Trade, Labour and the WTO: What Next?

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Trade, Labour & The WTO: What Next?

The upcoming UNCTAD meeting in Bangkok will be the site of significant positioning on WTO issues. It is know that the EU has been considering using the event as a platform to announce market access measures in support of the least developed countries. This is regarded as a strategic step designed to further solidify the European relationship with the WTO majority. Japan is expected to join the EU in this effort.

There could be movement on Dr. Supachai Panitchpakdi's proposal to have a non-WTO forum examine the trade and labour issue. In a statement of December 1, 1999, he said that there should be a "high level soul-searching dialogue on trade and labor." In his view, the proposed dialogue would be a "one-off meeting with no binding commitment." In his view, whatever the outcome of the dialogue, trade sanctions should not be accepted as a means to promote the adoption of core labour standards. He suggested a dialogue could be organised by "a neutral party" such as UNCTAD or the UN ECOSOC, with participation by the WTO and the ILO, as well as WTO member country decision-makers.

As Dr. Supachai Panitchpakdi will chair the UNCTAD meeting, UNCTAD itself is well positioned to assume such a role.

Such a development is wildly inconsistent with existing US trade policy on the subject, and could present an interesting challenge for the Clinton Administration. As primary season begins, the potential Supachai maneuver will need to be resisted vigorously.

Although such an initiative appears to work around the fracture in WTO on the issue, this is true only at the process level. In other words, one can keep labour out of the WTO, but one cannot keep the WTO out of labour.

Specifically, the WTO has labour concerns embedded within its rules. GATT(1947) Article XX(e) provides that Members may adopt or enforce measures relating to the products of prison labour. This exception, like all exceptions, is conditioned by the requirement that such a measure not be a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or be a disguised restriction on international trade. While, the question is an open one, it is not clear why prison labour was singled out as prima facie subject to restriction. In the contemporary context, the term "prison labour" might be viewed as one form of forced labour.

Similarly, the nullification and impairment provisions of Article XXIII offer an interesting perspective on the issue of core labour standards. Essentially, should a Member consider that the attainment of any objective of the GATT is being impeded as a result of any measure applied by another Member, whether or not it conflicts with the provisions of the GATT, the Member may initiate a bilateral process to resolve the matter. In this regard, one of the main objectives of the GATT is to raise living standards.

If a bilateral process fails to produce satisfactory results, the WTO is obliged to investigate the matter, and make recommendations. Provision is made for consultation with any appropriate inter - governmental organisation, opening the door to the direct involvement of the International Labour Organisation. Significantly, if the circumstances are deemed serious enough, the WTO is empowered to authorize suspension of concessions.

Both the Article XX(e) and Article XXIII provisions contain the seeds of a potential test case for the WTO's dispute settlement process. Though the outcome may be uncertain, such a case would reinforce the existing reality of the WTO's mandate in respect to trade-related labour matters. For those who would wish to affect a direct trade - labour linkage, it appears there is a compelling opportunity to bring the issue inside WTO's chambers.

There are other opportunities for labour to be introduced in unavoidable ways. For example, the mandated services negotiations represent an opportunity to lay down markers on labour issues. Specifically, it is possible that there will be market access requests associated with labour related service providers. This is an option the US may find hard to resist. Such a request might include access for union training service providers, union management services, and other labour association services providers.

It remains to be seen how far the investment issue will be carried this year. However, it is clear that any discussion of investment incentives is bound to include the labour dimension. There could for example be attention drawn to labour related derogations from national and local laws and regulations.

In effect, there are a variety of substantive approaches to addressing labour issues within the existing WTO framework. Should US efforts continue to flounder to achieve a working party on the issue, there is a possibility that these other avenues will become relevant.

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