HARMONISING LABOUR STANDARDS IN INTERNATIONAL TRADE

AGREEMENTS: CHALLENGES AND OPPORTUNITIES

BA LLB
SEMESTER-8
SUBMITTED BY: BRAHM SAREEN & SHIVESH SAINI
ROLL NO: 01716503820 & 0596503820
SUBMITTED TO: MS. SAUMYA
(GUEST FACULTY- ITL)

UNIVERSITY SCHOOL OF LAW AND LEGAL STUDIES

GURU GOBIND SINGH INDRAPRASTH UNIVERSITY
DWARKA
NEW DELHI, 110075, INDIA,
2024
 Harmonising labour standards in international trade agreements:
Challenges and opportunities

Introduction

In the global scenario, labour plays an important role in international trade. Developing
countries which are often labour intensive engage in trade with the developed nations. The
proponents of International labour standards argue that there is lack of level playing field in
the global trade as developing nations often employ exploitative labour practices and less
wages. As far as existing codified labour standards are concerned, no two countries have the
same ones.

The floor of protection depends on the specific factor mentioned above – the stage of
development, per capita income, political, social and cultural condition and institutions.
However, some attempts to formulate and achieve consensus on a group of so-called core
labour standards that should apply ideally everywhere have been made. According to OECD ,
there are eight fundamental ILO Conventions on which the consensus exists among the ILO’s
constituents. These are the following: 1) prohibition of forced labour Ao. 29 and 105 ; 2)
freedom of association and protection of the rights to organize and to collective bargaining
Ao. 87 and 98 ; 3) equal remuneration for men and women for work of equal value (No. 100);
4) non-discrimination in employment and occupation (No. 111); and 5) minimum age of
employment of children and abolition of the worst forms of child labour (No. 138 and 182).

Agreement on the universality of these core labour standards derives ostensibly from the
acceptance of the United Nations Universal Declaration of Human Rights in 1948, with the
possible acceptance of the ILO Charter – the specific agreements dealing with human rights
and labour standards, though not up to the ratification level – and the ILO Declaration on
Fundamental Principles and Rights at Work in 1998.

The ILO’s 1998 Declaration on Fundamental Principles and Rights at Work guarantees that the
workers have the right to freedom of association and the right to collective bargaining; the
abolition of forced labour; the prohibition of the employment of children; and the prohibition
of any type of discrimination in respect of employment. The first step toward assessing
noncompliance, which is to determine the substantive standard establishes what are core labour
standards. After which, we must settle the obligations assumed by conforming countries. The
need to monitor the process of the compliance (ILO Standards) by foreigners i.e. nations,
international agencies, labour unions and student committees of colleges relies greatly on the
identification of such indicators that allow the observers to assess whether a country is
complying with ILO standards or not. At last the measuring compliance applying data has many
defects such as being incomplete, non-representative, non-comparable, as well as biased, that
envisage to make a judgment whether a country satisfies the obligation established in the
treaties or not and infer their quality from available evidence.

National Responsibilities

Fundamental freedoms of assembling, and real dealing of the right to collective bargaining,
form one of the cores labour standards, which have long and detailed history of dispute about
what constitutes non-compliance. There is general international consensus which among
other things encompasses the rules of preventing governments from imposing measures like
suspension of employees who threaten to strike if employers do not enter negotiations,
employers being prosecuted for taking action against such employees and having parties in
full compliance with the law. This implies that labour laws that do not allow workers during a
strike to be replaced with permanent workers do not fit this core standard, of which it would
only be logical conclusion. Having been able to go through the whole ILO jurisprudence does
not lead to the same result. Rather than the ILO has fluctuated, searching for a consensus over
the years recognizing that the ability of employers to take the place of strikes workers by
appointing new permanent ones every time “poses a risk” to the effective job right of
collective bargaining and not necessarily violate this rule as long as it does not happen in an
unspecified “extensive” way.

As per the ILO, only the US is a chief country around the globe besides Burkina Faso, Cabo
Verde, Central Africa Republic, Djibouti, Madagascar and Niger that has laws allowing the
establishment of strike subcontractors. Trade laws also present some important complications.
For example, there are required “closed shop” laws which can ensure that all workers joining
a union need to be members, they also have to remain union members and continue to pay
their dues. Furthermore, in these situations there is another type of law that is applied, called
the “ right to work.”
Conventional labour market analysis defines “closed shop” agreements as the restriction of
workers who do not belong to trade unions to the enjoyment of freedom of association and
other fundamental rights related to the formation of the professional group. According to
conventional wisdom, 'right to work' laws insure workers of their right to obtain jobs that
have benefits of a contract negotiated by unions, even if workers do not take part in the
collective bargaining or pay the union dues. Quite likely, such support for what economists
called free-riding, water down the union strength in negotiating with employers. Again, this is
the lack of clarity on the two camps (closed shops and right to work laws) although the
jurisprudence does not impose a dictatem of restrictive trade union monopoly by law.

Lacunae in ILO Interpretations

There are different spaces in the ILO constitution which clearly provide the rules to freedom
of association and the right to collective bargaining. The mentioned one is no control or a
union by criminal gangs. In many countries, trade unionists can be coerced by local
bureaucrats and organized criminals to become union chief for protection of property. When
the shop windows are no longer wiped out every day, it is not worth it for the slim of
businesses. Here ILO approaches the problem in weird way, not regarding as behavioural
anti-corruption standard for union management. The consequence might be for instance, the
fact-finding bodies look into high union density as an indicator of freedom of association and
right of collective bargaining in a country in which they work, while the polity of those
countries is, in fact, use these unions for criminal communist purposes and using workers.

Then, there are also those other aspects where the specificity of ILO jurisprudence is quite
clear and thus differ a lot from country practices. On the right to strike, there are many
undecided situations concerning prohibitions related, for instance, to sympathy strikes or
protest strikes. At the time of writing, ILO’s jurisprudence recognizes the legitimacy of
protest strikes for the purpose of criticizing a government’s economic and social policies.
Anyway, sympathy strikes are considered acceptable as long as the initial one is lawful
itself. There are questions on whether after giving opinion of majority of the workers that
would have to be approved a strike, which, in turn, the ILO described as “excessive.”

Issues for determining country criteria for labour standards are very similar for all other
major international labour statutes. The superior presumption, however, is still that the state
shall provide the service but it will be left to the decision of a country's authorities to
determine what is an adequate level of service or adequate amount of subsidy which implies
to them in their unique circumstances. Therefore, it is the responsibility of the developing
nations to review their policies regarding labour standards.

What can nations do?

To begin with, in order to assess how much a country is compliant to the core labour standard
it must be clear on the obligations that countries have when they promise to obey any of
them. Such indicators may reside at three levels; firstly, assessing a nation’s legal framework
on the core labour standard e.g. whether laws and regulations protect freedom of association,
right to collective bargaining, and right to strike according to an appraiser’s understanding of
the country’s commitments.

The second level involves gauging government performance in implementing these

standards. Effort and effectiveness are both indispensable for evaluators who should inquire
into such matters as whether enough attention is paid by governments to promote organising,
bargaining and striking, and whether this leads to sufficient results which allow those
governments being qualified as “in compliance”.

The outcome of any evaluations made according to both effort and effectiveness will depend
upon government resources available at hand; how pressing are those claims (e.g., dealing
with HIV/AIDS or provision of clean water). Whether developing status or competing needs
limit. The third level of investigation focuses on labour market outcomes that are beyond
direct government control, such as the number of strikes. Nevertheless, this could also be
interpreted in different ways since similar outcomes (e.g., a plethora of strikes) may either
represent robust compliance or poor compliance.

Reliability of Information Sources

Qualitative and quantitative information sources that policy makers, NGOs, multilateral
lending agencies and other parties might use to assess how much progress has been made
towards GSP+ regarding each of the core labour standards for developing countries are
qualitative reports and quantitative data. The quality of those two types of information varies.
In terms of freedom to form associations and bargain collectively, the available evidence base
is likely to be limited to conditions within large firms in the formal sector who represent only
a small minority of companies operating in one country. This is not a representative sample
for how employees are treated in the entire economy.

Qualitative sources
Qualitative sources can also provide field reporting on treatment received by workers. In an
ideal situation, independent experts unrelated to governments, employers and workers being
interrogated would provide this evidence. However, in practice, qualitative sources are most
likely to reflect the viewpoint of the reporters and might be skewed. Selection bias occurs in
many of these reports that are complaint-driven. Others go through committee review or are
toned down for political reasons such as not to offend the country being investigated.

Quantitative Sources
The importance given to information collected from quantitative sources on whether a
company complies with a particular benchmark could vary depending on which standard is
under scrutiny. In cases of freedom of association and collective bargaining rights, however,
some numbers will be important including number and workers on strike but majority of
evidence to prove compliance will tend to lean towards the qualitative side instead of being
numerical. However, some data sets involving discrimination may be pivotal in the
investigation – differences between literacy rates among men and women or enrolment ratio
between men and women from different ethnic, tribal, racial or other groups may be used by
assessors as important benchmarks here. Similarly, an important indicator in judging whether
a country has effectively abolished child labour or is making sufficient progress toward that
goal is survey data recording changes in the number and proportion of children ages five to
seventeen who are economically active and the number of hours they work.

In an ideal world, though, there are rigid rules which survey samples must meet in order to be
a faithful reflection of the situation prevailing in the given economy and/or among countries.
The real world of data collection on labour markets is however different from this. There is
no comprehensive coverage of data for all periods within each country neither they can be
compared to other nations’ ones.

It is noticed that one should be very careful when making conclusions based on the available
information. In particular, it is very difficult to appraise what such information as strike
frequency, strike duration and person-days lost because of strikes tells us about freedom of
association and right to collective bargaining. Labour-management relationship might be
good while little employee participation could indicate labour repression with workers
expecting replacement or victimization if they strike. Also applies to other standards at work
that might be considered quite steadfast apparently but do not necessarily have lots of things
in common. Analysing relative wage levels can offer insights into discrimination. Lower
wages for women don't necessarily mean they're less productive, less trained, or less assertive
due to insufficient protection against retaliation when addressing pay disparities. Instead,
such discrepancies likely stem from systemic biases, unequal access to opportunities, and
societal expectations.

Effect of labour standards in international trade

Labour standards have various effects on international trade whether on developed nations or
the lesser developing nations (“LDCs”). At least the advocates of enforcing labour standards
in international trade agreements say so. To understand the basics, the advocates of labour
standards, strictly from an economic point of view state that poor enforcement of standards in
LDCs affect labour in developing nations. This is because, it is understood that products
made in LDCs naturally displace products made in developed nations. Furthermore
multinational corporations benefit from low labour standards in LDCs because it is more cost
effective and they can easily exploit labour. This view has also been advocated by OECD’s
study on trade and labour standards1 both in 1996 and 2000.2 However, this is just a

1
Organization for Economic Cooperation and Development (OECD). 1996. Trade, Employment and Labour
Standards: A Study of Core Workers’ Rights and International Trade. Paris: OECD.
2
Organization for Economic Cooperation and Development (OECD). 2000. International Trade and Core
Labour Standards. Paris: OECD.
hypothesis which has also been disproved by some.3 Therefore, there is no solid evidence that
countries with low labour standards prove to be more FDI driven.4

Conclusion

Labour standards therefore, do not define a country’s international trade specifically but they
do play a role in assessing a country’s development in trade policy. Where it has been seen
that both qualitative and quantitative sources play an important role in defining national
efforts, it is also pertinent to note that there is much to be done beyond seeking sources to
identify national efforts in harmonisation of core labour standards in trade agreements.

There is a need to keep working on numerous economic and social development initiatives
implemented by global organizations (such as the Organization for Economic Cooperation
and Development [OECD], United Nations [UN] agencies, and the World Bank), government
aid agencies, Non-governmental Organizations (NGOs), etc. These organizations should not
stop their efforts.

Poor countries, where there is widespread poverty, have weak educational systems among the
determinants of the problem. One way to deal with poverty in such countries is by providing
financial and technical support to address these root causes. Some initiatives that could be
used as successful models for implementing this approach include progress, among others.
The Mexican conditional cash transfer programs that have proven effective in increasing
school attendance among poor children serve a dual role of reducing child labour and offering
possibilities for a better life.5 Therefore, in solving the issue of substandard working
environments, it is proper to approach this matter as a part of enhancing opportunities and
standards of living.

3
Aggarwal, Mita. 1995. “International Trade, Labour Standards, and Labour Market Conditions: An Evaluation
of the Linkages,” USITC, Office of Economics Working Paper No. 95-06-C (June).
4
Brown, Drusilla K., Alan V. Deardorff and Robert M. Stern. 2002. “The Effects of Multinational Production
on Wages and Working Conditions in Developing Countries,” in Robert E. Baldwin and L. Alan Winters (eds.),
Challenges to Globalization. Chicago: University of Chicago Press.
5
Stern, Robert., Terrell, Katherine. 2003. “Labour standards and WTO”, Discussion paper 499 (August).
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