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International Trade and Labor Standards

International Trade and Labor Standards: A Proposal for Linkage

Christian Barry
Sanjay G. Reddy
Copyright Date: 2008
Pages: 232
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  • Book Info
    International Trade and Labor Standards
    Book Description:

    Progressive governments in poor countries fear that if they undertake measures to enhance real wages and working conditions, rising labor costs would cause wealthier countries to import from and invest elsewhere. Yet if the world trading system were designed to facilitate or even reward measures to promote labor standards, poor countries could undertake them without fear.

    In this book, Christian Barry and Sanjay G. Reddy propose ways in which the international trading system can support poor countries in promoting the well-being of their peoples. Reforms to the trading system can lessen the collective-action problem among poor countries, increasing their freedom to pursue policy that better serves the interests of their people. Incorporating the right kind of linkage between trading opportunities and the promotion of labor standards could empower countries, allowing them greater effective sovereignty and enabling them to improve the circumstances of the less advantaged.

    Barry and Reddy demonstrate how linkage can be made acceptable to all players, and they carefully defend these ideas against those who might initially disagree. Their volume is accessible to general readers but draws on sophisticated economic and philosophical arguments and includes responses from leading labor activists, economists, and philosophers, including Kyle Bagwell, Robert Goodin, Rohini Hensman, and Roberto Mangabeira Unger.

    eISBN: 978-0-231-51296-1
    Subjects: Economics, Law, Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Tables
    (pp. vii-viii)
    (pp. ix-xiv)
    (pp. xv-xx)
  6. Introduction
    (pp. 1-2)

    Whether rights to trade ought to be made in any way conditional on the promotion of labor standards is an issue that currently engenders a great deal of heated disagreement.

    This essay presents a proposal for linking trade and labor standards.¹ We develop a proposal for linking rights to participate in international trade with the promotion of basic labor standards.² We argue that implementing our proposal would improve working conditions and living standards in poor countries without imposing undue burdens and would therefore be one means of advancing valued ends, including the ends of justice.³ We identify the arguments that...

  7. CHAPTER ONE What Is Linkage? Two Propositions
    (pp. 3-5)

    Proposals to promote labor standards can be divided into two types: those that involve linkage and those that do not. Further, all proposals to promote labor standards, whether or not they involve linkage, can be characterized according to how they answer the following two questions:

    (Q1) What are the labor standards to be promoted?

    (Q2) How should labor standards be promoted?

    Disagreements between opponents and proponents of linkage either concern the objectives that should be promoted or the means of promoting them. Both opponents and proponents of linkage seem to affirm the following proposition:¹

    Proposition O: A very important factor...

  8. CHAPTER TWO Three Types of Linkage, and What Linkage Proponents Must Show
    (pp. 6-9)

    What is linkage, and what are the conditions under which it is desirable to “link” things? At least three distinct types of linkage can be relevant in designing institutional arrangements.

    The first type of linkage arises as a result of the interdependence of different attainments (in health, education, security, and so on) in the process of evaluation. The assessment of an outcome may depend on the extent to which distinct objectives are each attained. When attainments of more than one kind necessarily enter jointly into the evaluative process, we may refer to this as “evaluation linkage.” Evaluation linkage influences the...

  9. CHAPTER THREE What Linkage Opponents Must Show
    (pp. 10-11)

    Principles commonly espoused with respect to the organization of the domestic economy can be invoked in favor of linkage. Regulations protecting labor standards in the domestic economy effectively condition the right to produce and trade goods and services on the adherence to some standards. Failure to abide by labor regulations protecting basic labor standards breaks fundamental rules governing membership in a cooperative economic union whose members are provided certain economic privileges (e.g., to produce and to trade with one another) as a condition of their full membership in the union. Those who reject proposition L in the context of international...

  10. CHAPTER FOUR Arguments Against Linkage
    (pp. 12-22)

    We identify below five partially overlapping objections to linkage. We believe that this classification of arguments is exhaustive of the arguments that can plausibly be advanced against linkage.

    This type of argument claims that linkage will either be inconsequential or that it will backfire and have the opposite of its intended effect of improving the level of advantage of less advantaged persons in the world. It is therefore often claimed that while perhaps well intentioned, linkage will “hurt those it is meant to help.”

    It is widely alleged that countries will opportunistically misuse the possibilities for restricting imports provided by...

  11. CHAPTER FIVE Ruling Out Linkage Proposals
    (pp. 23-26)

    To justify proposition L, we will identify a class of linkage proposals that withstands the five standard objections raised by linkage critics identified in chapter 4. Some linkage systems very obviously fail to do so because they straightforwardly fail to meet a number of the objections. In this chapter we argue that those institutions that fail to be rule-based and impartial, to arise through a process of fair negotiation, or to incorporate adequate burden sharing between countries will not meet some of these objections.

    First, note that systems of linkage can be of two types: those that are imposed on...

  12. CHAPTER SIX A Constructive Procedure—Identifying Linkage Proposals That Meet the Standard Objections
    (pp. 27-79)

    Proponents of linkage must identify an institutional arrangement that is both feasible and desirable to bring about. Such an arrangement must possess the three features identified above, and perhaps more. At a minimum, they must be transparent and rule-based, incorporate adequate international burden sharing, and arise through a process of fair negotiation among states. In this chapter, we will attempt to show that it is possible to identify such institutional arrangements. Throughout this chapter, we employ what we refer to as a “constructive procedure” to clarify and emphasize the role that the requirements already identified play in making a linkage...

  13. CHAPTER SEVEN Sketch of One Possible Linkage System
    (pp. 80-85)

    We have identified above a class of linkage systems that withstands the standard objections made to such systems. In order to provide a more concrete starting point for discussion, we offer below a detailed description of a member of this class.

    Any system of linkage will require administration. Who should be responsible for this? In order to answer this question, we should take note of some relevant facts. First, there are existing institutions (in particular, the WTO) that govern rights to trade. If a system of linkage is put in place, these institutions will either have to cede some of...

  14. CHAPTER EIGHT Conclusion
    (pp. 86-88)

    We have demonstrated that there exists a class of proposals for linkage that would withstand the standard objections advanced against such proposals. Indeed, we have argued that there are systems of linkage that would help to promote a goal of both linkage opponents and advocates (increasing the level of advantage of the globally less advantaged) to a larger extent than would any proposals for the governance of international trade that do not include linkage, without notably detracting from other goals that they have.

    Proposals for linkage have been criticized on the ground that they allegedly reflect the priorities of developed...

  15. APPENDIX. Empirical Evidence on the Likely Effects of Improvements in Labor Standards
    (pp. 89-100)
  16. Economic Theory, WTO Rules, and Linkage
    (pp. 101-116)

    In this thoughtful essay, Christian Barry and Sanjay Reddy consider the important and timely issue of linkage.¹ In particular, they address the following question: should some rights to engage in international trade be made conditional on the promotion of labor standards? This is a complex question that may be approached from many angles. Concerned citizens of the world can all agree that less advantaged individuals in some developing countries work under very difficult conditions. There is thus some immediate appeal to the notion that trade sanctions might be used to motivate the governments of such countries to strengthen their labor...

  17. Fine-Tuning the Linkage Proposal
    (pp. 117-126)

    A cross-country comparison that finds “strong evidence that countries with open trade policies have superior labor rights and health conditions and less child labor”¹ suggests that openness to the world economy does not undermine workers’ rights and may even enhance them. However, the finding that in any particular country openness to the world economy can go with high labor standards is not incompatible with the proposition that globalization as a process undermines labor rights globally.

    One process by which this could and does take place is by the transfer of production from countries with higher labor standards to countries with...

  18. The Ethics of Political Linkage
    (pp. 127-134)

    In the negotiations leading up to the Helsinki agreement of 1975, Western negotiators proposed linking nuclear arms reductions to respect for international human rights. There were widespread complaints at the time. Arms control and human rights were two wholly separate issues having absolutely nothing to do with one another, it was said, and it was simply inappropriate to make one conditional in any way on the other. Such complaints came naturally enough from the Soviet bloc. But they were also heard from Westerners who were genuinely serious about nuclear arms reductions and who suspected that the linkage was intended by...

  19. The Transformative Imagination and the World Trading System
    (pp. 135-140)

    Christian Barry and Sanjay Reddy have made a contribution to the alliance of reason with hope. In this note, I suggest four ways of developing their view.

    In an argument about the linkage of trade to labor standards, it is important to address squarely the content of these standards. Their definition presents a problem of great importance and of vast scope. Wage labor is supposed to be free labor, in contrast to slavery and serfdom. If, however, workers must sell their labor under circumstances of economic duress or dependence, the break with slavery and serfdom may remain unfinished. The contractual...

  20. Reply to Commentators
    (pp. 141-164)

    The international trade economist Kyle Bagwell sees merit in our proposal for linkage and presents thoughtful criticisms of it. He characterizes the “alternative linkage paradigm” that we present as differing from the “unduly narrow” standard interpretation of linkage. While the standard interpretation of linkage emphasizes the threat of application by developed countries of “sticks” in the form of trade sanctions or punitive tariffs, we emphasize the role of a diverse range of “carrots,” in which developed countries “offer the reward of lower tariffs or other compensation” to developing countries that “achieve high labor standards.”

    This distinction certainly captures a very...

  21. NOTES
    (pp. 165-200)
  22. INDEX
    (pp. 201-208)