Bridge News - February 18, 2000

Compromise on Labor Rights is Crucial to New WTO Talks
U.S. Must Demand Basic Guarantees for Workers

by Peter Morici

WASHINGTON--The fiasco during the World Trade Organization conference in Seattle in December has scarred both the WTO and the prospects for further trade talks to open markets. In the subsequent Monday-morning quarterbacking, most commentators concluded that US President Bill Clinton's ruminations on the divisive issue of labor standards sealed the collapse of WTO talks.

But, inevitably, a new round of trade negotiations will only occur with compromise by all parties on labor rights. A more constructive dialogue should focus on how, not whether, to incorporate the broad principles of labor rights into the international trading system.

Of course, Clinton's attempt to politically exploit the debate has created a thorny path to consensus. By invoking the need to put a human face on trade, he signaled fraternal support to the labor movement, a critical ally in promoting the political ambitions of his vice president, Al Gore.

But developing countries demand that labor rights be divorced from the WTO. Clinton maneuvered to downplay the gravity of his remarks by suggesting only the ''ultimate'' use of sanctions to enforce labor standards. This mixed message bred cynicism on both sides of the debate, and developing countries were handed a convenient exit strategy from the trade talks.

What must be done to forge agreement on universal norms for labor standards? Some observers casually suggest that labor rights should be under the exclusive domain of the International Labor Organization, but this token gesture is rightly rebuffed by those who recognize that the ILO has no teeth to enforce its rules.

Rather, the United States must boldly demand that a core labor-rights framework be included in the WTO. We can tactfully exercise leadership without the impression that Western values and America's will are being imposed on developing countries.

For example, the United States does not dictate what the minimum wage should be in India; similarly, we have no interest or authority in mandating what precisely constitutes child labor in India.

Indeed, India must determine the appropriate minimum age for its work force. India may decide that, for the time being, no child under age 14 should be in the labor force. At some later point, India may deem it fitting to adjust the minimum age to, say, 16. Regardless of the minimum age established by the Indian government, it is their responsibility to enforce the prohibition of child labor under Indian law. Hence, the WTO must ''ultimately'' be equipped with an enforcement mechanism to assure that India, like all members of the WTO, enforces its laws on child labor.

Furthermore, the economic argument for prohibiting child labor is grounded on rules of fair play in the world trading system. Contrary to the views of developing countries with labor-intensive economies, the use of child labor does not represent a legitimate comparative advantage. Rather, it amounts to a subsidy for firms that violate norms of civil conduct -- as expressed, for example, at the United Nations World Summit for Social Development in 1995 -- by exploiting the cheap labor of children. The same broad principles apply to basic labor rights such as nondiscrimination in employment and freedom of association.

An effective WTO must establish a fair, transparent, rules-based international trading system that safeguards the rights of all parties affected by commerce. Thus, institutional reform to fairly represent the interests of firms, investors and workers would help restore confidence in the WTO's authority and effectiveness among members and constituents.

Of course, it would be naive to assume that the United States can reconcile the labor-rights dispute if other nations resume obstructionist tactics in trade negotiations. Indeed, one source of tension in international affairs is a perceived global imbalance of power, which some countries allege is a byproduct of American hegemony.

Many critics of trade liberalization view globalization as a veil for Americanization -- a process that seeks to promote America's corporate and economic interests. Achieving agreement on regulating the rules and terms of globalization is difficult enough, and the myth of an American capitalist conspiracy makes matters worse.

Not long ago, author and columnist Tom Friedman cavalierly warned that countries failing to board the globalization train risk being run over by it. Many nations now complain that the costs (loss of sovereignty) of boarding the globalization train are excessive, that no one knows the destination of the train, and that the United States monopolizes the driver's seat.

Proponents of economic integration must demonstrate that the virtue of trade lies not merely in the creation and accumulation of wealth. A viable system of international commerce should also promote shared prosperity by assuring the optimal gain for the maximum number of participants in the global economy.

Liberalization will succeed only if its advocates recognize that the bitter, grassroots struggle over globalization is unlike the old, backroom economic debate over free trade. To that end, the WTO can no longer neglect the rights of workers.