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.), Emerging Agenda for Global Trade: High Stakes for DevelopingCountries.Washington, D.C.: Overseas Development Council.Stern, Robert M.1997. Issues of Trade and International Labor Standards in theWTO System, in Symposium on The Emerging WTO System and Perspectivesfrom East Asia, Joint U.S.-Korea Academic Studies, Vol.7.Washington, D.C.:Korea Economic Institute of America.Stern, Robert M.1998. Labor Standards and International Trade, INTAL,Integration and Trade, forthcoming.UNICEF.1995.Girls in Especially Difficult Circumstances: An Action ResearchReport.Kathmandu: UNICEF.U.S.Department of Labor (U.S.-DOL).1998. The Role of Governments and Non-Governmental Organizations in Combating Child Labor: ILO-IPEC Experience, Public Hearing, February 13, processed.Suggested Further ReadingBrown, Drusilla K., Alan V.Deardorff, and Robert M.Stern.2003. Child Labor:Theory, Evidence and Policy, in Kaushik Baushik, Henrik Horn, Lisa Roman,and Judith Shapiro (eds.), International Labour Standards.Blackwell Publishers. b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 743U.S.Trade and Other Policy Options and Programs to Deter Child Labor 743Edmonds, Eric V.2007. Child Labor, in T.Paul Shultz and John Strauss (eds.),Handbook of Development Economics, Volume 4.Blackwell.Edmonds, Eric V.and Nina Pavcnik.2005. The Effect of Trade Liberalization onChild Labor, Journal of International Economics 65, pp.401 419.Edmonds, Eric V.and Nina Pavcnik.2005. Child Labor in the Global Economy, Journal of Economic Perspectives 19, pp.199 220.Edmonds, Eric V.and Nina Pavcnik.2006. International Trade and Child Labor:Cross-Country Evidence, Journal of International Economics 68, 115 140. b723_Chapter-18.qxd 7/15/2009 10:02 AM Page 744This page intentionally left blankThis page intentionally left blank b723_Chapter-19.qxd 7/15/2009 10:02 AM Page 745Chapter 19Labor Standards and InternationalTrade*,Robert M.SternI.IntroductionThe interaction of labor standards and international trade is by nomeans a new issue.Nonetheless it has assumed new importance dueto the increasingly vocal arguments by labor interests and socialactivists in the United States and other industrialized countries that unfair labor practices and conditions that may exist in their devel-oping country trading partners need to be offset by appropriate tradepolicy measures in order to level the playing field. Thus, for exam-ple, issues of lax enforcement of labor standards in Mexico were at thecenter of the public debate in the United States especially in1992 1993 when the North American Free Trade Agreement* Published in INTAL, Integration and Trade, May/June 1999, pp.15 38.Reprintedwith permission.This paper was awarded the first prize of $10,000 in October 1998 in an essay con-test on the topic, Labor Standards and Income Distribution and Their Relation toTrade. The contest was sponsored by the Institute for the Integration of LatinAmerica and the Caribbean (INTAL), which is part of the Integration and RegionalPrograms Department of the Inter-American Development Bank.745 b723_Chapter-19.qxd 7/15/2009 10:02 AM Page 746746 R.M.Stern(NAFTA) was being negotiated and later submitted for approval bythe U.S.Congress.Efforts were also made (unsuccessfully) by theUnited States and some members of the European Union (EU) at theDecember 1996 World Trade Organization (WTO) MinisterialMeeting in Singapore to extend the WTO to include rules governingtrade-related labor standards.Labor standards were again at issue inthe fast-track authority that the Clinton Administration requestedfrom Congress in November 1997 and then withdrew because ofinsufficient support from House Democrats.The concern of labor and social activists is that the increased importsfrom countries in which labor standards are ostensibly not enforced at asufficiently high level will be detrimental to wages and working condi-tions in the industrialized importing countries.As will be noted in ourdiscussion that follows, there is a wide disparity of views on issues ofinternational labor standards.The purpose of this chapter is to explorethese different views and the available options for addressing the issuesinvolved.The chapter is structured as follows.Section II deals with thedefinition and scope of labor standards.Theoretical aspects of the eco-nomic effects of labor standards are considered in Section III, whileSection IV summarizes the available empirical evidence.Global,regional, national/unilateral, and other arrangements for the monitor-ing and enforcement of labor standards are discussed in Section V.Conclusions and implications for policy are presented in Section VI.II.Definition and Scope of Labor StandardsLabor standards are multi-faceted and may vary from country to coun-try depending on the stage of development, per capita income, andpolitical, social, and cultural conditions and institutions.It may be dif-ficult therefore to distinguish unambiguously those labor standards thateveryone would consider to be universal rights from other labor stan-dards that will depend on given national circumstances.Nonetheless,efforts have been made to identify and achieve consensus on a groupof so-called core labor standards that ideally should apply universally.For example, according to OECD (1996, p.26), core labor standardsinclude: (1) prohibition of forced labor; (2) freedom of association; b723_Chapter-19.qxd 7/15/2009 10:02 AM Page 747Labor Standards and International Trade 747(3) the right to organize and bargain collectively; (4) elimination ofchild labor exploitation; and (5) nondiscrimination in employment.Agreement on the universality of these core labor standardsderives ostensibly from the widespread acceptance and ratification ofUnited Nations Covenants and Conventions as well as acceptance(though not necessarily ratification) of the pertinent Conventions ofthe International Labour Organization (ILO) that deal with humanrights and labor standards.1 Besides the aforementioned core stan-dards, there are other labor standards that are less universallyaccepted, and that relate to acceptable conditions of work, whichinclude: a minimum wage; limitations on hours of work; and occupa-tional safety and health in the workplace.2Some of the difficulties that may arise in interpreting and imple-menting core standards and distinguishing between core and otherstandards can be illustrated in the attempt by Fields (1995, p.13) toarticulate what he considers to be: .a set of basic labour rights forworkers throughout the world:i) No person has the right to enslave another or to cause anotherto enter into indentured servitude, and every person has the rightto freedom from such conditions.ii) No person has the right to expose another to unsafe or unhealthyworking conditions without the fullest possible information.iii) Children have the right not to work long hours whenever theirfamilies financial circumstances allow.iv) Every person has the right to freedom of association in the workplaceand the right to organise and bargain collectively with employers. 1According to OECD (1996, pp.31 34), there are seven fundamental ILOConventions that form the basis of consensus among the ILO s constituents.Theseinclude: prohibition of forced labor (No
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