Global Policy Forum

America says labor issues belong on the WTO's agenda. That's terrible for trade and doesn't do anything for labor rights, either.

By Jagdish Bhagwati

The World Trade Organization's second ministerial meeting in December promises to be a real happening—the most entertaining thing to hit Seattle since Hollywood sent Meg Ryan there. Militant labor, environmental and other nongovernmental groups, some keen to destroy the WTO and others bent on killing trade and globalization, plan to invade the city. Though by the most generous estimate they represent only a few million people, they hope to wreck a meeting desired by 135 WTO member nations, nearly all with democratically elected governments, representing more than 3 billion of the world's people.

But the threat to the multilateral trade negotiations comes not just from these protesters. There are fundamental problems that divide the governments themselves. Chief among them is the question of including in the new round's agenda an issue with as many fissures as an earthquake-ravaged city: labor standards.

The Clinton-Gore administration's current demand that the Seattle agenda embrace labor issues puts a deep divide between the United States and many developing countries. It creates a gulf between the administration and the many economists who strongly counsel against linking trade and labor issues, particularly at the WTO. And it separates Republicans from Democrats, and even centrist Democrats from ultraliberal Democrats. The administration is calling for the formation of a WTO working group that would report in two years on the relationship between international trade and employment, social protection and so-called "core" labor standards, including child labor. That is a bad-faith violation of the understanding reached at the WTO's first ministerial meeting in Singapore in December 1996.

The Singapore Declaration clearly stated what numerous economists believe to be the case: "The International Labour Organization is the competent body to set and deal with these standards." The United States did manage to append a weaselly concluding statement saying that "the WTO and ILO Secretariats will continue their existing collaboration." But such collaboration was perfunctory at best; the statement was a small bone for U.S. Ambassador Mickey Kantor to take home and throw to the labor unions. Yeo Cheow Tong, Singapore's minister and chairman of the meeting,was careful to clarify the matter in his concluding speech, saying that the text would not lead the WTO to undertake further work in the relationship between trade and core labor standards. And yet here we are, with the United States demanding that the WTO do precisely that!

We should not take at face value the reassuring whispers from Washington that this is just another "talking" exercise, aimed at co-opting the unions. Indeed, the next thing will be the ultimate prize that the unions seek: a social clause that will prevent countries from trading freely if they did not meet tough labor standards.

The social clause is a terrible idea with a single merit: it shows just how counterproductive it is to impose agendas essentially unrelated to trade on the WTO. As proposed by the United States and France (among other countries), the social clause sets "core" labor standards, including the right to unionize, and nonuse of child labor. It is the product of an alliance between two groups: financially flush and politically powerful labor unions, whose motivation is mainly protectionism; and morally driven human-rights and other groups. For evidence that the unions care mainly about guarding their own turf, consider the selective nature of the proposed social clause. Only issues such as child labor, where the developing countries are expected to be the defendants rather than the plaintiffs, are included. So enforcement against domestic sweatshops, for example—which is notoriously minuscule and lax in the United States—would not be included.

To be sure, there are also groups that genuinely wish for better standards for labor everywhere. They must be applauded. But their demands for a social clause at the WTO are nonetheless mistaken, because there are superior ways of advancing their objectives and agendas. By mixing up moral and social issues with trade, we make those important concerns captive to protectionism. You cannot get poker players, drinking whisky and telling bawdy tales, to burst into singing hymns! If we try, we inevitably devalue our moral concerns, and slow down trade liberalization as well.

Why try to kill two birds with one stone, when a second stone is handy? The new, dynamic head of the ILO, Juan Somavia of Chile, is eager to move the cause of labor rights forward—but without resort to trade sanctions. Let all nations seeking to advance progressive agendas take them to appropriate institutions: labor issues to ILO, environmental issues to UNEP, children's issues to UNICEF, and so on. That way lie both "appropriate governance" and more rapid fulfillment of our shared objectives.

Bhagwati teaches economics at Columbia University.

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