues resurfaced.

Since the 1980s, an impressive number of bilateral, regional and multilateral trade agreements were signed by a growing number of trading nations. These agreements reach far beyond trade issues ; they include investment issues, intellectual property rights, competition, regulation, standards, etc... The social impacts of trade liberalization have been an important element in the debates triggered by trade agreements and economic liberalization. In the 1990s, trade agreements have increasingly been accompanied by side agreements on labour issues or by a social clause.

Pros and Cons

Arguments in favour :

– Trade create growth but is unable secure social progress. The improvement of employment and labour conditions must be ensured through special measures.
– The trade-labour interface can reduce the “race to the bottom” (RTB) that induces nations to seek economic rents and competitive advantages through poor working conditions, low wages and labour standards
– Social clauses could be an instrument against multinationals exploiting poor working conditions abroad.

Arguments against :

– The best way to improve employment and better working conditions is to increase growth through trade. Labour standards can distort trade, thereby having the adverse effect of reducing growth, employment, and harming those they are supposed to protect.
– Labour standards should be addressed at the national level and should not be “imposed” through international obligations.
– Trade-labour agreements are captured by “protectionist” interests.
– The trade-labour interface fails to discipline enterprises in the world economy.

As the issue resurfaced at the multilateral level in the context of the creation of the WTO (World Trade Organisation). The outcome was a refusal to discuss labour issues, while confirming the ILO as the proper forum to address the social dimension of globalization. (see the section International Initiatives). Trade-labour initiatives were more successful at the bilateral and regional levels. Developed countries, the United States and Europe, as well as Canada, have signed many trade agreements with developing countries addressing labour issues or trade-labour side agreements. In Europe, the social dimension of the integration process is perhaps the most advanced experience regarding the interface of economic and social issues. In the South, there are also many processes of trade integration that include provisions related to labour and social issues. The United States favour the use of trade sanctions, while most other actors are reluctant to this approach ; they prefer voluntary cooperation. Different approaches and perspectives are being developed, some of which are more effective than others.

This section of the GLG Directory is devoted to trade-labour issues. It will provide research tools on the general trend towards initiatives linking trade and labour issues The sub-sections will build the trade-labour constellation at the regional, sub-regional and bilateral levels.

Actors

Actors of the LGG are numerous ; they include states and international organizations, as well as a plurality of other actors, such as enterprises, consumers, unions, investors, trade associations, ONGs, etc... These actors are contributing to shape and develop regulatory mechanisms, being advocates and targets, and often both at the same time. Strategies of multiple advocates (from trade unions and labour groups, consumers, NGOs) to promote labour standards target states, international organizations and firms, which are responding in various ways. On the other hand, states, international organizations and private actors are also becoming advocates of global labour standards and are developing new forms of regulatory instruments. Increasingly, agreements, alliances and partnerships between different actors are being elaborated, developed and put at work.

Any strategy to promote a fair globalization and better working conditions must take into account the role being played by a plurality of actors, their relative power and their capacity to provide new and effective solutions. This section will provide information and analytical tools in relation to the evolution of the role of actors such as states and international organizations in the LGG, the increasing role of new actors, and the interplay between actors.