A “Social Clause” through the Back Door? Labor Provisions in Preferential Trade Agreements

What are the causes and the consequences of labour provisions in preferential trade agreements?

Project Summary

International developments in the social dimension of globalization have long gone unnoticed because progress towards social regulation of global capitalism has been slow or insignificant. In the past ten years, there has been a spectacular growth of preferential trade agreements (PTAs) with references to labor provisions. This is a remarkable and somewhat surprising development, given the failed attempt to include a social clause to multilateral trade agreements as recently as the 1990s.

This project investigates the causes and consequences of labor provisions in PTAs. The objective of this research is to deepen our understanding of how to improve labour standards in the context of globalization. Beyond providing an original academic contribution, the research outputs will be of great policy relevance given how collective labor rights have come under increased strain worldwide as a result of deepening economic globalization, skill-biased technological change and the 2007-08 global financial crisis. By probing deeper into the interests of developed and developing countries to link trade and labor issues, this project will shed light on the likelihood of future inclusion of social issues in the multilateral trade system.

Academic Output

Working Paper

Labor Provisions in Trade Agreements (LABPTA): Introducing a New Dataset

Global labor policy through trade has begun to receive growing attention with the inclusion of labor provisions in preferential trade agreements (PTAs). Until recently there has been a shortage of available data that would adequately capture the variation that exists with respect to the scope and stringency of labor provisions, preventing scholars and practitioners from addressing key questions about the design and effects of the trade-labor linkage. This paper introduces a new dataset covering 487 PTAs from 1990 to 2015 coded against 140 distinct items pertaining to six main categories, presenting — to our knowledge — the most rigorous and fine-grained mapping of labor provisions. It also offers the first systematic description of the key trends in the design and occurrence of those commitments. Our study shows that labor provisions have not only expanded in terms of their content and participating countries but that labor provisions have, although to a varying degree, also become more stringent over time. The provisions that have across all PTAs demonstrated a steady increase are the ones related to the institutional framework set up for the monitoring and implementation of labor commitments, becoming more specialized and more inclusive of third party involvement over time.

Executive Summary

Recent years have not only witnessed a spectacular proliferation of preferential trade agreements (PTAs) but also a surprising growth in the references to labor rights in those. This is a remarkable development given the failed attempt to include a social clause to trade at the multilateral level in the 1990s. We still know fairly little about the causes and consequences of labor provisions in PTAs. The project is primarily interested in the domestic determinants of variation in the design of labor provisions in PTAs, and in the social and economic impact of the inclusion of such provisions in trade agreements. Being the first of its kind, the project sets as its main goal to fill this gap and thus to systematically investigate the above questions, primarily through a set of quantitative studies complemented by a number of qualitative case studies to examine outliers identified based on basic parameters. The key outputs of the project includes the construction of an original dataset on the content of labor provisions in PTAs (LABPTA) and four core articles, two assessing the origins and two assessing the effects of labor provisions in PTAs. According to our main findings: 1) labor provisions do not amount to “protectionism in disguise” as exports from low income countries benefit from the introduction of labor provisions in North-South trade agreements; 2) soft, cooperation- related labor provisions can be effective in improving state compliance with collective labor rights; and 3) the role of trade unions is vital both in the design and the implementation of labor provisions.

Research Team

Damian Raess
Coordinator
Université de Genève

Cédric Dupont
Co-Coordinateur
Graduate Institute Geneva

Marcelo Olarreaga
Co-Coordinator
Université de Genève

Sonja Peters
Principal Member
Université de Genève

Dòra Sàri
Principal Member
Université de Genève

José Corpataux
Associated Member
Union Syndicale SuisseAndreas Dür
Associated Member
Universität Salzburg

David Kucera
Associated Member
International Labour Organisation (ILO)

Joost Pauwelyn
Associated Member
Graduate Institute Geneva

Philippe Pochet
Associated Member
European Trade Union Confederation

Status

completed

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