Many analysts of international trade decry the concept of a ‘social clause’ as an attempt by rich developed countries to protect jobs and dominate markets by stipulating minimum labour standards. However, little attention is given to competition between developing countries to gain access to markets in richer countries, which is equally detrimental to labour standards. In the absence of a common set of minimum labour standards, destructive competition deprives workers of the benefits of economic growth.

Research from the Australian National University and Clark University examines the consequences of competition between China and Mexico for the North American clothing market. It shows how the resulting growth in employment has been accompanied by appalling labour conditions. China is now the world leader in receiving foreign direct investment. As it attracts investment in search of cheap labour, the Chinese export economy is setting new low precedents for labour standards in the labour-intensive export sectors.

Within international labour law the ‘social clause’ refers to linking trade with standards embodied in the five ‘core’ labour rights (freedom of association, freedom to organise and to bargain collectively (through a union for example), no forced labour, no child labour and no discrimination in employment). In a broader sense, the social clause includes labour standards such as minimum wages, limitation of work hours and occupational health and safety. Many developing countries either do not have laws to protect these rights or, when they do, they allow them to be violated. For many governments in developing countries the expression ‘social clause’ has become such a loaded term that the International Labour Organization (ILO) has started using the more neutral and abstract term, ‘social dimension’.

The researchers report that:

• Both Mexican and Chinese export-oriented factories mostly employ female domestic workers from their poorer regions.
• Chinese local authorities only nominally comply with the central government’s decrees about raising minimum wage levels to keep up with inflation.
• The state-controlled All China Federation of Trade Unions (ACFTU) – Asia’s largest union – rejects criticisms of Chinese human and labour rights violations and opposes the social clause.
• While the labour movement is divided over the social clause, the division is not along a simple rich-poor axis.
• Trade unions of countries of South Asia – notorious for using child labour – may be at the forefront of those rejecting the social clause, but other Asian and many African national trade union federations want the World Trade Organization (WTO) to champion the social clause.

Governments, trade unions and labour advocates in developing countries need to:

• realise that more work does not necessarily mean better lives, better working conditions and higher pay
• face the reality that they are competing among themselves as much or more than they are competing with developed states
• analyse the real consequences of rejecting a trading regime without labour standards
• recognise that there is genuine concern among unions in developed countries for workers’ conditions around the world.

A losing battle can only be avoided by a broad agreement to set minimum labour standards in the competition for cheap labour. China, the country with the largest labour force, should be the country taking the initiative. As China endeavours to play a leadership role in various international organisations it should be the natural leader to take up the cause of labour standards.

Source(s):
‘Racing to the bottom: international trade without a social clause’ by Anita Chan and Robert J S Ross, Third World Quarterly, Vol 24, No 6, pp 1011-1028, 2003
“A ‘race to the bottom’: globalisation and China’s labour standards” by Anita Chan, China Perspectives No 46. pp41-49, March 2003 Full document.
‘From North-South to South-South: the true face of global competition’ by Robert J.S. Ross and Anita Chan, Foreign Affairs, vol 81, no 5, pp September-October 2002 Full document.

Funded by: Ford Foundation

id21 Research Highlight: 28 June 2004

Further Information:
Anita Chan
Senior Research Associate
Contemporary China Centre
Research School of Pacific & Asian Studies
9 Liversidge Street
Australian National University
Canberra 0200
Australia

Tel: 61 2 6125 4260; +61 2 6241 4285
Fax: 61 2 6257 3642
Contact the contributor: anita@coombs.anu.edu.au

Australian National University

Robert J S Ross
Professor of Sociology
Department of Sociology
Clark University
950 Main Street
Worcester MA 01610-1477
USA

Clark University, USA

Other related links:
'Indecent work and child or slave labour: human rights in the sustainable workplace'

The International Labour Organisation (ILO)

'Ethical information: keeping consumers informed'

Information on Global labour rights from choike.org