Linking Trade and Labour Standards: A Promising Synergy or Double-edged Sword? Acta Juridica

Trade liberalisation is increasingly promoted and regulated through regional, bilateral or unilateral trade arrangements. In recent years some of these arrangements have provided for sanctions in the case of non-compliance with the labour standards included in the agreement. This link between trade rights and labour standards is controversial. Those who argue in favour of the inclusion of labour standards in trade agreements do so on either economic or normative grounds: the economic argument is that a trading partner that does not adequately protect labour standards affords that country an unfair advantage over a country that does protect labour standards; while the normative argument is that it is morally offensive to trade in goods that have been produced by exploited labour. Those who argue against the inclusion of labour standards in trade agreements also advance economic and normative grounds: from an economic perspective, exclusionists argue that the comparative advantage of developing countries is their ability to produce low-wage goods and are concerned that a link between trade and labour standards may be exploited for protectionist purposes. Normatively motivated exclusionists argue that labour standards are a human rights concern that should not be linked to trade and should be promoted through other means. This contribution assesses the arguments for and against the inclusion of labour standards in trade arrangements against the backdrop of a case study involving a recent complaint against Guatemala for failure to enforce its labour standards in terms of the Dominican Republic - Central America Free Trade Agreement (CAFTA-DR).