“Should WTO law be interpreted so as to allow for a “labour exception”? Should a
social clause, focusing on labour standards, be explicitly adopted by WTO Members
and become part of the WTO legal system?”
First and foremost the preamble to the WTO agreement refers to “sustainable
development”, while indeed the WTO does not include only “border measures” (e.g.
TRIPS). Hence, the WTO is not inherently bound to not impose rules on possibly
internal obligations and, therefore, the CLS should be incorporated into the WTO.
CLS fulfil all 4 requirements for incorporation into the WTO:
1. CLS are Trade related: Firstly, the conditions of production impact the quantity
produced and its cost. Furthermore, art.7 UNHC recognized the link between trade
and labour and that unfair labour leads to distortions in the market via prices that are
too low for a normal competitive market. Finally, industrialized countries (USA, EU)
have already recognized the linkage between trade and labour.
2. The protection of the CLS would positively affect trade flows: Having lower wages is
a comparative advantage for developing countries. Nonetheless, non-incorporation
denies workers the comparable right to seek better working conditions which leads to
an interference with the free market. Additionally, the 1996 and 2000 OECD reports
and the ILO investigations show positive correlation between CLS and long term
economic success. Finally, the 2001 World Bank report shows that low CLS lead to
fewer incentives for the workers’ self-improvement and to reduced labour saving
technology for companies. Hence, a myopic view is only harmful as CLS
incorporation does not mean reduced exports and trade.
3. CLS suffer under enforcement: ILO is the current international agency responsible for
the enforcement of CLS but fails to achieve its goals. This is partially due to the
heterogeneity of ratification of its treaties. Lack of implementation and relying mainly
on public shaming as sanctions also plague ILO’s work towards a greater protection
of CLS.
4. CLS inherently deserve protection: It is globally accepted that CLS are human rights,
as they can be found in different international conventions such as the UDHR. The
protection of those CLS should not be seen as an attempt to create a ‘fair game’ but
simply as the protection of these rights. Moreover CLS are consistent with liberal
trading, as based on the protection of the freedom of choice, a light erosion of
sovereignty as already accepted by WTO members is justified. The incorporation of
those standards into the WTO would not theoretically change much, as they are
already supposed to be protected in other conventions such as the ILO. Hence, it
would only improve its enforcement.
GATT Based Arguments:
To begin with, the incorporation of core labour standards into the WTO
framework was in the drafters’ intention. Article XX(e) GATT permits governments
to ban trade of goods produced using prison labour. Therefore:
1. Labour legislation is regarded as sovereign law. The importing member’s sovereignty
could be undermined if a Panel or Appellate Body considers the efforts of restricting
labour practices and the prohibition of products that do not comply with the CLS
inconsistent with the GATT.
2. The enforcement of a key global norm would be constrained if the WTO were to
refuse to take into account non-trade rules when assessing the validity of a restrictive
trade measure.
3. There is a potential public legitimacy increase with the incorporation of the CLS.
4. Eventually, Members are not allowed to take trade-related measures to protect human
rights. For example, states could neglect a far more serious issue such as slave labour.
Incorporation:
To neutralize the developing countries’ agitations -emerging from their belief that
imposing trade barriers for violations of CLS leads to protectionism- the incorporation
of CLS into the WTO could come in hand. This could be done through the judicial
and the legislative model.
1. Judicial: it operates by using interpretation of the GATT, which concerns to the
exception under article XX(a) of the GATT that extend the content of ‘public moral’
to also include compliance with universal CLS, and interpretation used by the Dispute
Settlement Body on determining the ‘likeness’ of product that rely on the Process and
Production method used between two products.
2. Legislative: it operates through an explicit social clause adopted by the WTO in the
newest agreement, the Agreement on Trade Related Aspect of International Labour
Standards (TRILS). It gives more certainty on how CLS could be applied in the right
manner without constituting a barrier to trade.
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