The Free Trade—Fair Trade Debate: Trade, Labor, and the Environment
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Many trade scholars—both lawyers and economists—view the increasing preoccupation with “fair trade” as the most fundamental intellectual challenge or threat to the liberal trading order that has arisen in recent decades. This refers to the proliferation of arguments that free trade is only “fair” where one's trading partners adopt certain kinds of domestic policies and/or refrain from others (whether the policy area be competition law, intellectual property rights, regulation of services, environment, or labor standards), although concerns that the practices of one's foreign competitors are unfairly rigging the marketplace have a long genesis in international trade law, as reflected particularly in antidumping and countervailing duty laws. The fair-trade claims that are currently generating the most debate in the trade community are those related to environmental and labor standards. The Economist magazine recently noted that “labor standards and environmental issues are playing an increasing role in international trade disputes” and are likely to be the central area of conflict between developed and developing countries in the next decade. Most free traders see recent demands that trade be linked to compliance with environmental and labor standards as motivated by the desire to protect jobs at home against increased competition from the Third World and view many fair traders as charlatans (protectionists masquerading as ethicists). Where such demands cannot so easily be reduced to protectionist pretexts, free traders are inclined to portray the advocates of linkage as irrational moral fanatics, prepared to sacrifice global economic welfare and the pressing needs of the developing countries for trivial, elusive, or purely sentimental goals. Although there is certainly an element of truth in these characterizations, we believe that free traders have, in general, been too cavalier in their summary rejection of arguments that trade, environment, and labor rights should be linked. A visceral distrust of any or all demands for trade restrictions has impeded a careful analysis of the kinds of normative claims at issue and has allowed fair traders to characterize free traders as moral philistines. Under these circumstances, the debate about trade, environment, and labor rights has frequently assumed the character of a “clash of absolutes.” The position of the free traders is reflected in two recent GATT dispute panel rulings, both concerning the legality under GATT of U.S. embargoes of tuna imports. The embargoes were targeted, either directly or indirectly, at tuna fishing practices in the Eastern Pacific, particularly those of Mexico, which resulted in the deaths of large numbers of dolphins. Despite some differences in interpretive approach, both panels held that the environmental exemptions in Article XX of the GATT (which refer to protection of animal life and health and to conservation of natural resources) do not extend to trade sanctions whose environ- mental impact depends on inducing other countries to change their policies. Although neither panel ruling has been formally adopted by the GATT Council, and although there is currently no exemption in Article XX of the GATT that applies to labor rights-based measures (except with respect to restrictions on imports of products of prison labor), the principle that trade sanctions should never be a legally permissible response to the environmental and labor policies of other countries has become an article of faith among most free traders, or at least the beginning point6 for any discussion of the relationship between GATT rules and global environmental and labor rights concerns. The notion that there is, or should be, no room whatever within the GATT/WTO legal framework for trade measures in response to labor and environmental policies of other countries has arguably heightened the intuitive discomfort many citizens feel about transferring domestic sovereignty to an international institution like the World Trade Organization. It is significant that of all the GATT panel rulings in recent years, only Tuna/Dolphin I has attracted widespread attention and scrutiny beyond the trade law and policy community, particularly in the United States. If international trade law simply rules out of court any trade response to the policies of other countries, however abhorrent, then there will be an understandable, and dangerous, temptation to declare that international trade law is an ass. The lesson of the recent heroic exercise to gain congressional approval of the Uruguay Round agreements, including the provisions establishing the WTO, is that any rules-based approach to international trade is unlikely to be durable unless, in the end, it is able to command significant public legitimacy. People who are concerned about endangered species may not end up sitting on many GATT panels, or negotiating many trade treaties, but in liberal democracies they do vote, and the fate of the international trading order depends, in certain respects, on their support.
Source Publication
Economic Dimensions in International Law: Comparative and Empirical Perspectives
Source Editors/Authors
Jagdeep S. Bhandari, Alan O. Sykes
Publication Date
1997
Recommended Citation
Howse, Robert L. and Trebilcock, Michael J., "The Free Trade—Fair Trade Debate: Trade, Labor, and the Environment" (1997). Faculty Chapters. 890.
https://gretchen.law.nyu.edu/fac-chapt/890
