Wisconsin’s Labor Protests: A Bellwether for Union Rights or Union Busting?

The trade union movement is facing a time of profound change throughout the world. But what is the nature and extent of these changes? And can appropriate solutions be found?

October 2015 | by David Delaney

Proponents of workers' rights argue that trading nations should be held to strict labor standards—and they offer two quite different justifications for their view. The first is a moral argument whose premise is that many labor standards, such as freedom of association and the prohibition of forced labor, protect basic human rights. Foreign nations that wish to be granted free access to the world's biggest and richest markets should be required to observe fundamental human values, including labor rights. In short, the lure of market access to the United States and the European Union should be used to expand the domain of human rights.

The key consideration here is the efficacy of labor standards policies. Will they improve human rights among would-be trading partners? Or will they slow progress toward human rights by keeping politically powerless workers mired in poverty? Some countries, including China, might reject otherwise appealing trade deals that contain enforceable labor standards. By insisting on tough labor standards, the wealthy democracies could lay claim to the moral high ground. But they might have to forgo a trade pact that could help their own producers and consumers while boosting the incomes and political power of impoverished Chinese workers.

The second argument for strict labor standards stresses not the welfare of poor workers, but simple economic self-interest. A trading partner that fails to enforce basic protections for its workers can gain an unfair trade advantage, boosting its market competitiveness against countries with stronger labor safeguards. Including labor standards in trade deals can encourage countries in a free trade zone to maintain worker protections rather than abandoning them in a race to the bottom. If each country must observe a common set of minimum standards, member countries can offer and enforce worker protections at a more nearly optimal level. This second argument, unlike the first, can be assessed with economic theory and evidence.

Evaluating these arguments requires answering three questions. First, what labor standards are important to U.S. trade and foreign policy? Second, how can labor standards, once negotiated, be enforced? Finally, does it make sense to insist that our trade partners adhere to a common set of core labor standards? And if so, which standards?

Should Uncle Sam Enforce Labor Standards?

The case for enforcing labor standards is strongest when it involves basic human rights, such as freedom of association or freedom from slavery, and when it rests on moral grounds rather than economic calculation. If Washington wants to require its trading partners to respect basic human rights, it must be prepared to accept the real costs it will thereby impose on its own producers and consumers—and occasionally on the victims overseas whom it is trying to help. Economic theory and evidence may be useful in calculating the potential cost of trade sanctions to the United States and its trading partners. It is not helpful in determining whether the potential gains to human rights are worth the income sacrifice. Nor is social science very informative about whether a policy of trade sanctions is likely to improve victims' rights.

The case for requiring U.S. trade partners to respect international labor standards is least compelling when it involves the terms and conditions of employment. If a country respects ILO core standards, then workers will be able to negotiate for the best combination of pay, fringe benefits, work hours, and workplace amenities that their level of productivity allows. If we insist that the resulting compensation package meet minimum international standards, we are substituting our own judgment for that of the affected workers and their employers.

Readers may object, rightly, that the weak bargaining position of workers in poor countries makes it unlikely that their negotiations with employers will secure decent compensation and safe working conditions. But their weak bargaining position is linked to their low productivity and skills. Today U.S. and European labor standards are much higher, and labor regulation enforced more rigorously, than was the case 50 years ago. The improvement is closely associated with workers' increased skill and productivity. Even in the developing world, the better-off countries are more likely than the poorest to conform to ILO labor standards. In countries with per capita income of $500 a year or less, 30—60 percent of children between the ages of 10 and 14 work. In countries with per capita income of $500—1,000, just 10—30 percent of youngsters work. As productivity improves, so too will the bargaining position and wages of industrial workers. If history is any guide, national labor standards will improve as well.

The most reliable way to improve the condition of third-world workers is to boost their average productivity. Concerned voters in rich countries can help make this happen by pressing to open up their own markets to third-world products. Many low-income countries have a comparative advantage in manufacturing apparel, textiles, and footwear and in producing staple foods, fruits, and vegetables. Rich countries often impose high tariffs or quotas on these products, and nearly all provide generous subsidies to their farmers—thus denying third-world producers and farmers access to a huge potential market. The World Bank estimates that tariff and nontariff barriers, together with subsidies lavished on U.S. and European farmers, cost third-world countries more in lost trade than they get in foreign aid.

If we insist that developing countries meet immediately the labor standards that the richest countries achieved only gradually, we will keep some of them out of the world's best markets. The poor countries that agree to abide by ILO standards will occasionally be challenged—sometimes by representatives of rich countries more intent on protecting their own workers from "unfair" overseas competition than on improving the lot of third-world workers. While the moral case for requiring our trading partners to respect labor rights is compelling, the case for removing trade barriers that limit the product markets and incomes of the world's poorest workers is just as powerful.

 

Executive Editor

 Ms Anna Sullivan

Ms Anna Sullivan