Labor Standards

Abstract

The WTO is virtually silent on labor issues. The single exception is article XX (e) of the GATT which permits but does not require countries to exclude goods made by prison labor.¹ Should this silence be broken? In recent years there has been increasing pressure to extend WTO obligations to include minimum labor standards in some form. The idea is extremely controversial, with fault lines between North and South, between business and labor, and between advocates of free trade and groups with humanitarian and human rights interests.² This chapter attempts to sort out the issues and analyze the merits of including labor standards in the WTO. To accomplish this Part II provides a brief description of the evolution of the issue and the types of labor standards that might be included. Part III presents five arguments for inclusion. Part IV explores the economics of labor standards should they find their way into the WTO, and Part V elaborates on certain practical difficulties. Part VI draws conclusions. To anticipate, I find the case for inclusion of labor standards in the WTO to be dubious, and suggest that other avenues for labor protection would be more productive.

The original motivation was apparently protection from unfair competition, not ethical concerns. A 1930 law in the United States banned imports made from “forced” labor or “indentured labor under penal sanctions”, but exempted items if U.S. production was insufficient to satisfy consumption. Steve Charnovitz, The Influence of International Labor Standards on the World Trading Regime, 126 International Labor Review 565, 569–70 (1987).

This is a great generalization with many crossovers and shades of opinion. Virtually all commentators agree, however, that some labor in some countries experience dreadful working conditions.