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Fair trade versus free trade – labour standards versus double standards

By Phil Morgans - posted Monday, 18 November 2002

The premise behind the argument for more free trade is that free trade is the best way of achieving economic development and so, ultimately, higher living standards. But history has shown that more free trade has not brought prosperity for all. It is in their arguments against fair trade that the double standards of free-traders are most clearly exposed.

Many of the arguments free-traders use against linking labour standards to trade under the banner of fair trade revolve around claims that workers in developing countries are just so happy to have any sort of job at all, they really have no desire for improved rights. They argue that inclusion of core labour standards in trade agreements will end up hurting the very people they are supposed to help.

While free-traders occasionally express concern about respect for International Labour Organisation (ILO) Conventions and the need to ensure that poor people in developing countries benefit from trade, they apply double standards when it comes to translating their concern into action.


The solution to the inequities raised by globalisation of the world economy does not reside in a cocktail of good intentions combined with even freer trade, as proposed by mainstream free-traders. The answer lies in strengthening the capacity of the multilateral trading system to deal with the problems that free trade creates – a strengthening through the incorporation of social and environmental issues, including respect for core labour standards, into the functioning of the WTO in collaboration with the ILO and other UN agencies.

With more free trade in the neo-liberal mould, unscrupulous companies and governments are able to gain short-term competitive advantage by abusing fundamental workers’ freedoms. This can been seen most clearly in countries like Malaysia, where workers in the electronics export sector are denied the opportunity of joining trade unions; Mexico, where the systematic failure of the state to apply the law in the maquiladora free trade zones deprives over a million, mainly young women workers of basic rights; Turkey, where free trade zone workers are denied the right to strike; Lesotho, where workers in export estates producing goods like textiles and garments face violation of basic working conditions, police violence and shootings; and Egypt, where child labour is extensively employed in export sectors like commercial agriculture, textiles, leather and carpet-making. There are a myriad other examples from export sectors around the world which have been extensively documented by the ILO and the international labour movement.

The countries losing most from increasingly bitter competition for a share of the global marketplace are not developed countries like Australia, but those developing countries which are striving to improve living and working conditions. Thus, the workers who are most hit by India’s failure to address child labour in its carpet factories are the exporters in Nepal who are striving to make carpets under good working conditions. Those who are most affected by the suppression of trade union rights in Indonesia’s coal mines are the coal miners in India, whose trade unions obtain decent wages for them. The whole developing world suffers from China’s violation of all the core labour standards, enabling it to act as a magnet to persuade multinational companies to uproot their production from other developing countries in order to produce at low labour cost in China’s special economic zones instead.

In each of these cases, competition to produce exports and to attract direct foreign investment in traded goods sectors is at the root of the problem. Tackling these problems, which result so demonstrably from globalisation, requires action at the global level by the WTO working together with the ILO.

The conclusion that needs to be drawn from the increase in exploitation of workers in developing country traded goods sectors is that these grave problems must be addressed by the multilateral trading system through the WTO. Such action would provide the surest way of achieving a transfer of the benefits of trade liberalisation to ordinary people in those countries.

Free-traders express concern about the allegedly selective nature of the core labour standards (freedom of association, the right to collective bargaining, a minimum age for employment, non-discrimination and prohibition of forced labour) suggested by the proponents of Fair Trade. The reason why these particular standards are the ones always mentioned is not some arbitrary choice. It is because these workers’ rights are the ones that have been endorsed explicitly time and again by all UN member-states. These standards have been endorsed universally precisely because they do constitute what is globally agreed to be a minimum set of basic workers’ rights that can and must be protected.


Free-traders argue that the WTO’s design reflects the principle of mutual-gain. It is indeed high time that the WTO incorporated the principle into its functioning. While the WTO’s strengthened trade dispute system was planned to make it easy for governments to interpret the WTO’s articles of agreement to further the interests of their companies in areas such as anti-dumping, subsidies, technical barriers to trade and so on, there is so far nothing in the WTO’s design that allows issues of the most basic protection of workers’ rights in the face of the many problems deriving from globalisation to be raised. How can it be considered protectionist to say that people deserve the same protection as companies? That is all that the proponents of labour rights at the WTO are asking for and why they want to see respect for core labour standards included within the WTO. The claim for linkage between trade and labour standards is not a claim for equal pay, but a claim for equal rights.

Free-traders speak of letting the ILO look after the labour rights "problem". Occasionally they even say that if it is necessary to dampen criticism of neo-liberal free trade, the ILO should be given a "new set of teeth" to address abuses of core labour standards. It may be true that not all those who oppose linkage of trade and labour standards are corporate interests and malign governments. But there are far too many such interests and governments opposing core labour standards at the WTO for it to be a coincidence. These are the parties that have the most to gain from the perpetuation of the status quo.

Furthermore, the same interests that refuse to countenance any discussion of core labour standards at the WTO are those which were the obstacles all the way through the debates on the 1998 ILO Declaration on Fundamental Principles and Rights at Work. There is little sign of good faith from people who claim at the WTO that core labour standards are best dealt with by the ILO, but then at the ILO do their utmost to block any strengthening of the ILO’s capacity to deal with the issue effectively.

The biggest threat to free trade will come not from creating a linkage between trade and labour standards at the WTO, but from the double standards of the free-traders who oppose linkage.

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About the Author

Phil Morgans worked as a researcher and policy advisor in the national office of the Australian Manufacturing Workers' Union until 2000.

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