Berkeley Law

The relationship between international trade and labor standards is one of several controversial issues facing the WTO. Proponents of a trade-labor link argue that labor is a human rights issue and that trade sanctions represent a critical tool in the effort to improve international working conditions. Opponents argue that a link between trade and labor would open the door to protectionist measures that would target low wage countries and harm the very workers the policy is intended to help.

This paper argues that the merits of the trade-labor debate must be resolved through a political process. The alternative of a resolution through the WTO's Appellate Body (AB) is undesirable for a number of reasons, including the fact that the AB is undemocratic, unaccountable, poorly positioned to understand the trade-offs at stake, and has not been charged with resolving such fundamental policy issues. An attempt to resolve the issue at the AB will lack political legitimacy and ultimately undermine the stability of the WTO itself.

Given that a political solution is required, the only sensible place to negotiate it is the WTO. If there is to be a trade-labor link it will be necessary to change the rules of international trade, which must be done at the WTO. At present, however, there is reason to fear that the institutional structure of the organization will cause trade concerns to trump labor concerns. This paper proposes a set of reforms to the WTO designed to place trade and labor on an even footing without undermining the significant benefits that the WTO delivers to the international system.

The key to the proposed reforms is the creation of independent trade and labor departments within the WTO. The labor department would have considerable autonomy from the rest of the organization, would be staffed by labor specialists, and would have the authority to hold its own periodic rounds of negotiation, limited to labor issues. Such negotiations would result in binding obligations. In addition, from time to time the WTO would host negotiating rounds that include both the labor department and other WTO departments, including trade. These larger rounds would permit states to reach a negotiated agreement on the relationship between trade and labor. Because the agreement would be the product of consensus, a negotiated settlement would engender more legitimacy than an AB decision.