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Foreign Policy
Spring 1999
Labor Pains
The United States and France rarely agree on anything. But the governments of both countries found themselves on common ground in late 1996 when they proposed that the newly formed World Trade Organization (wto) incorporate a social clause to link labor standards with trade liberalization. The two countries sought to prevent international-trade competition from becoming a race to the bottom in terms of wages and labor conditions by making violation of agreed-upon labor standards grounds for invoking trade sanctions.
Domestic concerns buttressed their determination to provide a disincentive for labor exploitation. Both France and the United States were feeling the sting of a globalization backlash at home. The White House had faced staunch opposition, primarily from unions, when it pushed for ratification of the North American Free Trade Agreement in 1993, and again throughout 1995 and 1996 when it campaigned (unsuccessfully) to gain renewal of fast-track negotiating authority for new trade agreements. A period of labor unrest in 1995 brought Paris to a standstill for weeks as the constraints of a low-inflation policy continued to inhibit employment growth.
But the prospect of international labor standards with teeth did not sit well with Asia’s emerging economies or with many other developing-country exporters. In response to the efforts of the United States and France, the Association of South East Asian Nations issued a statement saying that its members would oppose the social clause and other issues “which were not trade-related” at the December 1996 wto ministerial conference in Singapore. Newly industrializing countries viewed the clause as a nontariff barrier to free trade that would deny them the opportunity to benefit from their comparative advantage of cheap labor.
Reflecting this opposition, the Final Declaration of the Singapore meeting declared a renewed “commitment to the observance of internationally recognized core labour standards” but insisted that “the International Labour Organization [is] the competent body to set and deal with these standards”—not the wto. By passing the protection of labor’s interests from an organization expected to be strong to one known to be weak, the ministers took another step to marginalize labor in the planning for a new global economic architecture
— K.N.