Early View Article - The Intricacies of Firms’ Support for Labor Provisions in US Trade Agreements

The Intricacies of Firms’ Support for Labor Provisions in US Trade Agreements

Do pro-trade firms want trade agreements to include stronger provisions protecting workers? The position of those firms in the US in recent years is often counterintuitive vis-à-vis the expectations of the literature. To solve that puzzle, I argue that it is necessary to account for the intricacies of the position of firms/associations on US trade–labor linkage according to their GVC integration. I argue that highly GVC-integrated firms/associations fear the uncertainties of strong labor provisions in PTAs and prefer to oppose commitments that could potentially lead to sanctions. However, it can be risky to oppose the inclusion of strong labor provisions in US PTAs. Instead, I argue that highly integrated firms/associations nowadays support trade–labor linkage but attach intricate conditions to that support based on lessons from previous experiences. To probe that argument, I perform a qualitative text analysis of the public submissions of firms/industry associations positioning themselves on the link between trade and labor in US PTAs between 2008 and 2020. The empirical analysis underscores the plausibility of my hypothesis. The results point to subtle ways in which pro-trade firms may lobby trade–labor linkage. The paper has implications to the design of sustainable development provisions in US PTAs and beyond.

Policy Implications

  • Given that large firms may seek to uphold existing regulations on trade–labor linkage, policy entrepreneurs should reinforce and expand the participation of a broad range of actors from the civil society when looking for policy innovations in that area.
  • Similarly, when looking for policy innovations policy entrepreneurs should bear in mind that industry champions for the promotion of better labor practices along the supply chain using voluntary instruments will not necessarily be proactive in the promotion of stronger labor standards using instruments of hard law.
  • To more fully understand the position of key stakeholders on trade–labor linkage, policymakers should factor in variables linked to international economic integration but also dynamics that are context-specific, such as the specific trajectory of a country when promoting sustainable development provisions in economic agreements.
  • To more fully understand the political underpinnings of promoting sustainable development objectives via trade, policymakers should pay close attention to the characteristics of the mechanisms of dispute resolution of those provisions.
  • In regions where demand for the inclusion of sanctions in the design of sustainable development provisions in PTAs is growing, the EU in particular, policymakers seeking to more fully understand the reaction of key stakeholders from the private sector for/against such provisions can learn from the US experience.

 

Photo by naeem mayet via Pexels