Defining Core Labor Standards

Groups that advocate improving labor standards overseas do not always define precisely which standards they are referring to. Yet the distinction is very important. The term "labor standards" has been used to refer to a wide range of employment laws, regulations, and practices including the right to form trade unions, the right to practice collective bargaining, prohibitions on child labor, minimum wages, overtime rates, limitations on hours worked per week, health and safety regulations, and prohibitions on forced and slave labor. Yet, these standards are not one and the same, particularly when considered from an economic development perspective. There are two key distinctions:

1) Core vs. Developmental Standards

Core labor standards generally refer to specific legal rights (e.g. the right to form unions) and prohibitions on certain abusive practices (e.g. bans on forced labor). These hard-won, universal social achievements represent the minimum conditions for a modern, progressive economy. What is underappreciated is that they create the framework conditions for the economy to operate efficiently. For example, prohibitions on discrimination allow all workers to be used in their most productive capacity and prevent prejudice or other social constraints distorting the labor market.¹ Any society, no matter how poor, should grant its workers such rights.

In contrast, developmental or economic labor standards refer to standards that will vary depending on the level of income in a given society. These country-specific standards include minimum wages and overtime rates. Setting uniform levels for such standards across both rich and poor nations (such as a global minimum wage) would render many developing countries uncompetitive (low wages in developing countries largely reflect their lower levels of productivity). Such uniformity would undermine the ability of many developing countries to provide their workers with any jobs let alone safe and stable employment. While the international community should help developing countries increase their incomes and thus raise their developmental labor standards in the long-run, these standards should vary from country to country and should reflect national income and development levels. ²

2) Unilateral vs. International

Another important distinction, also often blurred in the debate, concerns the way in which standards are set. Some commentators wish to see other countries adopting standards equal or equivalent to U.S. standards. For example, the group United Students Against Sweatshops has developed a code of conduct for all companies selling goods to its member universities. ³ The code requires companies operating overseas to meet U.S. federal regulations for health and safety in the workplace (unless domestic laws and regulations are higher than U.S. standards). It also includes requirements such as a maximum 48 hour week, mandatory vacation leave, overtime pay at a rate above the regular wage, and a "dignified living wage" for all employees. The latter is defined as sufficient to cover "basic needs" such as housing, energy, nutrition, clothing, health care, education, potable water, childcare, transportation, and savings.

Though the actual standards set under such an approach may be lower than U.S. labor market standards, parties in the United States define them in a unilateral way. Imagine if the German government decided to restrict all trade and investment with the United States until the U.S. adopted a German-style labor market with wages equal to German wage levels, six weeks mandatory vacation a year, and significantly higher payroll taxes to fund a state-run, universal pension system. Such an approach would seek to impose German social norms on U.S. workers and companies and would be flatly rejected by the U.S. Congress. Similarly, unilaterally determined U.S. standards seek to impose U.S. views and norms on weaker nations and are equally unacceptable to developing countries.

In contrast, there are internationally designed and recognized core labor standards and practices. The most well-known are those adopted by the ILO in its numerous conventions (see Appendix for details). The ILO is a tripartite organization made up of representatives from governments, business, and the labor movement and its 174 members represent nearly all of the world's governments.⁴ Therefore, ILO standards are a more legitimate basis for a discussion of the linkage between international trade and labor standards as they reflect an international consensus and they have been formulated with input from developing countries.

This paper will consider ways to promote the adoption of, and adherence to, core, international labor standards, recognizing that developmental standards can and should vary country by country, reflecting the level of development.

Trade is Good For Labor Standards

The common case made against trade and globalization in the area of labor standards is based on two related arguments. First, groups such as the AFL-CIO argue that increased trade and investment will result in lower standards both here and overseas as countries engage in a "race to the bottom" in the global economy.⁵ Second, these groups argue that it is unfair (and potentially damaging) for American workers to compete with low-paid workers in poor countries, many of whom work in unregulated environments with lax standards. Both of these arguments are false and they portray trade as the problem when it is really part of the solution.

First, there is no compelling evidence that countries that have opened their economies to international trade and investment have lowered their labor standards. A recent Organization for Economic Cooperation and Development (OECD) study of 44 developing countries that had significantly liberalized trade between 1980 and 1994 concluded "there was notably no case where the trade reforms were followed by a worsening of association rights."⁶ Indeed, freedom-of-association rights improved in 32 of the countries studied, albeit with some of the labor rights improvements coming before trade liberalization, some during, and some afterward. This reflects a result found in other studies namely that there is a small, but positive, correlation between openness to trade and higher labor standards. It seems that the two often go hand-in-hand as countries engage in broader reform processes, although the direction of causation is often unclear. More importantly, there is well-documented and strong correlation between income levels and high labor standards: rich countries, such as the OECD members, tend to have both high labor standards and high levels of income.⁷

Second, the main cause of lower wages in developing countries is not a specific ploy by their workers to undercut American wages or unfair competition from unregulated firms. Rather, lower wages reflect the lower levels of productivity found in developing countries. For example, while manufacturing wages in the United States are significantly higher than those in South Korea, American output per worker is double that of Korean workers.⁸ Hence, American workers receive higher wages and benefit from better working conditions because their higher wage costs are more than offset by their higher productivity. They work in highly productive factories and offices, with the best equipment and with high levels of education. In contrast, developing countries have much lower levels of productivity and desperately need new technologies, new ideas, and new markets. Only with increased access to such technology, and human and private capital--provided primarily through international trade and investment--will they be able to expand their economies and increase the standard of living for their workers.

Finally, increased economic integration brings many direct benefits to foreign workers and acts to raise labor standards overseas. For example, a recent detailed study of foreign companies operating in China noted:

[T]he relatively high salary and benefits, intensive training efforts, home financing experiments, and corporate culture of many (especially Western) foreign-invested enterprises have a virtuous impact on workers in China... indeed, probably only the withdrawal of foreign participants from China's marketplace could reverse the current positive trend.⁹

Similarly, the Business Roundtable recently produced a catalogue of examples of the wide-ranging benefits received by foreign employees of U.S. multinationals operating overseas. These include higher wages, a wide range of supplemental benefits (such as child care), and significant investments in education and training.¹⁰

In sum, the debate surrounding trade and labor standards is essentially a development question. That is, how do we ensure that developing countries achieve the economic growth necessary (though possibly not sufficient) to raise the standard of living for their populations? The approach adopted by groups such as the AFL-CIO ultimately implies that rich countries should limit (and even eliminate) trade with, and investment in, every country with lax labor standards. This would cut off U.S. trade with the very countries that most need it to grow their economies--the poorer developing countries. Such a policy is clearly misguided, and most developing countries oppose this approach. Indeed, the countries of sub-Saharan Africa are currently lining up to increase trade and investment ties with the United States, through the Africa Trade Bill being considered by Congress.¹¹ The United States should encourage policies to increase trade and investment with the world's poorest countries (along with other pro-development policies) as this will be a key factor in improving conditions for their workers.

The Trouble With Sanctions

Despite the theoretical and practical benefits of trade in terms of promoting economic growth, the idea of using trade sanctions to punish countries that do not adhere to or enforce core labor standards remains at the center of this debate. The main proponent of this approach in the United States is the AFL-CIO. In its current policy manifesto, the AFL-CIO calls on the WTO to "ensure that governments at all levels can continue to protect human and labor rights by withdrawing benefits from governments that fail to guarantee these rights."¹² In other words, the AFL-CIO wants to alter WTO rules so that members can raise barriers against trading partners that do not protect labor rights. Unfortunately, Vice President Al Gore seems to have adopted a similar approach as reflected in his statement that "future trade negotiations ought to include in the fabric of the agreement both labor and environmental components."¹³

However, there are several fundamental problems with this approach. First, trade sanctions, and in particular barriers to imports from countries with poor labor standards, are not a costless policy.¹⁴ As noted above, higher trade barriers will exacerbate problems of low economic growth and poverty in the targeted country by restricting its exports. They will hinder the very development that poor countries so desperately need. Higher trade barriers will also reduce choice and increase prices for consumers here in the United States. Similarly, import restrictions will raise the price of imported inputs for U.S. companies, reducing their competitiveness, and may disrupt long-term investment. Finally, even well-intentioned attempts to use sanctions are likely to be captured by protectionist interests here at home. That is, domestic U.S. industries are likely to champion higher trade barriers against foreign products in order to reduce foreign competition in their market and increase their own monopoly rents and profits. The purported benefits of imposing trade sanctions on a trading partner (i.e. an improvement in that country's labor standards) need to be weighed against these costs.

A second major problem with sanctions and higher trade barriers is that they are unlikely to be effective in achieving the desired outcome--in this case, improvements in labor standards overseas. Trade sanctions only affect industries that are engaged in exporting and not the whole economy. They have no impact on non-traded sectors, such as subsistence agriculture and the irregular employment sector, which often have the worst cases of labor rights abuses. A recent World Bank survey of the theoretical case for using trade restrictions to improve labor standards overseas concluded "the impacts of trade restrictions taken by foreign countries depend on the circumstances and could backfire if the aim is to improve the situation of workers with limited rights."¹⁵ In practice, there is little evidence of trade sanctions being used to effectively promote improved labor standards overseas. One recent review of countries petitioned under the Generalized System of Preferences (GSP) noted that "the 30 cases ended up being evenly divided between success and failure" and, even in these cases, it is difficult to know if it was the threat of sanctions or the focus of public attention that was the real motivation for change.¹⁶ Similarly, one recent survey of U.S. economic sanctions used for a wide range of objectives over the 1970s and 1980s showed that they resulted in positive outcomes in fewer than one case in five.¹⁷ Indeed, trade sanctions are a very blunt instrument to address the complex range of factors contributing to poor labor standards such as poverty, corruption, and political and regulatory weakness.

There are also significant practical problems with reforming WTO rules to allow members to sanction countries with a poor record on labor rights. First, most rule changes at the WTO require either a two-thirds majority or absolute consensus.¹⁸ With the current strong opposition from a coalition of developing countries, it is difficult to envision such a rule change ever being enacted. Indeed, one of the key lessons from the Seattle WTO ministerial is that developing countries are taking an increasingly active role in international trade policy and they are able to block policies that they perceive as against their interests.

Yet, even if the rules were modified and the United States were to bring a case against a country that violated core labor standards, it would be very difficult for the WTO to quantify the effects of lax labor standards. This is important because the WTO needs to measure the economic impact of a violation of its rules in order to determine the size of the sanctions that the complainant may introduce. For example, in a recent case, the WTO could clearly define the value of U.S. beef exports lost as a result of the European Union's import ban on hormone-treated beef. In a case of poor labor standards overseas, would the WTO allow the United States to ban all imports from that country, or just a fraction? If the United States wanted to increase tariffs, by how much would it be authorized to do so?

Finally, the WTO dispute settlement process either endorses or rejects trade restrictions imposed by individual WTO members on other members. For example, the WTO could rule on whether a Canadian regulation banning imports of goods made using prison labor was legal under WTO rules. Yet, in cases of egregious labor rights abuses, coordinated multilateral action against the offending country is likely to be more effective (rather than action by individual members). Such coordinated action cannot be organized through current WTO procedures.

Though at first glance it may seem easy to restrict trade with a trading partner in order to force that country to improve its labor standards, this policy tool is likely to be both ineffective and counterproductive in practice. Sanctions should, at most, be used as a last resort, and policymakers should recognize that the main outcome may simply be an expression of dissatisfaction with a certain practice, not its disappearance. Policymakers concerned with raising labor conditions overseas thus need to look elsewhere for more targeted, subtle, and effective policy tools.

Enforcing Labor Standards Through Trade Policy an Historical Overview

Before outlining our policy approach, it is important to note that attempts to link trade policy and international labor standards are not new. Indeed, Article 7 of the founding Charter of the International Trade Organization (ITO) recognized that "unfair labor conditions" create difficulties in international trade and required members to take feasible action to end such labor conditions within their own borders. This charter was never approved by the U.S. Congress and the ITO never came into being, but the inclusion of labor issues shows clearly that the architects of the post-war Bretton woods system recognized the potential linkages between international trade and labor conditions overseas.

More recently, the United States has tried to include labor standards in both the GATT and the WTO. In 1986, the United States proposed that the GATT consider "worker rights" during the Uruguay Round but its initiative was not adopted. In 1996, the United States proposed a working group on trade and labor standards at the WTO (this motion was defeated) and just last year, in Seattle, the United States again proposed such a working group. In all of these instances, a coalition of developing countries blocked the U.S. proposal.

Many commentators argue that this position reflects entrenched developing country opposition to the concept of international labor standards. Yet, two-thirds of WTO members, mostly developing countries, have ratified six of the seven ILO core conventions (see appendix for details).¹⁹ This suggests that developing countries are not concerned about the setting of core international labor standards per se. Rather, developing countries worry that the WTO will adopt a wider range of standards than the ILO (i.e. including development standards) and that developed countries will use WTO rules to close their markets to developing country goods and services. Therefore there is, clearly, a broad problem of building international support for any policy proposal in this area.

U.S. activity in the sphere of trade and labor standards is not limited to international bodies. The U.S. Generalized System of Preferences (GSP), implemented in 1976, offers preferential access to the U.S. market to developing countries. In determining which countries should receive lower tariff barriers, the President is required to consider, among other things, whether the country is taking steps to offer internationally recognized worker's rights. Between 1985 and 1995, the U.S. reviewed 63 petitions relating to 39 countries for labor rights reasons, though only 12 ended in the withdrawal or suspension of GSP rights.²⁰

Finally, Section 301 of the1974 Trade Act (as amended in 1988) also addresses labor rights and trade. This section deals with "unfair" trade practices of foreign countries and establishes mechanisms for the United States to take action against such practices. The definition of "unreasonable" trade practices that may be subject to legal action includes a persistent pattern of conduct that denies workers rights. This legislation actually goes beyond core ILO labor standards and includes language requiring countries to provide standards for minimum wages, hours of work, and the occupational health and safety of workers. This law has never been invoked and the U.S. Trade Representative has never received a petition to take action under this clause.²¹

This history suggests several premises. First, there is no lack of policy ideas in the debate. The difficulty lies in garnering support for any policy and enacting it. There is a particularly strong need to build international consensus around any policy at the multilateral level. Second, using trade policy tools and institutions to improve labor standards is unlikely to achieve the aim of improved labor standards overseas. Thus, it is important to consider other, not strictly "trade policy" tools, such as the work of the ILO and market-based approaches including social labeling and corporate codes of conduct.

Alternative Policy Tools

This section outlines an alternative approach to improving labor standards overseas one that rejects trade restrictions as the primary means for enforcing adherence to high standards. It focuses on steps that may be taken in addition to expanding international trade and investment, on the assumption that such general policies to expand economic growth will be pursued at the same time.

1) Strengthen and Reform the ILO

Simplify and broadcast the ILO's information on adherence to core labor standards. While the ILO's regular reports are detailed and provide a wealth of information about labor standards in all ILO member countries, they are not particularly effective tools. A simple annual scorecard of all ILO members, ranking them on their adherence to the core labor rights standards and any changes over time would synthesize the vast amount of information produced by the ILO and make it accessible to a wider audience. The scorecard would need to be easily understandable by the non-specialist, and accompanied by a media and marketing strategy to promote as wide a publication as possible.²² The ILO should also be more proactive in its dissemination of information about good and bad labor practices to other international bodies, NGOs, businesses, and individual consumers. In instances where ILO resources are stretched and insufficient, the ILO could contract with local NGOs to produce studies of labor rights abuses.

Give the ILO stronger enforcement powers. Under current rules, the ILO can take limited action against a member that exhibits continued and egregious violations of core standards.²³ The ILO should amend its constitution to create a new legal procedure under which countries that persistently and universally violate its core labor standards can be suspended and even expelled.²⁴ Actions under the new process should be widely publicized, bringing embarrassment to the government(s) and encouraging businesses to rethink their investments in the country concerned. Where a country exhibits improvement in its adherence to the core labor standards, its membership in the ILO could be reinstated.

Strengthen the U.S. commitment to the ILO's core standards. The United States has currently ratified only two of the ILO's eight core labor standards. As the world's largest economy and a strong proponent of human and worker rights, the United States should aggressively work to display leadership on this issue and ratify all of the core conventions.²⁵ It should also expend diplomatic pressure to push other countries to ratify them where they have not. Under the current situation, it is both difficult and hypocritical for the United States to advocate that other WTO members adhere to international labor standards that it has not ratified.

2) Forge Strong Links Between the ILO and WTO

Increase cooperation and information-sharing between the ILO and the WTO. The WTO already recognizes the ILO as the relevant body to set international labor standards and has declared its intent to increase its cooperation with the ILO. Yet little cooperation occurs in practice. One option is in the production of WTO "Trade Policy Reviews." The WTO undertakes these regular reviews of every member's trade policies at least once every four years. WTO Trade Policy Reviews should include a section--written by the ILO describing a country's ratification and enforcement of the ILO's core labor standards. One report (including information from the more legitimate ILO) would shine a brighter spotlight on abuses of labor rights by WTO members. The ILO and the WTO could also produce joint reports on labor rights practices in export-processing zones, which many countries have created specifically to facilitate trade.

Create a joint ILO/WTO working group on trade and labor conditions. This group would consider ways to ensure that the ILO and WTO's work is complementary and reinforcing, including new mechanisms to leverage information about worker's rights abuses and non-compliance with ILO Conventions. The group could also provide increased research on trade and labor questions, such the impact of foreign investment on labor conditions. Finally, it could consider the rule changes outlined below. In line with the EU's proposal in Seattle, this group should explicitly rule out setting core labor standards (as this has already been done by the ILO) and promoting trade restrictions to enforce labor standards overseas.²⁶ Setting up this group will not be easy and will face strong opposition from developing countries (see section on history above). Any proposal will have to clearly define the scope and limitations of such a group.

Encourage the WTO to recognize and promote core ILO standards. Under current WTO rules, any member can legally restrict imports made using prison labor from other WTO members (article XX (e) of the GATT) and seven countries have such laws on the books.²⁷ The WTO should formally state (through a rule change or an interpretation) that members are also free to restrict imports made with forced labor. The ILO conventions requiring the abolition of forced labor are the two most highly-ratified of the ILO's core conventions, representing worldwide condemnation of the practice of forced labor,²⁸ Including a clause on forced labor in the WTO would allow members to focus trade tools on specific firms and industries, rather than whole countries. It would also reinforce the legitimacy of the WTO and indicate its support for core labor standards. Yet, even this minor change would require a two-thirds majority of WTO members and may be difficult to achieve, given the position of many developing countries. Hence, the working group suggested above could include a WTO-wide discussion of such limited proposals to see if it is possible to garner widespread support. Any rule change that was introduced would thus, by definition, be the result of consultation and agreement between developing and developed countries and would not be unilateral protectionism.

3. Aid and Technical Assistance Paying the Price for Improvement in Enforcement

Lax enforcement of core labor standards is often a problem of insufficient resources and an inability of the government concerned to monitor and enforce laws already on the books (rather than a lack of political will). Simply demanding higher labor standards is unlikely to produce results. Developed countries need to support their calls for higher standards with significant resource commitments, both unilaterally and multilaterally. The Clinton Administration dramatically increased U.S. funding for the ILO's Program for the Elimination of the Worst Forms of Child Labor in 1999 and currently proposes $20 million for the Department of Labor to help developing countries improve their administration of labor laws and social safety net programs. Yet, more needs to be done. For example, the ILO, in conjunction with the World Bank, should increase assistance to developing countries for independent NGO monitoring programs, for legal aid programs for workers wishing to bring cases to the domestic courts, and for training in the application and prosecution of labor laws.

4. Market-based Approaches A Role for Civic Responsibility

Mechanisms designed to promote adherence to core labor standards overseas are not, and should not be, limited to formal government activities. A recent opinion poll by the Program on International Policy Attitudes at the University of Maryland showed that 75 percent of American consumers would be willing to pay $5 more for a shirt made under good working conditions than one made in a sweatshop.²⁹ It is thus in the interest of multinational companies to show that their business practices are benefitting workers around the world. Many U.S. companies have already adopted polices explicitly aimed at improving the lives of workers in their plants and factories overseas. For example, the Business Roundtable recently documented that more than 20 major U.S. companies have comprehensive corporate codes of conduct which apply to all of their operations worldwide.³⁰ Yet, much of the constructive work of multinationals goes unnoticed at home, while the media tends to focus attention on specific cases of abuses.

Companies, NGOs, and other groups interested in raising standards overseas need to become more sophisticated in their strategic use of information. The explosion of information technology and telecommunications (particularly the Internet) has made it easier to provide individuals with information about the way in which the goods and services they consume have been produced, even when the production occurs thousands of miles away. However, channeling this information in a clear, credible way to allow consumers to make informed decisions requires significant resources and a strong commitment by the parties involved. Some examples of schemes based on the power of informed consumption are outlined below.³¹

Voluntary Social Labeling

Partnership-Based Codes of Conduct for Multinational Corporations

Branding

These approaches are similar in their attempt to harness consumer values through market-based mechanisms and they attempt to ensure that a company's bottom line is directly affected by its adherence to core standards. However, such schemes need to meet several conditions. First, they need to be based on a genuine partnership between all interested parties the private sector, trade unions, and NGOs (both American and local). The government can play a unique role in bringing the parties to the table, providing legitimacy for the project and coordinating the different schemes. Second, these programs need external monitoring and review of company adherence to the rules on a continual basis. It is not enough for companies to sign up to these codes and then do nothing to implement them. Monitoring company behavior overseas is expensive and part of the cost may need to be covered with federal funding. Finally, there needs to be a strong enforcement mechanism. For example, companies that are found to be violating the code, should be publicly expelled from the scheme and possibly fined.

5. Trade Preferences a Carrot for Good Behavior

Some commentators have suggested that, rather than restricting trade with countries with lax labor standards, the United States should increase access to its market for countries with a good record on labor rights. In other words, it should expand on the Generalized System of Preferences, under which developing countries that meet certain conditions get preferential access to the U.S. market (lower or zero tariffs). This approach has the benefit of encouraging expanded trade, rather than restricting trade, and thus is less likely to be captured by protectionist interests. It also encourages and supports economic growth and development in the country concerned.

Since the GSP program expired in 1993, Congress has only renewed it on an annual or bi-annual basis, often after letting the program lapse for several months. It is difficult for developing countries to believe that the United States is serious about promoting their economic growth (and higher labor standards) when it disrupts their access to the U.S. market on an annual basis. Expanding and extending the GSP program is thus one step toward encouraging economic development in countries that respect core labor standards. To be a significant incentive for improved labor standards, the program would need to be extended for a significant time period such as ten years and may need to be broadened to some potentially sensitive sectors of the U.S. economy, such as textiles and agriculture.

Conclusion

Discussion of international trade and labor standards has long been, and is likely to remain, highly controversial. While it is tempting to promote the use of trade restrictions to force countries to improve their labor standards, there is no "magic bullet" solution. Indeed, sanctions are likely to be both ineffective in achieving higher labor standards overseas and counterproductive (they may be captured by domestic interests and act to reduce economic growth). We need a more nuanced and multifaceted approach largely outside the arena of traditional trade policy. This includes at least three components: promotion of economic growth in developing countries, through trade, investment, and other development policies; a strengthening and targeting of the ILO's work to improve adherence to its core standards, particularly in conjunction with the WTO; and non-government mechanisms such as partnership-based codes of conduct and social labeling schemes. None of these tools will alone solve the problem of labor rights abuses, but together they will help ensure that the benefits of the global economy are as widely shared as possible.

Appendix A

The Fundamental ILO Conventions

The ILO is the appropriate international body to set international labor standards. Its primary mandate is to seek "the promotion of social justice and internationally recognized human and labor rights," and it has seventy years of experience in this policy area.³⁷ Moreover, the ILO is a tripartite organization made up of representatives from governments, business, and the labor movement and its 174 members represent nearly all of the world's governments.

Since its creation in 1919, the ILO has authored more than 180 conventions relating to employment and working practices. However, it has identified seven conventions as representing the fundamental rights of human beings at work. These seven conventions define core labor standards as:

i. freedom of association and the effective recognition of the right to collective bargaining (no. 87 and no. 98);

ii. elimination of all forms of forced or compulsory labor (no. 29 and no. 105);

iii. elimination of discrimination in respect of employment and occupation (no. 111 and no. 100);

iv. effective abolition of child labor (no. 138).

All of these conventions (except the minimum age of employment) have been ratified by more than 120 (70 percent) of the ILO's members. The convention on child labor (no. 138) is the most controversial of the core ILO conventions and has only been ratified by 77 countries. The controversy arises because regulations regarding ages of employment vary across countries and many countries (including some developed countries) allow children to perform work in some fields or for some limited hours. This lack of consensus pushed ILO members to create a new convention (no. 182) in 1999. This convention calls for the elimination of the worst forms of child labor such as slavery, forced and compulsory labor, child prostitution, child pornography, and using, procuring or offering children for illicit activities, such as drug trafficking. This convention has already been ratified by 9 countries (including the United States) and it will become the eighth core convention once it comes into force.

In addition, the 1998 ILO Declaration on Fundamental Principles and Rights at Work declared that all ILO members, by virtue of their membership in the ILO, have an obligation to promote those rights listed above--even if they have not ratified the individual conventions.

The ILO promotes enforcement of its conventions through both a regular system of reporting on the behavior of individual countries and a complaints procedure in which any ILO member government, workers group, or employers group (including one from the country concerned) may bring a complaint against a member government. ³⁸ However, as the AFL-CIO and others rightly point out, the ILO enforcement mechanisms lack real teeth. There are no binding follow-up mechanisms if a country is found to be reneging on its commitments. Moreover, several countries that have ratified all or most of the core ILO conventions have poor labor rights records.³⁹ Indeed, few governments, policymakers, or consumers around the world are fully aware of the ILO's activities and the information it produces. Thus, it is necessary to improve enforcement of these core labor standards both by strengthening the ILO and with other tools.

Endnotes

1. Trade unions and collective bargaining can introduce distortions in the market, such as the separation of workers into "insiders" and "outsiders." The conclusion of efficiency is thus dependent on the assumption that the underlying institutional framework of the labor market does not encourage distortions

2. Many of the ILO's international conventions are developmental standards, but its seven key conventions (detailed later in the paper) are basically core standards.

3. Workers Rights Consortium Code of Conduct, United Students Against Sweatshops.

4. According to the State Department, there are 190 independent states.

5. "Developing countries . . . are forced to compete for foreign investment by offering the lowest level of protection for their workers." Workers Rights at the WTO and in U.S. Trade Policy, AFL-CIO, Publication number 99155-06-0-5, 5.

6. Organization for Economic Development, Trade, Employment and Labour Standards. A Study of Core Workers Rights and International Trade, (Paris: OECD, 1996) 112.

7. Similarly, many East Asian economies have exhibited high growth rates and improved bargaining power for workers over the past two decades. In "Do Labor Market Policies and Institutions Matter? The Adjustment experience in Latin America and the Caribbean," Labour, 1995, Martin Rama found that an indicator of labor market interventions increased with per-capita GDP.

8. 1996 figures. Data from the Bureau of Labor Statistics. Hourly direct pay for production workers in manufacturing ($13.91 in the United States, $6.78 in South Korea) and GDP per employed person ($59,534 in the United States, $29,208 in South Korea). Comparison is given as a rough example only.

9. Daniel H. Rosen, Behind the Open Door: Foreign Enterprises in the Chinese Marketplace, (Washington, DC: Institute for International Economics, 1999), 123.

10. Corporate Social Responsibility in China: Practices by U.S. Companies, The Business Roundtable, February 2000.

11. H.R. 434, The Africa Growth and Opportunity Act. This passed both the House and the Senate in 1999 and is currently in conference.

12. Workers Rights at the World Trade Organization and in U.S. Trade Policy,AFL-CIO, Publication number 99155-06-0-5., Petition, 8.

13. Letter to National Association of Manufacturers, February 18, 2000. This policy position implies support for using trade restrictions as the enforcement mechanism for labor and environmental standards.

14. Sanctions and trade barriers can also involve bans on exports from the United States, but in the context of labor standards, the debate is usually premised on the assumption that the United States would impose barriers on imports from countries with lax standards.

15. Keith E. Maskus, Should Core Labor Standards be Imposed Through International Trade Policy, (Washington, DC: World Bank International Trade Division, 1997), 50.

16.Kimberly Ann Elliott, Preferences for Workers? Worker Rights and the U.S. Generalized System of Preferences, (Washington, DC: Institute for International Economics, 1998), 14.

17. Hufbauer, Schott, and Elliott, Economic Sanctions Reconsidered,(Washington, DC: Institute for International Economics, 1990).

18. The majority required depends on the rule change being proposed. For example, an amendment to the Final Act (the founding charter of the WTO) requires a two-thirds majority of WTO members to be passed and a consensus in the Ministerial Conference to make the rule changes binding on all members. In contrast, a legally binding "interpretation" of a WTO rule requires only a simple majority.

19. 87 of the 135 members. Author's comparison of the WTO membership list and the ILO's list of countries that have ratified the core conventions.

20. Pharis J. Harvey,U.S. GSP Labor Rights Conditionality: Aggressive Unilateralism or a Forerunner to a Multilateral Social Clause?(Washington, DC: International Labor Rights Fund)

21. Maskus notes that this is because any action will be more likely filed under GSP statutes rather than Section 301. The bill also includes a disclaimer that a country is exempt from action (i.e. sanctions) if it is taking steps to improve labor standards or if its policies and practices are consistent with its level of development. These qualifications may weaken the likelihood of a successful case being brought under this legislation. Similarly, the lack of action under GSP laws may have convinced parties that a labor rights case brought under Section 301 is unlikely to be successful.

22. As part of its follow-up to the 1998 Declaration, the ILO has adopted a more rigorous monitoring program, including an annual review of ratification of the core conventions and a global report examining one of the four key areas in depth in terms of ratification of conventions and steps taken by countries to improve standards. However, this follow-up is not especially media-savvy, may simply duplicate other reports, and entails no specific marketing or publication strategy beyond sending the reports to the Governing Body of the ILO.

23. In response to persistent violations of core ILO conventions in Myanmar, the ILO recently decided to stop inviting representatives from the Myanmar Government to ILO meetings and to terminate all technical assistance projects involving Myanmar. These steps were taken under Article 33 of the ILO constitution the first time this clause has ever been used.

24. This will require a two-thirds majority of ILO members.

25. Ratifying some of the conventions may require modification of U.S. laws. Others are being held up in the Senate for political reasons. The point here is that international institutions such as the ILO rely on the commitment of their members, and partial support for the ILO from the United States and other nations undermines its credibility.

26.This was the formal position of the European Union in the run-up to Seattle. The Council of Ministers proposed the creation of a "Joint ILO/WTO Standing Working Forum on trade, globalization, and labor issues" and it noted that discussion of labor standards should be achieved "through additional improvements in market access for developing country exports, and not through trade-restrictive measures." (European Council of Ministers Council Conclusions, October 22, 1999, Document 12092/99).

27. The United States, the United Kingdom, Canada, New Zealand, South Africa, Argentina, and Spain all have laws on their books. For details see Steve Charnovitz, The Influence of International Labor Standards on the World Trading Regime

28. No. 29 has been ratified by 150 countries and No. 105 has been ratified by 140 members.

29. Steven Kull, Americans on Globalization:A Study of U.S. Public Attitudes (College Park, MD: Program on International Policy Attitudes, University of Maryland, November 16, 1999).

30. Corporate Social Responsibility in China: Practices by U.S. Companies, The Business Roundtable, February 2000. Many of these codes of conduct do not, however, mirror the ILO conventions and do not include clauses recognizing collective bargaining or the1` right to form trade unions.

31. There is a plethora of such programs around the world. For example, the search engine Yahoo lists a special category for groups fighting sweatshops under groups fighting sweatshops

32. For more information see www.rugmark.org

33. For more information see www.cepaa.org

34. The two trade union members of the partnership and one faith-based group resigned in 1998 in protest of several aspects of the code of conduct (it did not include a requirement for a living wage) and the proposed methods of monitoring (only 10 percent to 30 percent of company facilities would be monitored and companies could choose which ones would be inspected). This has somewhat undermined the legitimacy of the program and highlights the difficulty in identifying a code of conduct that is acceptable to a wide range of groups with different interests.

35. For more information see www.ethicaltrade.org

36. For more information see www.bodyshop.co.uk

37. This definition of the ILO's mandate is taken from the ILO website

38. Complaints about right-of-association and collective bargaining may be brought against any ILO member, even one that has not ratified the specific conventions.

39. Examples include Indonesia and Bangladesh. For a list of countries who have ratified the core ILO conventions see www.ilo.org

Jenny Bates is the trade and economics policy analyst for the Progressive Policy Institute.