In the debate over global economic liberalization, few issues have been as contentious or hard-fought as the calls to incorporate social standards and labor rights provisions into free trade agreements (“FTAs”).
In the United States, the inclusion and design of such provisions—a process often referred to as “linkage”—remains a highly controversial issue and one that has played a significant role in the political and policy debates over the rapidly increasing number of bilateral and regional FTAs that the U.S. government is negotiating. In one of the most widely followed recent examples, the U.S. House of Representatives, in a 217-215 vote, and the U.S. Senate in a 54-45 vote, barely ratified the Central American Free Trade Agreement (“CAFTA”) with six Central American countries. One of the major causes of its near defeat was the design of its labor provisions, which were deemed to be too weak given the poor record of labor law enforcement and the levels of poverty in CAFTA countries. Even more recently, in the debate over an FTA with the Sultanate of Oman, Democrats on the House Ways and Means Committee voted unanimously to defeat the FTA in part because the labor rights provisions in the FTA were inadequate in light of Oman’s weak labor standards. In the final vote, the FTA passed the whole Congress 221-105, with some key Democrats changing their votes based upon assurances by the Government of Oman that it would amend its collective bargaining laws. Even then, only twenty-two Democrats voted in favor of the agreement. Current negotiations over other trade agreements, such as the Andean Trade Promotion Agreement with Peru and Colombia and the more far-reaching Free Trade Agreement of the Americas (“FTAA”), are also likely to raise serious labor rights questions and objections.
Much of the disagreement in these debates centers on the question of how effectively trade-related labor rights provisions hold states accountable for their inadequate labor laws or inadequate labor law enforcement. The approach states have taken—an approach that I term a State Action–State Sanctions Model—primarily aims to pressure states to amend their labor laws and/or enforce their labor laws in a prescribed manner, or suffer economic consequences.
However, in light of contemporary scholarship on regulation and international governance, and in light of the fact that developing countries often have highly dysfunctional labor regulatory systems and are ineffective enforcers of labor laws and workers’ rights, such a state-centric focus is misguided. Instead, if trading partners are serious about protecting workers’ rights in a global economy, a new approach should be adopted that simultaneously recognizes the increasingly important role of private regulatory regimes in the enforcement of workers’ rights, and that aims to develop well-functioning, democratically accountable public labor regulation regimes.
This Article therefore argues for a new approach to trade and labor linkage that I term “Integrative Linkage” (“IL”). It is so-termed because the IL methodology integrates public and private regulatory approaches in the design and implementation of trade-based labor rights enforcement regimes. IL moves away from the predominant State Action–State Sanctions Model toward a more nuanced and encompassing approach that utilizes the powerful potential of private regulatory strategies. Rather than conceptualizing public and private regulation as operating in discrete realms that have little overlap, IL aims to create institutions that effectively combine the two in order to achieve a more effective trade and labor rights regime. Importantly, IL does not necessarily seek as a normative end the deregulation or even decentralization of regulatory authority, but instead actively seeks to bolster public regulatory capacity and improve democratic functioning. Such an approach is generally applicable, and is relevant not only to the United States and its trading partners in their bilateral and regional trading arrangements, but to other regional free trade areas and their members as well.
The structure of this Article is as follows: In Part I, I briefly survey the legal and normative justifications for linking trade agreements and labor standards and describe some principles that ought to guide the construction of labor provisions in trade agreements, taking special note of human rights and development concerns.
In Part II, I analyze how these provisions have been realized in domestic legislation, bilateral and regional trade agreements, and the World Trade Organization (“WTO”), as well as how scholars have approached linkage. I demonstrate that (a) both in practice and in theory, the predominant approach to linkage has focused on the State and has implicitly adopted a State Action–State Sanctions Model that is particularly ill-suited to developing countries with dysfunctional regulatory regimes; (b) extant regimes in the three predominant loci of trade and labor linkage have been largely ineffective in improving labor conditions, in part because of their reliance on the State Action–State Sanctions Model; and (c) despite this ineffectiveness, bilateral and regional agreements hold the most promise for the creation of effective trade and labor regimes.
I then turn in Part III to a description of developments in “private regulation” and describe the ways in which non-state actors and private regulation have played an increasingly important role in transnational labor regulation.
In Part IV, I examine an enlightening case study of creative linkage in Cambodia in which the market for labor rights compliant clothing has helped improve working conditions and has become a source of competitive advantage for the country. The Cambodia experiment can be viewed as an early prototype of an IL approach to linkage, and one that some development organizations are looking to as a possible model to follow in other countries.
In Part V, I put forward the basic tenets of an IL approach. In this model, bilateral and regional trade agreements would explicitly provide for labor rights enforcement regimes that focus less on evaluating and sanctioning state action and more on firm-level performance and the generation and dissemination of information about those firms. The trading partners would design specifically tailored regimes that address the particular regulatory concerns of those parties in experimental and diverse ways that aim to improve workers’ rights enforcement and bolster public regulatory capacity. Such regulatory capacity building would be achieved, in part, through the empowerment and participation of relevant stakeholder groups and of civil society. The varied IL regimes in different trading regions would then provide IL models and best practices to other regional and bilateral arrangements in a process of networked learning….
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