Question

Discuss the reasons why using trade barriers will enforce labor or environmental standards maybe efficient thannother measures.

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Answer 1

To address the problems, many labor advocates propose that new trade agreements include special provisions that permit one country to restrict the imports of another country if the country is found to be in violation of internationally accepted standards of labor protection. Proponents say that this threat of trade penalties or sanctions will encourage developing countries to improve their labor laws strengthen their enforcement of those laws, simultaneously. This could help both developing and industrial country workers. Currently, the U.S. has economic sanctions on a number of countries that violate human rights or basic tenets of American government, such as Cuba and Iran

Proposals to include labor provisions in new trade agreements have been opposed by developing country governments and businesses for one or more of the following reasons:  

• Developing country governments and businesses worry that those trade agreements that seek to raise labor standards will be manipulated for protectionist purposes—that their exports will be blocked on the ground that their labor standards are not sufficiently acceptable when the true motivation is to protect uncompetitive firms in industrial countries.
• Many developing country governments and economists also argue that international pressure to improve labor standards detracts from developing countries with only one big advantage: a cheap supply of labor. They make the case that pressure to raise labor costs takes away from their comparative advantage, and that this pressure only benefits workers in rich countries.
• Still others argue that trade sanctions are an imprecise and unwieldy means for improving developing country’s inferior labor conditions, which often have complex economic and social causes. They argue that labor conditions can best be improved over time by promoting development that improves productivity. By increasing the size of a nation’s labor force, economic trends tend to pull up wages and working conditions automatically.

Efforts to introduce the issue of labor standards into the WTO, which have been led primarily by the United States and other industrialized countries, have been fiercely opposed by other member states, particularly developing countries. These representatives invoke all of the above concerns to argue that efforts to promote labor standards tend to inhibit their economic development.

One of the most significant advances in the Uruguay Round, for example, was the expansion in the number of countries brought under disciplines on standards first negotiated in the Tokyo Round of the GATT. Many U.S. trading partners, especially the developing nations of Asia and Latin America, will require assistance in constructing modern standards and conformity assessment regimes. By providing this assistance, the United States has an opportunity to support successful implementation of the GATT, as well as U.S. global export expansion and economic progress.

Trade and the expansion of global exports are directly linked to U.S. economic vitality and future standards of living. Exports provide for domestic economic growth, increased labor productivity, and creation of jobs in the manufacturing and service sectors that pay wages well above the national average. Future U.S. economic success, as a result of these factors, centers to an increasing extent on removing barriers to international trade, as well as creating innovative export promotion programs to help expand markets for U.S. goods and services overseas.

The main objective of labour standards is to facilitate international trade. Fundamental labour standards encompass core standards, codes of conduct, and also account for social advocacy and a consumer's right to know the terms of trade policy. A consumer's right to know entails seeking sufficient information so that the consumer can choose or not choose to consume a product that is produced in ways he/she considers unacceptable. Social advocates want labour standards in developing countries to improve, and see trade agreements as a means to affect change in foreign countries. In response, large organizations have developed corporate code of conduct for labour standards in firms to which it outsources orders. These codes are in response to consumer concerns and activist pressures about labour standards). It makes good business sense to include enabling codes for the betterment of international trade, reputation and socio-economic development.

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