logo logo

Inclusion of labour norms on the rise in FTAs: ILO study

The Hindu, India

Inclusion of labour norms on the rise in FTAs: ILO study

7 November 2013

Our Bureau/New Delhi/As the world moves into a regime where free trade agreements (FTAs) govern 5.5 per cent of global trade compared with 0.6 per cent in 1995, a new ILO report finds a marked rise in inclusion of labour provisions in bilateral and regional pacts.

According to a report by ILO and the French Labour Ministry, ‘Social Dimensions of Free Trade Agreement’, more and more countries are now ensuring that FTAs lead to better working conditions. It found that 58 trade agreements included labour provisions in June 2013, up from 21 in 2005 and four in 1995.

“The increasing number of trade agreements which include provisions with respect to labour standards is a reflection of the growing awareness that trade liberalisation should go hand-in-hand with progress on the employment and social front,” said Raymond Torres, Director, in charge of the ILO Research Department.

The report notes that in some cases, the improvement of labour standards had been made a condition for the entry-into-force of agreements between countries.

The report is significant at a time when India is negotiating several FTAs with countries, such as Australia, Canada, New Zealand and the European Union.

The study defines labour provisions as those that establish minimum working conditions, terms of employment or worker rights, any norm on the protection provided to workers under national labour law and its enforcement, as well as any framework for cooperation or monitoring these issues.

However, the study cites mixed results on the impact of FTAs on labour in various countries. While in Mexico, import tariff cuts are related to reduction in the likelihood of informality in the tradable industries, another study on the relation between trade reforms and informality in manufacturing industries of Great Buenos Aires, Argentina, during 1980-2001, found a 4 per cent increase in informality of labour in export-oriented industries after trade liberalisation.

Another study that examined the relationship between tariff liberalisation and informality in Sri Lanka during 1996-2007, found that heavily protected industries experienced lower levels of informal jobs than the liberalised ones.

The report suggests steps to improve the effectiveness of labour norms in trade agreements, such as specific labour-related development objectives to be delivered in a set time-frame, linked to economic incentives, greater consultation of employer and worker organisations in the negotiation, among others.