The ‘New Commercial Agenda’: Trade, Environment and Labour Standards IR457: Political Economy of International Trade Le

1. The ‘New Commercial Agenda’: Trade, Environment and Labour StandardsIR457: Political Economy of International TradeLent Term: Week 5 Matthew Eagleton-Pierce Room D510 Email: m.eagleton-pierce@lse.ac.uk

2. Outline Introduction Conceptualising Trade Linkage Trade and Environment Trade and Labour Conclusion

3. Introduction Extending the agenda: the ‘trade and’ or ‘trade linkage’ debate, prominent in last two decades. How is the ‘integration’ of the ‘ands’ accomplished, conceptually and materially?

4. I. Conceptualising Trade Linkage

5. Conventional views on linkage • Linkage as a technique of politics; normatively neither good or bad. • Leebron’s (2002) definition of ‘linkage claims’: • Substantive linkage: some degree of coherence between two sets of norms, could be either congruent or conflictual. • Strategic linkage: referring to bargaining situations, how an actor connects a strength with a weakness. At the same time, need to define what an ‘issue area’ is.

6. Why and how has the ‘linkage debate’ come to take its objectified forms? Lang’s (2007) argument: ‘Trade and’ debate, while worthy to an extent, does not actually accomplish what it claims; has come to ‘legitimise and naturalise precisely those concepts which it ought to be contesting’. Classifying of ‘trade’ versus ‘non-trade’ never apolitical, always interested. Serious implications in terms of the strength of critiques of the trading order. Critical views on linkage

7. II. Trade and Environment

8. ‘Trade and environment’ umbrella frame to organise a range of concerns; contested debate Environmentalists: Trade may cause environmental harm by promoting growth that could be unsustainable; Trade rules often entail market access provisions that may override domestic environmental regulations; Trade restrictions should be part of a global promotion of environmental protection; Countries with lax standards may put pressure on countries with high standards to reduce their own environmental requirements. Positions in the debate I

9. Freer traders: tend to underscore mutual compatibility between trade and environment; relative costs and benefits: ‘Race to the bottom’ concerns on standards difficult to substantiate (exceptions heavy industry like steel and iron); ‘Trickle down’ approaches to wealth generation through trade ensure new resources can be devoted to environmental projects; Trade measures per se not the best environmental policy tool. Positions in the debate II

10. Environmental problems not a new concern in the trading system, but often not occupied a privileged space in debates. GATT 1947: traces of an ecological spirit. 1960s and 1970s: GATT driven not by environment concerns per se, but fears of parties ‘using’ ‘green protectionism’ (in intent or effect); institutional ‘window-dressing’ follows. 1970s and 1980s: growth in MEAs outside the GATT, such as Montreal Protocol (1987). Historical and institutional evolution I

11. 1990s: coming of age for ‘trade and environment’. Three major developments: Evidence of environmental damage becomes more worrying; new wave of activism, including targeting of US Congress. Two ‘trigger events’ raise the stakes: GATT panel decision on Tuna-Dolphin, and side agreement on environment in NAFTA. WTO Agreements signed with environment references: AoA, TRIPs, as well as Preamble; new institutional group: Committee on Trade and Environment (CTE). Historical and institutional evolution II

12. How to reconcile approximately 20 MEAs which feature some trade provisions with WTO law? Examples: Definition of patents in TRIPs seems to be at variance with Convention on Biological Diversity (which recognises rights of indigenous peoples’ informal innovation and traditional knowledge); potential Kyoto conflicts as well. Doha Round stalemate: EU, Norway, Switzerland: want rules that exempt MEAs from WTO legal challenges; US, Australia, many developing countries: oppose any further environmental compromises on trade rules. Debates I: MEAs-WTO relations

13. How a good is made of central environmental importance; makes sense to discriminate at the border between ‘like’ products produced in either clean or dirty ways. But discrimination based on process and production methods (PPMs) difficult to achieve: protectionist (not ecological) motives could arise; developing countries concerned about adopting Northern environmental priorities. Too narrow debate? Need to focus on entire product cycle, including consumption and disposal. Debates II: PPMs

14. Current rules and procedures not designed with climate crisis in mind, but some early adaptation: Enhancing market access for climate-friendly goods (for instance, carbon capture and storage technology) within Doha liberalisation of environmental goods and services. Examining the ‘embodied carbon’ of goods. Research explosion on many fronts: rethinking biofuels; reform of subsidies in agriculture, fisheries, and energy; and debates on climate-friendly technology transfers to Southern countries. Debates III: Climate crisis

15. Agents inside the trading system have primarily conceived of ‘environment’ in terms of impacts of environmental policy and regulation on ‘trade’. Only from 1990s: start to consider that trade regime could have negative impacts on the environment. World economy is a wholly owned subsidiary of the environment, not the other way around! Problems remain in the WTO: Compartmentalisation: for instance, no references to environment in NAMA talks. Failure to adequately include precautionary principle. Summary

16. III. Trade and Labour

17. Relationship between trade policy and labour rights historically contentious; the ‘problem of labour’ organised on and off the agenda. Critics: ‘unfair’ that developed countries should have to compete with imports from low-wage countries with poor standards. Advocates: comparative advantage is legitimate, important element in growth strategies and, ultimately, distributive justice. Positions in the debate

18. Relationship between trade and social rights reoccurring battle; need to keep in mind prevailing ideological climate of each period. 1919: International Labour Organisation (ILO) founded; aims to promote universal labour standards (freedom of association etc); 1946: becomes part of UN; expands membership. But what about the how question: ILO lacks compelling mechanisms of adjudication and enforcement (beyond monitoring and moral force). Historical and institutional evolution I

19. 1948: Ill-fated ITO featured much more ambitious mandate on labour than what the GATT would administer (‘Fair Labour Standards’ provision). Early GATT Rounds: most governments denied any substantive connection between labour and trade policy. 1970s and 1980s: early efforts, particularly from US (occupational health and safety rules) and EU (advanced its own Social Charter and proposal for a ‘social clause’). Historical and institutional evolution II

20. 1996: Singapore Ministerial decision: Members agreed to ‘renew’ their commitment to ‘observance’ of core labour standards; Labour standards should not be used for protectionist purposes (low wage countries should be able to fulfil comparative advantage); ILO is the competent body to promote such standards. Problems: WTO wipes its hands, but ILO is a toothless tiger; comparative advantage argument can be overextended to justify violation of core rights. Historical and institutional evolution III

21. Movement towards basic ‘minimum standards’; influential OECD (1996) report crystallises four: (1) freedom of association and right to bargain collectively; (2) no child exploitation; (3) no forced labour; (4) non-discrimination. Different types of arguments, stresses on efficiency, human rights, and sovereignty. Frame distortions: labour standards as a ‘Trojan horse’, hiding instrumental interests (ignoring labour problems on US soil heads off anti-US sanctions?) Debates I: Core labour rights

22. Legal provision in a trade agreement aimed at removing most extreme forms of labour exploitation in exporting countries by allowing importing countries to take certain measures: Exclusion from preferential status arrangements (such as GSP); Erecting restrictive quotas, quantitative barriers, or raising tariffs; Complete economic sanctions on products. Possible forms of surveillance and decision-making: ILO independent committee; WTO TPRM; voluntary codes and social labelling. Debates II: Social clause

23. Understanding ‘trade linkage’: conceptual constructions become material constructions. Struggle over the form of ‘integrating’ environment and labour, particularly since 1990s; but still largely viewed as ‘non-trade’ by many parties. Some reasons for optimism (WTO jurisprudence), but serious challenges in the immediate future due to the ecological crisis. Conclusion

24. Thank you for listening Matthew Eagleton-Pierce Room D510 Email: m.eagleton-pierce@lse.ac.uk