Labor Provisions in Trade Agreements: Recasting the Protectionist Debate
40 Pages Posted: 21 Sep 2020
Date Written: July 10, 2020
As labor provisions in regional trade agreements proliferate, critics contend that they are used for protectionist purposes. Existing categories of labor clauses lead to inconsistent empirical results. We propose and apply a new typology for labor clauses to all WTO-notified regional trade agreements from the 1990s through February 2016 and generate Pseudo Poisson Maximum Likelihood and Two-Stage Heckman gravity model estimates of the relationship between labor provisions and bilateral trade. Although individually heterogeneous, the overall relationship between labor provisions and pair-wise trade is positive. Contrary to contention, our estimates suggest that labor provisions reduce trade costs and facilitate trade.
Keywords: regional trade agreements; labor provisions; labor clauses; WTO; PPML; gravity model
JEL Classification: F13, F66, J8
Suggested Citation: Suggested Citation