Social Standards in Bilateral and Regional Trade and Investment Agreements

Despite efforts of the ILO, no viable multilateral labor rights regime has been established. At the same time, an increasingly global economy requires such regimes in order to prevent ruinous competition between countries competing in similar product markets on the basis of a similar set of production factors. Particularly if cheap labor is one of these factors, systematic violations of labor rights may be used as source of competitive advantages, even if such advantages are marginal. So-called ‘core labor rights’ can enable domestic actors to fight for improved standards.
Unilateral labor rights provisions do exist in the Generalized System of Preferences of the United States and the European Union, and have been applied with some success. However, attempts of the international labor movement to establish more enforceable multilateral labor rights provisions at the WTO have failed so far. Civil society actors have therefore stepped up their efforts to push individual transnational
enterprises to adopt so-called voluntary codes of conduct, with mixed (and limited) success.
A more recent strategy is the inclusion of labor rights provisions in bilateral or regional trade and investment agreements. With the multilateral trade process stalling, the governments of developed countries are moving toward bilateral and regional negotiations, where they have more bargaining power. Also, the value of unilateral trade preference schemes has decreased due to multilateral liberalization. Labor rights provisions in bilateral or regional agreements may thus be seen as a promis-ing strategy for improving compliance regarding core labor rights.
Specific labor rights provisions have been included in several agreements negotiated by the U.S., and more general provisions are to be found in agreements of the EU. Most U.S. provisions are effectively limited to the commitment of parties to enforce domestic labor law. However, there are notable exceptions in the agreements with Cambodia and Jordan, which could serve as examples for future labor rights provisions. In EU bilateral agreements, the focus is clearly on general human rights, development issues, technical cooperation and political dialogue, rather than on specific and enforceable labor rights provisions.
In addition to the problematic subordination of labor rights decisions to foreign policy objectives, there are two main problems for even the strongest labor rights provisions: First, their effective enforcement relies on strong local actors; yet it is the absence or weakness of such actors that makes external pressure necessary in the first place. Second, labor relations are among the most political domestic institutions, and resistance to external pressure can be expected not just in cases of systematic violations of core labor rights.