Thursday, August 16, 2007

The World Trade Organization: A Initial Look on Its Intrusion in Labor Relations


[1]To ensure the rights of the workers, the international community established the International Labour Organization. Labour law is the law that efers to the regulation of work and dealings in the factories and other places of work, notwithstanding the relations between employers and employees. However, in the face of globalization of trade and services, labour law is deeply at peril, so are the millions of workers protected under its ambit.

Global trends around the world have shown that the more stringent and effective labour legislation, the more likely MNC's will relocate to another jurisdiction. As a result, globalization endangers the jobs and employment benefits that labour law was intended to protect. As in any enterprise, big and small, the maximization of profits and resources must be of paramount importance. By enlarging the scope of the World Trade Organization to the equalization of labour standards, the prospects of more efficient international trade relations become further possible, but not without triggering intense protests from the most affected stake-holder – the labor of the world.

World Trade Organization

There is only one international organisation responsible for the rules of trade among different countries – the World Trade Organization. It solves trade controversies among its 150 member states. It was established in 1995 under the Marrakech agreement which consist of a general agreement on tariffs and trade, agreements on sanitary and plant health measures, trade related perspective of intellectual property and technical barriers to trade.

Unfortunately, the WTO’s performance is considerably more harmful than predicted by the WTO critics before its approval. In considering long term strong WTO and regional trade agreements, such as NAFTA, the US government and other develop countries, has conceded much of its flexibility to independently advance health and safety standards that protect citizens.

Define ILO:

To ensure common justice for workers of the world, the United Nations created the International Labour Organization, its first specialised agency in 1946[2]. The ILO expresses international labour principles in the form of conventions. Conventions are the basis from which the standards of basic labour rights are created, including freedom of association, collective bargaining, elimination of forced labour, equality of chance and treatment, among others. It also gives technical support to member states, such as vocational training, employment rule, labour management and labour law.

Define NAALC and NAFTA

After WTO started its operation, many developing organisations were experiencing rapid expansion of regional trading blocks. These regional blocs have had some remarkable achievements, such as intensive liberalization measures, but unfortunately these have also become subject of great controversy, especially the North American Free Trade Agreement (NAFTA) which has caused a great uproar from militant labour unions in Latin America, Canada and the United States.

NAALC stands for North American agreement on labour cooperation, which is another organisation, which support and enforce labour rights internationally. NAALC maximized the use of bilateral and regional agreements to ease trade systems after observing specific labour standard. It was the first trade union to make important nexus between trade and labour rights.

On the other hand, NAFTA stands for North American free trade agreement[3] whose members are Canada, Mexico and USA. Since NAFTA started its operation, it removed half of all duties of USA goods shipped to Mexico. Eventually it eliminated other tariffs over a time of 14 years. This includes motor vehicles and automotive parts, and agriculture, computers and textiles. This organisation also provides intellectual property rights. It takes care of the patent, copyright and trademark.

Strengths of the WTO and Including Labour Standards in its Ambit

The WTO [4] is the key organisation operating the trade agreement around its member countries. It is very powerful because it can control the trade agreement across many countries. Agreements are decided unanimously by all member countries, which are also supported by their respective parliaments.

On the other hand, the best argument to liberalizing labour standards in a multi-lateral scale has been to afford better opportunities for labourers of developing countries in terms of competitiveness, productivity and efficiency. If trade ministers the world over can agree on a middle ground as to how labours standards should apply to all member states, it would be for the general benefit of all workers, and even the balance of the international economic system. It is important to strike a balance between the labour standards between developing countries, which are general lax and anti-worker, and developed countries, which have markedly provided much of their workers adequate benefits to secure a true Living wage. These two situations in different countries must find a middle ground so that labour standards and rights are preserved without prejudicing the utter need to create a stable, sustainable and efficient economic system in which trade barriers do not preclude the access of the people to commodities. In balancing the two factors, however, it must be noted that labour standards must always yield to sustaining the efficiency of the world economic system because the continued existence of industries, big or small, in all member states is more imperative than ensuring labour standards which might constitute as a big stumbling block in keeping the prices of commodities lower, thus, constraining market access due to higher prices. It must be remembered that the beauty of globalization has always been the breaking down of transactional costs and trade barriers to reduce prices considerably and flood the market with accessible goods for the people of the world. In the long run, balancing international trade in favour of the survival of industries rather than labour standards would benefit the workers soon enough. While to an extent, including labour standards to the ambit of the WTO might be burdensome for workers, especially workers in developed countries who might have to sacrifice much of their well-endowed benefits, the promise of globalization has not been to benefit a mere section of the world’s population, but to equalize the fruits and profits of international trade to all member states, thereby, relatively reducing poverty and hunger in a world-wide scale.

Weakness of the WTO and Including Labour Standards in its Ambit

The weakness of WTO is the continued perpetuation of regional trading blocs[5] as sometimes regional reforms turn out better, and more enforceable than the WTO. As the countries in regional blocs are more culturally and politically linked, the enforcement of obligations have been much easier than the multilateralism enforced by the WTO.

However, the most tacit yet glaring controversy the WTO has immersed itself into has been the prospects of compromising the interests of labour in the guise of freer market access and cheaper prices for goods traded. The phenomenon of globalization, has forced even without the need for legislation, Third World countries to turn into a haven of cheap-labour for the international market, to the extent that huge multinational and trans-national industries relentlessly search for factory sites that would offer the cheapest costs. No other greater example exists than the influx of direct capital investment to China. On the other hand, other Third World countries are forced to do away with stringent labour standards entrenched in Labor Codes and ILO standards in order to compete with China a gain a comparative advantage. As a result, countries like the Philippines, known for its high labour standards and the militancy of its working class, is veering into measures to subvert the protections given to labour, such as industry-scale contractualization policies. Contractualization is the phenomenon in which capitalists and employers employ, in a semi-annual contractual basis, all the workers in the production line it needs, to go around the labour standard loophole of automatically regularizing a person’s employment, with benefits, job security and union rights, once the person is employed after more than six months in any enterprise.

Nonetheless, in the area of labour, the current trend at present has shown that workers in the Third World are at a great disadvantage to developed countries in which the latter countries continuously employ and follow strict labour standards, whereas in the former countries, these already inadequate protections have been relaxed to suit the demands of a competitive advantage of cheap labour. The myth then of the equalization of playing fields is pierced because in glaring economic reality, the conditions of labour and the working people in both developed and underdeveloped areas of are utterly different. If the WTO were to include the globalization of labour standards aside from trade and services, it would totally be hard pressed to implement it, especially in the face of the patent inability of the WTO to force the withdrawal of agricultural farm subsidies on European farmers, in violation of WTO policies to level the playing field in agriculture. In WTO’s prospective policy on labour, it cannot be expected to uphold the stringent labour standards set by international labour organizations nor adhere to the intense lobby of worker’s unions to improve labour relations as such protections of labour would entail increased transaction costs (worker benefits and compensation, separation pay etc.) and jack up prices of goods distributed in the world market. The WTO would inimitably contradict itself if it upholds such stringent labour standards as it would mean that the WTO favours some barriers to trade such as stringent labour standards. However, in the even that the WTO does enact and encroach even on labour standards and dismantle those standards set by the WTO in pursuit of its neo-liberal economic agenda, it will surely be met with massive protests the working people the world over, as what happened in Seattle, Cancun and Hong Kong when agricultural subsidies were being liberalized. Like agriculture and land, labour is one of the more sensitive issues that can be the source of either developing the world economy or destroying it.


Based on the ILO and some other regional agreements such as NAALC, there have been controversies on whether the WTO should involve itself in adjudication and enforcement of international labour standards. It is not certain at present whether it will affect the aims of the WTO or not.

At the first WTO ministerial meeting in 1996 it was decided that whether WTO should renew its promise to observance of internationally recognised core labour standards or not. The ILO[6] was the competent body to set and maintain these standards. The question arises that whether WTO should keep its neutrality in labour standards or not.

An option[7] is to give the power to WTO to enforce international human rights via mandatory implication of trade measures against state that violate such rules. A weaker idea of this option is to empower WTO to enforce certain specified categories of human rights by introducing mandatory trade sanctions.

Nonetheless, the WTO should not interfere in labour standards because the ILO[8] exists to promote and protect these standards. More so, it may further create difficulties for the WTO in enforcing the already much violated international trade agreements. Adding more factors for adjudication and agreement might further complicate the dynamics of the organization, especially an issue as complex and controversial as labour. Unless the WTO can improve firstly on enforcing the multilaterally agreed upon trade agreements at present, the WTO has no business encroaching on the labour standards set by the ILO. The labour standards created by the ILO more than suffice to secure the rights of workers and ensure economic growth in affected industries the world over. Actually, these standards have even been violated by member countries already, to the detriment of workers around the world. But the solution to this can never be the encroachment by the WTO of these standards as the WTO does not exist primarily to regulate labour standards and rights, but to regulate international trade and all the industries under its ambit – an interest diametrically opposed to the idea of labour as a fundamental right, and the protection of labour as a primary obligation of states. An independent international organization that fully recognizes labour as such must still stand guard in its defence, rather than an international organization that simply treats labour as a matter of transactional costs in trade.


While the World Trade Organization has been primarily effective in helping member states facilitate their trade relations and equalizing international trade to permit developing countries to compete with developed ones, encroaching upon the ambit of international labour standards might not be the wises thing to do at present. The WTO has, as of late, been having much trouble enforcing much of its trade agreements already, with the perennial breakdown of talks in different WTO rounds such as in Seattle and Cancun, and including labour standards in its ambit would definitely erode further its capacity to assert its legitimacy and authority to member states, especially when labour standards, over and above agriculture and intellectual property, are deeply controversial matters in all states. On the other hand, an organization exists for this purpose of securing labour standards and that is the International Labour Organization. The best thing to do now is not to allow the WTO to encroach on the field of labour standards, but to give the ILO more teeth in enforcing, protecting and asserting labour rights in an international scale, albeit in conjunction and support with labour organizations in different continents, regions, and countries.


1. Andreyeva, N. 2000, Imperialism and Revolution, Available at

2. Bhaumik T. K., The WTO: a discordant orchestra

3. Brenner, R. 1998, The Economic of Global Turbulence, A Special Report on the World Economy, 1950-98, New Left Review, London

4. Bullard N. 1998, Taming the Tigers: The IMF and the Asian Crisis, Tigers in Trouble, edited by Jomo K.S., Hong Kong University Press

5. Cheng E. et al, WTO: Globalisation at Gunpoint

6. Clough, S 1968, European Economic History, The Economies of Western Civilization, McGraw Hill

7. Fatoumata J. 2004, at the WTO: The Negotiations/Lessons of Cancun Behind the Scenes Real World of International Trade, 2Rev Ed edition, Zed Books Ltd

8. Goldstein, F. 2000, The Free Market Myth and Japan’s Banking Crisis

9. Grant T. 1997, An Analysis of the Global Economic Situation, Socialist Appeal

10. Greider, W. 1997, A Review of One World, Ready or Not: The Manic Logic of Global Capitalism, Simon and Shchuster

11. Jackson J. H. 2006, Sovereignty, the WTO and Changing Fundamentals of International Law

12. Richard P. 2003, Trinity: The IMF, and the WTO Unholy World Bank, Zed Books Ltd

13. Schorkopf F.., Peter-Tobias S., WTO

14. United Nations Conference on Trade and Development, WTO Accessions and Development Policies

15. Villegas, E. 2000, Global Finance Capital and the Philippine Financial System, Institute of Political Economy, Manila

16. Wallach L. & Michelle S., The WTO: Five Years of Reasons to Resist Corporate Globalization

17. _________ 2002, Economic Crises and the Possibility of a Major World Crisis, Eleventh International Communist Seminar, Brussels, Belgium

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[1] Labour Laws and Global Trade by Bob Hepple


[3] Bob Hepple, 30 Mar 2005, Labour Laws and Global Trade, Hart Publishing.



[6] Bob Hepple, 30 Mar 2005 ,Labour Laws and Global Trade, Hart Publishing

[7] Bob Hepple, 30 Mar 2005 ,Labour Laws and Global Trade, Hart Publishing

[8] Bob Hepple, 30 Mar 2005 ,Labour Laws and Global Trade, Hart Publishing

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