Standards in Trade Agreements Foster the Common Good

Mar 10, 2009 Issues: Trade

President Obama’s trade agenda states that “we need to ensure that expanded trade is not at the expense of workers’ welfare and that competitiveness is not based on the exploitation of workers.”

These principles reflect what has motivated efforts by House Democrats to include labor standards in trade agreements. As is true for domestic economic policy, there has been a basic issue relating to international trade. Shaped by the rapid increase in globalization, the issue has been whether to shape the path of market forces or basically let them occur along their own course.

A flashpoint on this issue has been incorporating in trade agreements the basic International Labor Organization (ILO) standards: prohibitions on child labor and forced labor, non-discrimination, and the rights to associate and to bargain collectively. For the first time, the Free Trade Agreement (FTA) that Congress approved with Peru included an enforceable obligation to adopt, maintain and enforce in its laws and practice these five basic international labor standards.

In Latin America, globalization has not spread its benefits broadly enough and is one source of turmoil. Unless the basic imbalance of power changes in these countries, all of the market access in the world is not going to effectively alleviate poverty within these nations. For workers to be able to break the cycle of poverty for themselves and for their children’s future, they need to have the ability to join together, to participate, and to improve their economic status.

This is an antecedent to helping those workers use the potential of globalization to create, join or expand the middle class. The development of a middle class is a matter of mutual benefit for those nations and ours. It is critical for the stability and security of these countries; for their citizens, who are fighting to climb out of poverty; for our workers, who should not have to compete against workers lacking basic rights; and for our businesses, which need middle classes to buy their products.

The Panama FTA provides an additional opportunity to expand trade and to advance worker rights in this region.

Panama is a small country, but it is an ally. Right now, 96 percent of its exports to the United States enter duty-free, while U.S. exporters still face significant barriers in Panama. An agreement would change that.

It also provides an opportunity for Panama to take the steps necessary to make real the labor standards already incorporated into the core of the agreement. Under existing Panamanian law, certain provisions are clearly in violation of ILO standards. For example, a workforce of fewer than 40 employees has no right to form a union, and a union in a company less than two years old has no right to collectively bargain or to call a strike. The laws and practices relating to subcontracted and temporary workers also interfere with the rights to freely associate and to collectively bargain.

Panama has expressed a willingness to address these issues and they should now follow through with necessary changes before congressional consideration of the FTA. Discussions are also under way about issues relating to Panama’s laws and practices regarding tax havens.

President Obama’s trade policy agenda states “trade is more beneficial for the world, and fairer for everyone, if it respects the basic rights of workers.” This helps to put to rest the false stereotypes and the mindless charges of “protectionism” that have plagued the issue of labor standards and trade agreements for years. It facilitates our moving forward to seize this opportunity for workers here and abroad, and for the cause of expanding trade in ways that spread its benefits for the common good.