Free Trade Agreements and Global Labour Governance

The European Union’s Trade-Labour Linkage in a Value Chain World

Adrian Smith, James Harrison, Liam Campling, Ben Richardson, Mirela Barbu

• Publisher: Routledge
• Year: 2020
• Print ISBN:
  9780367202064
• eBook ISBN:
  9780429535772
• Topic: Politics & International Relations
• Subtopic: Political History & Theory
• Index: Politics & International Relations

Exploring the contentious relationship between trade and labour, this book looks at the impact of the EU's 'new generation' free trade agreements on workers. Drawing upon extensive original research, including over 200 interviews with key actors across the EU and its trading partners, it considers the effectiveness of the trade-labour linkage in an era of global value chains.

The EU believes trade can work for all, claiming that labour provisions in its free trade agreements ensure that economic growth and high labour standards go hand-in-hand. Yet whether these actually make a difference to workers is strongly contested. This book explains why labour provisions have been profoundly limited in the EU's agreements with the CARIFORUM group, South Korea and Moldova. It also shows how the provisions were mismatched with the most pressing workplace concerns in the key export industries of sugar, automobiles and clothing, and how these concerns were exacerbated by the agreements' commercial provisions. This pioneering approach to studying the trade-labour linkage provides insights into key debates on the role of civil society in trade governance, the relationship between public and private labour regulation, and the progressive possibilities for trade policy in the twenty-first century.

This book will appeal to research scholars, post-graduate students, trade policy practitioners, policy researchers allied to labour movements, and informed activists.

1 The trade-labour linkage revisited

Introduction

Three days into his presidency, Donald Trump signed an executive order withdrawing the US from the Trans-Pacific Partnership, a regional free trade agreement (FTA) negotiated among 12 states accounting for 40 per cent of global economic output. In front of the world’s media at the Oval Office signing ceremony, Trump declared: ‘We’ve been talking about this for a long time. It’s a great thing for the American worker’ (Smith, 2017). A few months later, and with the future of the liberal trading system itself now seemingly in the balance, the European Commissioner for Trade, Cecilia Malmström, made a pointed retort to Trump’s decision. Reflecting on the EU’s progress in trade talks with Japan she said: ‘For every country that wants to build walls, there are those who want to build bridges… . We can offer an economic and social boost for our businesses, our workers, our consumers, our people, whether they are in Tokyo, Tallinn or Toulouse’ (Malmström, 2017, italics added).

The relationship between trade and labour, reignited in this transatlantic dispute, has long been subject to passionate debate. In 1864, the inaugural address of the International Working Men’s Association (2000: no page numbers) began on exactly this topic, rejecting forcefully the assumed link between increased trade and poverty reduction in imperial Britain and its colonies: ‘No free trade … will do away with the miseries of the industrious masses’. International trade unions in the twenty-first century have also been wary of free trade, though some, like the European Trade Union Confederation (2017: 1) have offered qualified support for FTAs where they are considered to advance ‘the creation of decent jobs, the protection of fundamental rights and the interests of workers’. Yet this kind of conditional liberalisation can be read as one that privileges some countries over others. This was the case at the first ministerial conference of the World Trade Organization (WTO) in 1996, which collapsed in part because the US and some European states sought to put a social clause on the negotiation agenda. With the aim of preventing ‘social dumping’ the proposed clause would have required WTO members to recognise basic labour rights and collaborate with the International Labour Organization (ILO) to ensure they were observed. It was loudly dismissed by delegates from developing countries, Malaysia and Egypt among them, who saw it as an attempt to undermine their national sovereignty and economic competitiveness (Leary, 1997).¹ Cutting across the distributive axes of class and nationality, meanwhile, has been gender. Despite the feminisation of the labour force being central to the growth in international trade during the late-twentieth century, in the major export processing zones of Asia and Latin America among other places, women have remained subject to discriminatory and exploitative employment practices (van Staveren et al., 2007).

In short, there is continued disagreement as to whether, and how, trade really can work for all. This book contributes to the debate by investigating the use of labour provisions in EU FTAs. According to the European Commission (2015c: 5) these provisions are meant to ensure that trade liberalisation leads to economic growth and higher labour standards, thereby demonstrating that EU trade policy is ‘not just about interests but also about values’. Contained in legally binding agreements directly affecting the commercial interests of states, there are good reasons to think that such labour provisions could make a real difference to workers’ rights (see ILO and IILS, 2013). Our research seeks to ascertain how effective they have been in practice. Whose values do they reflect and what are they meant to achieve? What changes, if any, have they produced in the way that work is actually governed and experienced? And to what extent do they connect with the struggles of workers involved in the production of goods traded internationally? Answers to these questions are relevant not just to the evaluation and evolution of EU FTAs but also to the legitimacy of contrasting trade strategies in the twenty-first century; strategies that continue to make appeals to the fate of ‘the worker’ both at home and abroad.

Global labour governance through trade policy

Labour standards can be thought of as individual and collective rights at work. They cover issues like minimum wages, maximum working hours, equality of treatment, workplace safety, the right to associate and take industrial action, and many more. Dense bodies of statutory law and collective bargaining agreements have been built up at the national level to govern labour standards. Yet advocates of worker’s rights have continually looked to extend these protections beyond the national border, be it to promote universal human rights and working-class solidarity or prevent ‘unfair’ competition from goods and services produced under lower labour standards. One way of doing this has been to use international regulation to establish a universal floor in labour standards beneath which no country could drop. For more than a century, the ILO has been at the heart of efforts to promulgate international labour law in the form of conventions that Member States are urged to ratify and implement through their domestic legal systems. This proved to be no panacea to the worst forms of labour exploitation, not least because national governments have often been unable or unwilling to commit to this process. Grafted on to the international labour rights regime have thus been transnational regulatory processes. These have been mobilised primarily through cross-border networks of non-state actors, albeit often underpinned by state power and coordinated by international organisations. Examples include codes of conduct and certification schemes for cross-border supply chains, global framework agreements negotiated between trade union federations and multinational companies, social principles adopted by institutional financial investors, and multi-stakeholder initiatives such as the United Nations Global Compact, the ILO’s Better Work programme and the OECD’s Guidelines for Multinational Companies. It is this complex set of international and transnational regulations that the term ‘global labour governance’ is intended to capture (Hendrickx et al., 2016; Meardi and Marginson, 2014; Fransen and Burgoon, 2017).

Labour provisions in FTAs have been identified as a potentially important instrument of global labour governance, whose efficacy to improve labour standards independently and in concert with other forms of regulation is under-explored (Meardi and Marginson, 2014; Mosley, 2017). This nascent area of research has been stimulated by the re-emergence of the ‘trade-labour linkage’ on the contemporary political agenda. The state strategy of using international trade policy to govern labour standards has a long and varied history dating back to the nineteenth century. But, with the rejection of the social clause from the negotiating framework of the WTO, it appeared that it would no longer be relevant to the regulation of global capitalism in the twenty-first century. The salience of this particular decision is reflected in the academic scholarship. The most highly cited journal articles on the trade-labour linkage are still those asking whether, and how, labour provisions ought to be brought into the sphere of multilateral trade regulation (Bhagwati, 1995; Charnovitz, 1987; Lee, 1997). These research questions have since been surpassed by the evolution of international trade law. From the 1990s onwards there have been ‘increasingly proactive’ attempts by states to include labour provisions in bilateral trade agreements (International Labour Office, 2016: 20). Between 1994 and 2019, there were 85 trade agreements with labour provisions put in place, which together covered 138 national economies (ILO, 2019a: 17). Indeed, for the last five years of this period it was more common for FTAs with labour provisions to enter into force than without them. While for many years then, the notion of a trade-labour linkage was discussed largely in hypothetical terms, it can now be considered practically as a way in which global labour governance is conducted.

Labour provisions in EU free trade agreements

The empirical focus of this book is on the labour provisions of EU FTAs during the period 2008–2019. There are a number of reasons why we make the EU and its bilateral trade relations central to our study of the contemporary trade-labour linkage. First, the EU is one of the world’s largest economies, accounting for 15.8 per cent of global GDP in 2019, based on purchasing power parity (IMF, 2019). It is appropriate to refer to the EU as a single economy in this context due to the unified trade relations between its Member States and the rest of the world, known in EU legislation as the Common Commercial Policy. Trade policy has been a supranational competency since the formation of the European Economic Community in 1957, exercised in earnest from the 1980s.² This means that it is the EU institutions, led by the Directorate-General for Trade of the European Commission (DG Trade), not national governments, that have exclusive competence for legislating on trade matters and negotiating and concluding trade agreements on behalf of all Member States. EU trade policy thus applies to a large internal economy, and, by extension, also has the potential leverage to effect change in the domestic policies of its trading partners by using access to the Single Market as a bargaining chip; what scholars have referred to as ‘trade power’ or ‘market power’ (Meunier and Nicolaïdis, 2006; Damro, 2012). Moreover, the very fact that it has appeared capable of transcending nationalism on the basis of common principles is considered by some to also confer upon the EU a ‘normative power’ wherein it can effect change by diffusing shared expectations through the international system (Manners, 2002).

Second, the EU has been particularly proactive in signing FTAs. Multilateral coordination of trade liberalisation has diminished with the failure to complete the 2001 Doha Round of WTO negotiations, leading many states to turn to bilateral coordination to further their agendas. Between 2001 and 2019, there were 212 new reciprocal trade agreements that came into force. The EU was party to 27 of these: more than any other WTO Member State.³ By 2018, 31 per cent of all goods traded by the EU with the rest of the world were covered by FTAs, while pending agreements with Japan, Singapore, Vietnam and the Mercosur countries would see that figure rise to 41 per cent (European Commission, 2019e). Others are in the pipeline, including negotiations on a prospective FTA with the UK as it begins its secession from the EU. In short, for the last two decades the thrust of new developments in global trade governance has been in FTAs, with the EU firmly at the forefront.

Third, labour provisions have featured significantly in EU trade-policy-making. From the mid-1990s, they were most prominent in the EU’s unilateral system of preferences for developing countries, which include commitments in relation to labour standards under its Generalised Systems of Preferences Plus (GSP+) scheme. While still important to the beneficiaries, by 2019 only eight countries were obtaining preferential access to the EU market as a result of GSP+, with a number of previous recipients now signatories of EU FTAs instead (European Commission, 2019d). During the 2000s, references to labour standards in those FTAs ‘widened and deepened’ (Van den Putte and Orbie, 2015: 264). An important institutional factor was the 2007 Lisbon Treaty that accorded greater influence to the European Parliament; a body that has tended to emphasise the labour, human rights and environmental dimensions of trade. The first agreement to be signed after the Lisbon Treaty was the 2008 Economic Partnership Agreement (EPA) with the CARIFORUM group in the Caribbean. This contained more concrete references to the ILO’s core labour standards than previous FTAs, allowed for disputes on social issues to be referred to government consultations and independent experts for resolution, and institutionalised dialogue about the trade agreement within a civil society mechanism. Since the 2011 FTA with South Korea, such provisions have been packaged with rules around environmental protection in a Trade and Sustainable Development (TSD) chapter. These chapters have become an integral part of the EU’s ‘new generation’ trade agreements, understood within Brussels as comprehensive agreements that go beyond WTO rules to address ‘behind the border’ issues such as competition policy, regulatory cooperation, and public procurement contracting (Bendini, 2015).⁴ Not only are TSD chapters a standard part of all new EU FTAs, but they also feature in proposals for renewed or ‘modernised’ FTAs with existing signatories, as well as the EU’s investment-only agreement with China (European Commission, 2017b).

While there is some variation across the different agreements, the TSD chapters in EU FTAs share three key types of provisions. First there are substantive standards. Most importantly, all agreements require that the parties commit to upholding the ILO core labour standards which cover freedom of association and collective bargaining, forced and compulsory labour, child labour, and workplace discrimination. The parties also commit to promoting the ILO’s Decent Work agenda. Second, there are procedural commitments. These include commitments on: conducting dialogue and cooperation between the parties; transparency in introducing new labour standards measures; monitoring and reviewing of the sustainability impacts of the agreement; and upholding levels of domestic labour protection. Third, there are institutional mechanisms. All agreements since the EU-Korea FTA have a tripartite format.⁵ Committees of state/EU officials from the two parties are established to oversee the implementation of the TSD chapter. These are a...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Preface
• List of abbreviations
• 1 The trade-labour linkage revisited
• 2 Historicising the trade-labour linkage
• 3 Assessing the effectiveness of the trade-labour linkage
• 4 The EU-CARIFORUM Economic Partnership Agreement and the Guyanese sugar industry
• 5 The EU-Korea Free Trade Agreement and the Korean automotive industry
• 6 The EU-Moldova Association Agreement and the Moldovan clothing industry
• 7 The EU trade-labour linkage: present limits, future possibilities
• Bibliography
• Index