International Trade and Labor Standards: A Proposal for Linkage

Abstract:     
Should some rights to engage in international trade be made conditional on the promotion of labor standards? The critics of such conditionality, known as linkage, are right to be concerned about its possible adverse effects. However, linkage can be desirable. A set of rules for international trade that incorporates linkage can serve the interests of developing countries, and in particular of less advantaged individuals within them - if it is unimposed, transparent and rule-based, applied in a manner reflecting a country's level of development, demands adequate international burden-sharing, and incorporates measures that ensure that appropriate account is taken of different viewpoints within each country. Such a linkage system could substantially reduce the costs that are incurred by exporting countries when they attempt to promote the interests of workers. By enabling and encouraging countries to promote labor standards, an appropriate form of linkage can serve as a cornerstone of a worker-oriented world trading system.

Keywords: linkage, labor standards, international trade, WTO

JEL Classifications: F02, F10, F19, J00, J50, O19

Working Paper Series