Free Trade Needs Labour Standards
Free trade has many supporters who reject the notion of labour standards. Labour standards have many supporters who reject the notion of free trade. But free trade needs labour standards, and labour standards need free trade.
Free traders argue that trade increases a country's national income and that tariffs and other impediments to trade almost always hurt the economy of the country that puts them up. Free traders would admit, however, that there are losses as a result of removing any particular tariff or other barrier to trade, and that these losses are incurred intensely by a smaller number of people, while the gains of freer trade are normally diffused over a larger number of people.
Labour activists argue that working people need a core set of legal standards to protect them against exploitation in the workplace. Outside of the rule of law, people who are economically stronger will not always respect the dignity of people who are economically weaker. Employers may not exercise enough concern for the safety of their employees, may not treat people fairly, may disregard proper process when dealing with disputes and grievances, or may subject children to some of the worst forms of child labour. Just because people are poor, or live in a less developed country, does not mean that there should be no standards protecting them against these and other abuses.
Some free traders argue against labour standards. In their view, the insistence by labour activists in developed countries of labour standards for less developed countries as a prerequisite to freer trade is nothing less than protectionism. The argument of such free traders is that economic development should precede worker rights, if development is to occur at all.
Less developed countries, according to this argument, do not have the means with which to compete on an equal footing with developed countries. They can only compete, and alleviate poverty, if they are allowed to pay lower wages, have lower standards of safety, and perhaps even deny freedom of association—particularly the right to form and join trade unions—to workers.
Some labour activists argue against free trade. In their view, free trade is an integral element in a process of capitalist globalization that inherently advantages business corporations and disadvantages employees everywhere.
The argument of such labour activists is that the existing international framework for free trade, especially NAFTA and the WTO, is reducing the degree of sovereignty enjoyed by the governments of countries in setting labour standards, thus allowing multinational corporations and financial speculators free rein in their treatment of working people and local communities.
Civil discussion needed
One does not need to be a foam-at-the-mouth economic libertarian to understand the benefits of freer trade nor a dyed-in-the-wool economic nationalist to understand the need for labour standards. Both sets of arguments bear elements of the truth. A civil discussion about the relative weight these elements should carry as we make judgements about economic life in North America will benefit us all more than street battles and advertizing blitzes.
In such a discussion, I would make the moderate argument that free trade and labour standards are mutually necessary for the flourishing of economies. Free trade is necessary for the alleviation of poverty and the cultivation of prosperity. Labour standards are necessary for the prevention of exploitation and the cultivation of justice. Without prosperity, justice is an empty cup. Without justice, prosperity will flow through our fingers.
What are the core labour standards necessary for fair, free trade? While the existing North American arrangement for incorporating labour standards into free trade agreements still needs some work, it is not a bad place to start.
Consider the labour standards enshrined in the North American Agreement on Labour Cooperation (NAALC), the "labour side agreement" to NAFTA. The NAALC requires each of the countries party to the agreement (Mexico, the USA, and Canada) to promote a set of eleven labour principles:
- freedom of association and protection of the right to organize;
- the right to bargain collectively;
- the right to strike;
- prohibition of forced labour;
- labour protections for children and young persons;
- the elimination of employment discrimination;
- minimum employment standards;
- equal pay for women and men;
- prevention of occupational injuries and illnesses;
- compensation should injury or illness occur; and
- protection of migrant workers.
Motherhood and apple pie
While one or two of these beginning guidelines may be subject to some reasonable controversy, for the most part these are motherhood and apple pie. We know, of course, that in each of the countries party to the agreement, for at least some part of their respective histories, most of these principles suffered disregard. But in our time, while we may not always walk our talk, very few people would seriously argue against freedom of association or in favour of forced labour and the exploitation of child labour.
The NAALC also sets up mechanisms and institutions to monitor the extent to which the party nations promote these principles and to deal with complaints. According to the Canadian federal Ministry of Labour, 22 submissions have been made under the NAALC since its entry into force in January 1994 until April 2000. Thirteen of the submissions were directed against Mexico (two were withdrawn and one declined); seven against the U.S. (two were declined); two against Canada (one was declined).
While these mechanisms and institutions could bear some careful improvement, they do afford a forum within which to address infringements of the NAALC principles while respecting the sovereignty of the governments involved.
It is important for the sake of both justice and prosperity that as free trade in the American hemisphere is extended and strengthened it be accompanied by a core set of labour standards, not only in print, but in enforced practice.