Toward a New Foreign Policy.

The U.S. proposal to the ministerial conference in Seattle added some refinement to its predecessors. Earlier proposals had focused on the fact that linkages exist and that a working party should address those labor rights now referred to as core. The latest proposal included specific issues that could be considered by the working party: e.g., forced or exploitative child labor and export processing zones. More interestingly, the proposal called for consideration of "positive trade policy incentives and core labor standards."

In the hard bargaining that characterizes WTO negotiations, it is difficult to recommend amendments to agreements that are not undertaken within the context of official negotiations. If the U.S. wants to expand its right to examine the relationship between trade and labor standards in developing countries, it should expect to offer quid pro quos for its proposals and to take on reciprocal obligations.

U.S. policy should recognize that market access is a major issue for developing countries, especially in textiles, a crucial industry in the context of employment and development. The U.S. could accelerate its implementation of the CTA, at least as an implicit quid pro quo, in return for developing country support for a working party. Since the U.S. is already committed to liberalization in the CTA, however, this concession would not represent a fundamental balancing of rights and obligations.

An even more attractive offer would be U.S. willingness to consider a "multilateral agreement for movement of labor," perhaps by amending the existing provision in the General Agreement on Trade in Services for movement of "natural persons" (noncitizens). Such an agreement would have to be compatible with ILO and UN conventions on migration and migrant worker rights.

A more suitable balance could be established between developed countries' social concern for labor standards and developing countries' social and cultural concerns for traditional knowledge and farmers' rights--e.g, protection of indigenous communities' rights to biological resources, and recognition of farming communities' rights to cultivated plant varieties. This could be done within the WTO Trade-Related Intellectual Property Agreement.

More balance could be established within a working group by including in its mandate an examination of developed country legislation and trade measures involving unilateral action based on labor standards. For example, section 301 of the U.S. Omnibus Trade and Competitiveness Act allows the U.S. president to impose or restore restrictions on imports of any countries that practice a persistent pattern of denial of recognized international worker rights. The prospects for protectionist action based on Section 301 could be evaluated in a working group. Antidumping action by the U.S. could also be scrutinized, if such action involved labor standards.

The 1996 Singapore ministerial declaration on trade and labor renewed member governments' trade ministers' "commitment to the observance of internationally recognized core labor standards." However, it merely noted that the WTO and ILO secretariats "still continue their existing collaboration." U.S. policy should vigorously press for ILO observer status in all relevant WTO councils and committees. In this connection, the ILO could contribute to the WTO Trade Policy Review Mechanism assessments of labor standards with a view toward the contribution their improvement could make to increased productivity and export performance.

The U.S. should press for more than the Singapore commitment to "existing collaboration." Stronger and more cooperative relations would allow for examination--perhaps in a working group--of how the declaration could be used for improving core labor standards as opposed to undermining comparative advantages. This would be in keeping with the declaration's commitment that "... labor standards should not be used for protectionist purposes...." Furthermore, while the Singapore declaration commits WTO member governments to "the observance of internationally recognized core labor standards," the ILO declaration provides objective standards for labor rights. In this case, the U.S. should pose the question as to whether WTO trade liberalization is compatible with member states' ILO commitments--in much the same way as the WTO Committee on Trade and Environment looks at the relationship between trade measures and multilateral environmental agreements.

A hint of movement in increased collaboration could be seen in the March meeting of the ILO Governing Body Working Party on the Social Dimensions of the Liberalization of International Trade. An important step beyond the Singapore declaration and toward formal involvement of the WTO with the labor standards issue could be a joint WTO-ILO forum to address issues of labor standards based on the WTO Trade Policy Review Mechanism and the ILO Country Employment Policy Review.

Finally, the U.S. should urge a review of GATT Article XX. It is crucial that the international trading system not be subjected to disguised protectionism in order to support environmental and social concerns. However, since GATT was written in 1947, there has been considerable progress in defining and refining international labor (as well as environmental) norms and institutions. U.S. policy should address the need to update Article XX to allow for exemptions that take into account this progress in labor and environmental norms. Such a move would also help the WTO judge whether trade measures taken on grounds of violations of labor standards are indeed currently and universally accepted as such, thus alleviating fears of hidden agendas and narrow economic interests.

Key Recommendations

* The U.S. needs to relate labor standards to increasing market access for developing countries.

* The U.S. should support even greater collaboration between the ILO and WTO, drawing on the commitment that ILO members have made to respect core labor standards.

* Article XX of GATT should either be reviewed in order to consider broader interpretations or amended to incorporate evolving universal norms regarding labor standards.