Labor provisions in trade agreements do not lead to a reduction or diversion of trade flows, and ease labor market access, a new study by the International Labor Organization finds.
The research shows that a trade agreement that includes labor provisions actually increases the value of trade by 28 percent on average, similar to 26 percent for an agreement without labor provisions.
The study also finds that labor provisions support labor market access, particularly for working-age women. Labor provisions impact positively on labor force participation rates, bringing larger proportions of both, male and female working age populations into the labor force.
These are the main findings of the new ILO Growth with Equity report entitled “Assessment of labor provisions in trade and investment arrangements” which analyses the design, implementation and outcomes of labor provisions in trade agreements.
The study, produced by the ILO Research Department, highlights a significant increase in the number of trade agreements worldwide, showing that in 2014 almost 55 percent of exports took place within the framework of bi- and multi-lateral trade agreements – compared to just 42 percent in 1995.
“It is increasingly common for new trade agreements to include labor provisions,” said Marva Corley, ILO senior economist and lead author of the report.
“As of December 2015, there were 76 trade agreements in place (covering 135 economies) that include labor provisions, nearly half of which were concluded after 2008. Over 80 percent of agreements that came into force since 2013 contain such provisions,” she added.
Currently a quarter of the value of trade taking place within trade agreements falls under the scope of such provisions which were almost non-existent until the mid-1990s.
The report warns that the impact of trade on labor markets shows a mixed picture, especially when it comes to job quality and wage increases. It insists on the fact that income inequality has tended to widen since the 1980’s, which is partly due to trade and investment liberalization.
“The winners from trade are not adequately compensating those who lose in terms of jobs and incomes,” the study observes.
Looking at the nature of labor provisions, the authors say that in the great majority of cases, trade agreements that include labor provisions are based on the commitment not to lower labor standards or stray from labor laws to boost competitiveness. They also aim at ensuring national labor laws are effectively enforced and consistent with already existing labor standards. 72 per cent of trade-related labor provisions make reference to ILO instruments.
The authors also say that trade agreements that contain labor provisions can boost capacity-building, and, in some cases, improvements in working conditions at the sectoral level.
Looking at how labor provisions can be more effective, the ILO research suggests that trade negotiations become less opaque by involving stakeholders, especially the social partners – and not just governments – in the making and implementation of labor provisions in trade agreements.
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Labor provisions in trade agreements do not lead to a reduction or diversion of trade flows, and ease labor market access, a new study by the International Labor Organization finds.
The research shows that a trade agreement that includes labor provisions actually increases the value of trade by 28 percent on average, similar to 26 percent for an agreement without labor provisions.
The study also finds that labor provisions support labor market access, particularly for working-age women. Labor provisions impact positively on labor force participation rates, bringing larger proportions of both, male and female working age populations into the labor force.
These are the main findings of the new ILO Growth with Equity report entitled “Assessment of labor provisions in trade and investment arrangements” which analyses the design, implementation and outcomes of labor provisions in trade agreements.
The study, produced by the ILO Research Department, highlights a significant increase in the number of trade agreements worldwide, showing that in 2014 almost 55 percent of exports took place within the framework of bi- and multi-lateral trade agreements – compared to just 42 percent in 1995.
“It is increasingly common for new trade agreements to include labor provisions,” said Marva Corley, ILO senior economist and lead author of the report.
“As of December 2015, there were 76 trade agreements in place (covering 135 economies) that include labor provisions, nearly half of which were concluded after 2008. Over 80 percent of agreements that came into force since 2013 contain such provisions,” she added.
Currently a quarter of the value of trade taking place within trade agreements falls under the scope of such provisions which were almost non-existent until the mid-1990s.
The report warns that the impact of trade on labor markets shows a mixed picture, especially when it comes to job quality and wage increases. It insists on the fact that income inequality has tended to widen since the 1980’s, which is partly due to trade and investment liberalization.
“The winners from trade are not adequately compensating those who lose in terms of jobs and incomes,” the study observes.
Looking at the nature of labor provisions, the authors say that in the great majority of cases, trade agreements that include labor provisions are based on the commitment not to lower labor standards or stray from labor laws to boost competitiveness. They also aim at ensuring national labor laws are effectively enforced and consistent with already existing labor standards. 72 per cent of trade-related labor provisions make reference to ILO instruments.
The authors also say that trade agreements that contain labor provisions can boost capacity-building, and, in some cases, improvements in working conditions at the sectoral level.
Looking at how labor provisions can be more effective, the ILO research suggests that trade negotiations become less opaque by involving stakeholders, especially the social partners – and not just governments – in the making and implementation of labor provisions in trade agreements.