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  • Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.


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February 25, 2008

Labor standards do not equal rising living standards

To listen to some of the recent chatter in the presidential debate about trade policy, you would think that the only problem with NAFTA is that it didn't contain core international labor standards in the main body of the text. As we've pointed out, core labor standards are only the beginning of what needs to be fixed with the failed NAFTA model, and many labor unions think even the labor standards achieved in the Peru FTA - supported by all the top contenders for president - didn't take us to where we need to be on that issue alone.

But this debate even obscures a larger issue: that labor standards are not going to put food on anyone's plate. As our own Lori Wallach notes over at Huffington Post,

Strong labor standards are necessary, but they are not sufficient to alter trade agreements' damaging economic outcomes for Americans. Labor rights requirements in trade pacts will provide workers in trade partner countries with essential tools to organize for improved wages and conditions over many decades as part of creating a social contract that may take a century to establish, as it did in the United States. However, a future president has a duty to secure tangible gains for Americans who are losing their jobs and seeing their wages stagnate today, and who fear for their children's futures in the coming decades. That requires changing the status quo trade model by eliminating provisions that promote immediate offshoring of U.S. production and jobs. The foreign investor protections included in these agreements directly incentivize offshoring by removing the risks normally associated with relocating to low-wage developing countries.

Indeed, the *best* case scenario for labor rights in an FTA over the short-to-medium term is that there is a lawsuit brought by the U.S. government against a developing country for failure to comply with labor rights (subject to multiple and difficult to meet conditions). This could be awesome, no doubt about it, and would provoke an important debate. But lawsuits alone will not put food on the table in either the U.S. or Mexico.

How did we get into the position where labor rights became the outer horizon of the thinkable? For some insight on the question, I highly recommend this article by Robert Howse, "From Politics to Technocracy". Howse is probably more sympathetic to the overall GATT-WTO agenda that we here at EOT, which makes some of his insights all the more interesting. His read on history is that the basic trade policy infrastructure was drawn up in a time of Keynesian welfare states in developed countries, where "one simply assumed a certain toolbox of effective nontrade policy instruments, and the stability and viability of the social bargains within states as well, or at least the stability of institutions that construct and reconstruct such social bargains." In other words, many in the group assumed massive domestic redistributive interventions in the "free market" were just fine, while they should be limited in actions between governments internationally. All of this, it was thought, could be technocratically managed, if one were to restrict "politics" to the domestic sphere.

But the growth of neoliberalism in the 1970s and 1980s (which I would argue was fed by this very group of trade lawyers) decimated the ability/willingness of states to have effective domestic responses to economic problems.

And meanwhile, trade law was delving deeper and deeper into domestic spheres like domestic environmental law, making rulings in several GATT-WTO cases that "were understood to be making a choice that trade liberalization should trump environmental values." And of course there's the famous inclusion of intellectual property rights enforcement at the WTO, and "there is no particular reason to believe on the basis of economics that increasing intellectual property protection will increase aggregate domestic welfare."

But as this group slowly allowed non-trade issues like IP and environmental policy to be considered within the WTO framework, they lost their ability to on principle exclude labor rights (i.e. domestic issues) from the trade discussion. In Howse's estimation, as they surrendered the technocratic "high ground", they were washed back into the world of politics:

"it constituted an admission that the system rests on an essentially contingent, and in some measure arbitrary, dividing line between what is acceptable and unacceptable in the way of domestic regulation... Thus, those with a different intuition about the dividing line could simply say: we want the line drawn here, not there, to which insiders could summon no good response based on the authority of expertise, having admitted that the dividing line is preeminently a judgment call..."

To really gain some insight into how labor standards came to be the center of the discussion, we'd have to also look at social movement changes within the labor movement itself, and how they moved from burning Japanese cars to calling for labor rights reforms. But that's for another time...

I would argue that politics cannot ever be absent from international OR domestic affairs. To the extent that "Keynesians" became detached from local and national political economic realities when they decamped to Geneva, they too bear responsibility for the corporate takeover. After all, if your policies can't work in the real world (or require too many technocratic assumptions about the separability of politics from policy), it's not the world that's at fault, it your policies.


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