CIAO DATE: 04/04

Labor Standards, Development, and CAFTA

Abstract

The debate over linking trade and worker rights is often a dialogue of the deaf, with advocates on either side paying little attention to the scope for positive synergies between labor standards, development, and globalization. Instead, each side views the other as promoting positions that will, intentionally or not, impoverish poor people in poor countries. Opponents of global labor standards fear that these standards will undermine developing countries' comparative advantage in low-wage goods or be abused for protectionist purposes, thereby denying workers jobs. Standards advocates argue that failure to include labor standards in trade agreements increases inequality and leads to a race to the bottom for workers worldwide.

Both sides in the standards debate have some things right but others wrong (Elliott and Freeman 2003). Globalization enthusiasts are right that increased trade can contribute to growth and that the jobs global engagement creates are generally better than those in agriculture or the informal sector. But they downplay the increased income inequality that sometimes accompanies globalization, the disproportionate influence that multinational corporations have had on international trade negotiations, and the possibilities for directly improving conditions for workers in less developed countries without risking economic growth. Worker rights advocates are right that global labor standards can spread the benefits of globalization more broadly, discourage the worst abuses of workers, and increase public support for trade agreements. But they undervalue the need for increased market access for developing-country exports to enable poor people to move from agriculture and the informal sector to more productive jobs.

Full Text (PDF, 11 pages, 320.5 KB)