Considerations of Labour Standards in International Trade and their Implications

The discourse to find a balance between maintenance of labour standards and non-violation of the principles of GATT is not new. A common consensus in this matter, however, has been that considerations of labour standards should not be used to enforce protectionist practices or to dilute the comparative advantage of a certain country. The Appellate Body of WTO had ruled that GATT inconsistent trade measures directed at other countries have to be justified under any of the exceptions listed in Article XX of GATT. However, there is little available jurisprudence to understand how Article XX is to be interpreted. Article XX lists exceptions to justify trade measures that are inconsistent with the principles of GATT with only two exceptions, namely “public morals” and “products of prison labour” that can be linked to labour standards, unlike its arguable predecessor, the Havana Declaration which expressly called for measures against unfair labour conditions. It is particularly “public morals”, that provides a rather wide but quite ambiguous connotation of Article XX. What constitutes public morals is itself dynamic in nature, ever adapting to the changing times. At the same time variations in labour conditions are also a result of the economy of a particular nation as well as are culture specific. This poses a challenge to enforcing a universal idea of rights at the backdrop of plausibly inconsistent domestic policies. However, while inconsistencies might exist in tailoring an ideal fair wage or liberty for labour to organise, certain aspects of labour rights remain non-negotiable. The objective of the paper is to explore ways to make sure that labour rights are given due consideration in international trade, by delving into the present framework and connected jurisprudence, existing challenges and rationales and would ultimately suggest plausible policy reforms.