"The aim of a
social clause would be to improve labour conditions in exporting countries by permitting sanctions against exporters who fail to observe certain minimum labour standards formulated by the International Labour Organization (ILO)."
(Goode, W,
Dictionary of Trade Policy Terms, Fourth Edition, Cambridge (UK): Cambridge University Press, 2003, p. 437)
The Issue of Core Labour Standards in WTO Conferences
Trade and labour standards have always been a concern of the World Trade Organization (WTO) since its foundation in 1994. At the First WTO Ministerial Conference in Singapore in December 1996, the issue was addressed in the Declaration:
"We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO secretariats will continue their existing collaboration. [...]
At the 3rd Ministerial Meeting in Seattle in December 1999, the issue of core labour standards was perhaps the most divisive issue on the agenda. In the run-up to the meeting, both the United States and the European Union put forward proposals for addressing the issue of labour standards inside the WTO. Although officials from both members said they did not envision the use of trade sanctions in the context of the labour standards issue, both proposals were fiercely opposed by developing country governments. [...]
Since the Seattle Ministerial Conference, governments from around the world have turned their attention to the ILO as the forum for addressing this question."
(World Trade Organization (WTO),
A difficult issue for many WTO member governments, 2001, visited 2011-08-03)
Foundations of the Social Clause
Most proposals for a
social clause are based upon the eight ILO Conventions:
- Freedom of association and collective bargaining (Conventions 87 and 98);
- Abolition of forced labour (Conventions 29 and 105);
- Prevention of discrimination in employment and equal pay for work of equal value (Conventions 111 and 100);
- Minimum age for the employment of children (Convention 138),
- Convention concerning the most extreme form of child labour (Convention 182).]
Violations
The
social clause can be defined as the provision in trade agreements that compels the contracting states to respect core labour standards as defined by the ILO.
Social clause violations strictly concern contraventions of core labour standards rather than social systems as a whole. For instance, such topics as minimum wage, employment benefits, social security and pension plans are not covered by the
social clause. The definition of core labour standards is therefore considered to be restrictive because it does not include issues such as security or other standards appearing in ILO conventions.
Sanctions
Trade measures taken against exporting countries that fail to observe the
social clause may include:
- exclusion from arrangements providing preferential trading status (e.g. US or EU General System of Preferences or Most Favoured Nation trading status);
- restrictive quotas or other quantitative trade barriers and/or raising tariff levels;
- restriction of imports from the offending country.
"If a
social clause is to work, it must follow a step-by-step procedure which is open, fair and multilateral, and which allows problems to be resolved through negotiation. Within such a framework, there would be many safeguards against the indiscriminate use of sanctions. One of the most important safeguards would be the need for multilateral agreement on the use of sanctions. It is likely that within such a framework sanctions would be used only as a final measure, when all other avenues have failed to persuade the offending party to address its violation of core labour standards."
(Lim, H.,
The social clause: issues and challenges, International Labour Organization (ILO),visited 2011-08-03)
A North-South Debate
"There is no issue which inspires more intense debate among World Trade Organization member governments than the issue of trade and core labour standards. [...] Advocates for including labour standards on the WTO's agenda of future work maintain that rights including the freedom to bargain collectively, freedom of association, elimination of discrimination in the workplace and the elimination of workplace abuse (including forced labour and certain types of child labour) are matters which should be considered in the WTO. In the past, member governments have suggested that a WTO working party be established to examine the link between trade and core labour standards. Other member governments have suggested that a working group involving a number of international organizations be established to examine the social issues that are affected by globalization. But developing countries have another view. Member governments from the developing world believe attempts to introduce this issue into the WTO represent a thinly veiled form of protectionism which is designed to undermine the comparative advantage of lower-wage developing countries. Officials from these countries say that workplace conditions will improve through economic growth and development, which would be hindered should rich countries apply trade sanctions to their exports for reasons relating to labour standards. Application of such sanctions, they say, would perpetuate poverty and delay developmental efforts including those aimed at improving conditions in the workplace."
(World Trade Organization (WTO),
A difficult issue for many WTO member governments , visited 2011-08-03)