Trade-Labour Linkage & the Social Clause debate

1. Law School International Business Law & Institutions Sol Picciotto Topic 2: Free & Fair Trade I: Safeguards and Employment Protection Trade-Labour Linkage & the Social Clause debate Labour Standards in the World Economy - Role of ILO Safeguards & Adjustment - GATT art. XIX & WTO TRIMS & Performance Requirements IBLI Topic 2

2. Trade & Labour Standards Globalisation: Race to the Bottom/Top? trade & investment liberalisation increases competition between (1) Firms: do TNCs take advantage of lower social/labour standards? can they be induced to transmit higher standards? (2) States: do they keep social costs low to attract investment? do lower social standards help sustainable development? Labour & Social Provisions in Regional Agreements EU: Social Chapter - harmonisation? excludes pay & rights of association, strike/lockout NAFTA: Side Agreement on Labour Cooperation transnational enforcement of specified laws IBLI Topic 2

3. GATT & WTO Havana Charter for ITO: art.7 obligation on states end `unfair labour conditions particularly in production for export’ GATT/WTO Preamble: aim to raise living standards via economic growth Art. VI: Anti-Dumping protect domestic industry from unfair trade practices & disruption Art. XIX: Safeguards unforeseen development resulting from GATT obligation (=tariff reduction) increased imports (absolute or relative?) cause/threat of `serious injury’ to (i) domestic producers of (ii) like or directly competitive products IBLI Topic 2

4. GATT XIX & WTO Safeguards Agreement (SA) Escape clause, to make concessions easier Temporary relief for domestic industry but compensation may hit others Suspension of obligation or withdrawal of concession + counter-suspension GATT: Grey-Area measures: ERAs, VERs, OMAs (cartels?) SA 11: must not seek/support inconsistent measures - phase-out SA 3 & 4: Investigation & Determination of Serious Injury/Threat Notice to CPs and exporters & Consultations may proceed if approval not reached SA12: notification to and surveillance by Committee based on all pertinent information & evidence: AB Korean Safeguards SA 5.1: only to extent necessary to remedy serious injury & facilitate adjustment Selective withdrawal? SA 5: irrespective of source; SA9: import share quotas Duration: SA 19: 4+4 years, tapered after 1 year Compensation? : SA 8: suspended for 3 yrs; Selective? unless Council disapproves Adjustment Assistance to workers instead of protection for firms? IBLI Topic 2

5. Performance Requirements & TRIMS PRs: to ensure beneficial spread-effects from FDI TRIMS 2: restates GATT obligations + Illustrative List GATT III requiring local sourcing discriminates against imports whether by volume, value, or trade-balancing GATT XI restricting foreign sourcing may be trade restriction whether by volume, value, forex balancing or trade balancing GATT XII exception: rejected in Indian Auto Mandatory/administrative/compliance necessary to obtain advantage conditional tax incentive? discretionary investment subsidy? TRIMS 5: Transition Periods: 2, 5, 7 years + requests to extend TRIMS 6 Transparency TRIMS 7: Committee IBLI Topic 2

6. Labour/Social Clause in WTO? Art XX Exception? (e) relating to products of prison labour; coerced labour? (a) necessary to protect public morals: child labour? (b) necessary to protect … human .. life/health: work safety? Phosphorous Match Convention 1906 Chapeau: no arbitrary discrimination among countries Denial of trade preferences(GSP): US: sanction for low standards; EU: reward for higher standards Violations of ILO Core Labour Standards? ILO Declaration 1998: 5 Principles, 7 Core Conventions WTO- ILO Collaboration? Social Labels? IBLI Topic 2