The WTO distraction.

• Author: Kolben, Kevin

INTRODUCTION

"All the hullabaloo about labor and environmental standards is just academic." (1)

The World Trade Organization (WTO) has been the locus of the most academic analysis and the most controversy in the debate over labor standards and trade. Many proponents of the inclusion of labor standards in the WTO believe that the WTO provides what other mechanisms of transnational labor regulation lack--"teeth." While the International Labor Organization (ILO) is the United Nations (U.N.) organization charged with overseeing and promoting better working conditions and improving labor law enforcement in its member countries, it is often considered a "toothless tiger"--a tripartite, do-nothing organization that is somewhat effective in generating norms but falls far short in ensuring their respect due to its lack of meaningful sanctions power.

On the other side of the debate are those who believe that linking labor standards and trade is like spreading peanut butter on your steak: the two have little to do with each other, and when mixed together disastrous consequences can result. Suspicious that the inclusion of labor issues is a smokescreen for domestic economic protectionism, these scholars argue that labor issues are wholly inappropriate for inclusion in the international trading regime and that labor issues are rightly left to the ILO. (2) For even if the ILO might not have the power of the sanction, as Jagdish Bhagwati writes, "[i]ndeed we must remember that God gave us not just teeth but also a tongue. And a good tongue-lashing on a moral cause is more likely to work today than a bite." (3)

This Article argues that the focus on the WTO by proponents of trade and labor linkage is misplaced and that the focus on labor rights in the WTO is more distracting than constructive--but not for the reasons put forth by opponents of linkage. While the WTO might have significant symbolic resonance in the debate over trade and labor standards, its potential as an effective site of labor linkage, and more broadly transnational labor regulation, is limited.

The argument proceeds as follows. In Part I, I suggest that there are at least three compelling justifications for the inclusion of labor provisions in trade regimes. These justifications are (1) embedded liberalism, (2) consumer autonomy and citizenship, and (3) development. The first two of these arguments are what might be termed "reflexive" justifications. That is, they are legal and political reasons for why it might be politically and legally legitimate for importing countries to discriminate between products based on labor-related criteria. The third justification, development, is externally focused, meaning it primarily takes into account the impact of trade and labor linkage on the development of trading countries. The burden then is to design a linkage regime that furthers development goals, which I suggest include labor development goals.

However, I argue in Part II that the WTO is not the ideal institutional choice for actualizing labor development objectives for a number of political, legal, and institutional reasons. First, the political opposition of developing countries to labor linkage in the WTO is so strong that a negotiated agreement creating any treaty language, or legal or other institutions to address labor issues within the organization is unlikely. The second way in which the WTO might allow for labor issues to enter the international trade regime is through legal decisions of its Dispute Settlement Body (DSB) on the legality of unilateral laws of its member countries that discriminate against imports based on labor criteria. But this method is unlikely to be effective because (1) there are very few such laws by member countries that have been enacted; (2) those that have been or will be enacted are unlikely to be challenged; (3) even if they were challenged they would face very high legal obstacles; and (4) even if they managed to overcome these legal hurdles, unilateral legislation is highly limited in its ability to achieve the goals of labor development, in particular improving labor governance in developing countries. Therefore, I conclude that the political, legal, and institutional potential of the WTO is too limited to warrant the intellectual attention that it has been given.

Instead, I argue in Part III that scholars and advocates should focus on the periphery of the WTO, which is where the most progress has been made and the most potential lies. In other words, academic attention would be better focused developing systems of what I call "integrative linkage" that are bilateral and regionally based, grounded in development objectives, and that experiment with using non-state, private regulatory regimes that harness the power of non-state actors to effectively regulate labor along global supply chains.

1. THREE JUSTIFICATIONS FOR LINKAGE

   Before turning to the argument that the WTO is not a fruitful site of transnational labor regulation, we should first ask a broader question about the relationship between trade regulation and labor. That is, what are the justifications for conditioning trading privileges on compliance with, or adherence to, a set of labor rights or principles? In this Part I argue that there are at least three compelling justifications for doing so. The first two are "reflexive" justifications, while the third is externally directed. (4)

   1. Trade Liberalization Embedded in the Political

      States enter trade agreements primarily for economic reasons. By reducing tariffs and non-tariff barriers, trade agreements help ensure that trading partners will efficiently allocate resources to the production of goods and services in which they have the greatest comparative advantage. Without such agreements, countries will engage in strategic protectionist behavior that, while benefitting certain domestic interests, will be economically inefficient at the broader macro level. (5)

      But while the underlying justification for free trade is fundamentally economic, trade liberalization is necessarily grounded in the political. First, the liberalization of trade by nation states is, contrary to the conviction and assumption of many economists, not the default state of affairs. The processes of liberalizing trade and markets inevitably take place against a political backdrop whereby citizens and nation-states agree to liberalize, provided that a set of political and economic conditions is satisfied. Free trade is thus not external but rather, in the terminology of Karl Polanyi's famous conceptualization, "embedded" within society and within a political context. (6) Markets, including those that Polanyi termed "external trade," were never self-regulating and were always subject to a "double movement," in which society protected itself against the perils of market liberalization through the creation of social regulation. (7) This is not only descriptively true, but also normatively desirable and arguably necessary for the preservation of trade itself. If trade policy is to be made completely exogenous to the social and political context in which it exists, free trade and the economic benefits that free trade promises will likely cease to exist because citizens will oppose it.

      As John Ruggie has argued, the modern international economic system is grounded in what he has termed "embedded liberalism." (8) That is, international markets are grounded in a compact by which states agree to open up their markets globally, while still maintaining a degree of control over their regulatory space through domestic regulatory interventions. (9) Such an understanding of the WTO would allow member states to retain an ability to regulate around social issues in a non-protectionist manner. (10)

   2. Consumer Autonomy/Consumer Citizenship

      A second justification is grounded in the liberal notion that consumers should be allowed autonomy in their consumption choices as long as those choices do not discriminate between products based on "illegitimate," protectionist grounds. (11) Douglas Kysar has argued that because we are in an era when "the market and the consumer are central to public policy," it is important to facilitate effective consumer citizenship by allowing discrimination between products and services based on the methods by which they are made. (12) The intuitions underlying these autonomy and citizenship approaches are compelling as applied to labor rights. For example, if consumer-citizens in a given country wish to ban the importation of products made with child labor because they do not want to consume products in a way that violates their conscience (for reasons grounded in global legal and moral norms), then it seems odd that the WTO or another international economic organization should prevent that choice. This intuition is particularly strong when that discrimination is grounded in universal human rights norms. (13)

   3. Development

      A third reason why we might want to coordinate or condition trade policy with labor policy is grounded in broader development objectives. It is widely accepted that a primary objective of trade is to raise the global standard of living and overall well-being of all. (14) The concept of what constitutes development, however, is increasingly understood to be constituted by more than simply economic growth as defined by increasing GDP or income. The most notable articulation of this notion is Amartya Sen's work on a freedom and capabilities approach to development. (15) In Sen's conception, development must be understood as the process of increasing people's freedoms, which he understands to be the capability to lead the lives that they have reasons to value. (16) For Sen, higher incomes are not necessarily ends in themselves, but rather instruments to achieve a set of "functionings." (17) Similarly, poverty is not simply low income, but rather a lack of capabilities. (18) Notably, however, Sen does not...