Weakness of the WTO and Including Labour Standards

These two situations in different countries must find a middle ground so that labour standards and rights are preserved without prejudicing the utter need to create a stable, sustainable and efficient economic system in which trade barriers do not preclude the access of the people to commodities.

In balancing the two factors, however, it must be noted that labour standards must always yield to sustaining the efficiency of the world economic system because the continued existence of industries, big or small, in all member states is more imperative than ensuring labour standards which might constitute as a big stumbling block in keeping the prices of commodities lower, thus, constraining market access due to higher prices.

It must be remembered that the beauty of globalization has always been the breaking down of transactional costs and trade barriers to reduce prices considerably and flood the market with accessible goods for the people of the world. In the long run, balancing international trade in favour of the survival of industries rather than labour standards would benefit the workers soon enough.

While to an extent, including labour standards to the ambit of the WTO might be burdensome for workers, especially workers in developed countries who might have to sacrifice much of their well-endowed benefits, the promise of globalization has not been to benefit a mere section of the world’s population, but to equalize the fruits and profits of international trade to all member states, thereby, relatively reducing poverty and hunger in a world-wide scale.

The weakness of WTO is the continued perpetuation of regional trading blocs  as sometimes regional reforms turn out better, and more enforceable than the WTO. As the countries in regional blocs are more culturally and politically linked, the enforcement of obligations have been much easier than the multilateralism enforced by the WTO. However, the most tacit yet glaring controversy the WTO has immersed itself into has been the prospects of compromising the interests of labour in the guise of freer market access and cheaper prices for goods traded.

The phenomenon of globalization, has forced even without the need for legislation, Third World countries to turn into a haven of cheap-labour for the international market, to the extent that huge multinational and trans-national industries relentlessly search for factory sites that would offer the cheapest costs. No other greater example exists than the influx of direct capital investment to China. On the other hand, other Third World countries are forced to do away with stringent labour standards entrenched in Labor Codes and ILO standards in order to compete with China a gain a comparative advantage.

As a result, countries like the Philippines, known for its high labour standards and the militancy of its working class, is veering into measures to subvert the protections given to labour, such as industry-scale contractualization policies. Contractualization is the phenomenon in which capitalists and employers employ, in a semi-annual contractual basis, all the workers in the production line it needs, to go around the labour standard loophole of automatically regularizing a person’s employment, with benefits, job security and union rights, once the person is employed after more than six months in any enterprise.

Nonetheless, in the area of labour, the current trend at present has shown that workers in the Third World are at a great disadvantage to developed countries in which the latter countries continuously employ and follow strict labour standards, whereas in the former countries, these already inadequate protections have been relaxed to suit the demands of a competitive advantage of cheap labour.

The myth then of the equalization of playing fields is pierced because in glaring economic reality, the conditions of labour and the working people in both developed and underdeveloped areas of are utterly different. If the WTO were to include the globalization of labour standards aside from trade and services, it would totally be hard pressed to implement it, especially in the face of the patent inability of the WTO to force the withdrawal of agricultural farm subsidies on European farmers, in violation of WTO policies to level the playing field in agriculture.

In WTO’s prospective policy on labour, it cannot be expected to uphold the stringent labour standards set by international labour organizations nor adhere to the intense lobby of worker’s unions to improve labour relations as such protections of labour would entail increased transaction costs (worker benefits and compensation, separation pay etc. ) and jack up prices of goods distributed in the world market. The WTO would inimitably contradict itself if it upholds such stringent labour standards as it would mean that the WTO favours some barriers to trade such as stringent labour standards.

However, in the event that the WTO does enact and encroach even on labour standards and dismantle those standards set by the WTO in pursuit of its neo-liberal economic agenda, it will surely be met with massive protests the working people the world over, as what happened in Seattle, Cancun and Hong Kong when agricultural subsidies were being liberalized. Like agriculture and land, labour is one of the more sensitive issues that can be the source of either developing the world economy or destroying it.