Trade-Labor Linkage

Policy Innovations innovators Sanjay Reddy and Christian Barry respond to Jagdish Bhagwati's recent op-ed in the Financial Times, "Foes of free trade get a foot in the door" in which he argues that many of those who want the inclusion of labor standards in trade agreements do so out of fear and self-interest. Bhagwati labels such people as foes of free trade.

Reddy and Barry in this June 2, 2007 letter to the FT remind us that not all proponents of linkage are protectionists. They note that there is another way:

"There is an alternative approach to linkage, which would provide an attractive means of furthering the interests of poorer countries. This alternative would extend the transparent, rule-based approach of the WTO system to include an appropriate concern for labour standards (thereby excluding opportunistic actions by wealthy importing countries). It would require that poorer countries undertake only those efforts to promote labour standards that are reasonable to expect in light of their circumstances; while also ensuring that these countries gain by providing them with additional access to northern markets and other forms of reward for their efforts."