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Forging Trade Rules in the Age of AI: The Case for Special Labor Safeguards

In: Geopolitical Risks and Geoeconomics in International Economic Law

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  • Tsai-fang Chen

    (National Yang Ming Chiao Tung University)

Abstract

Artificial intelligence (AI) has the potential to reshape global labor markets, generating structural displacement across sectors through trade in AI-enabled goods and services. This chapter argues that the WTO’s current safeguard regime is poorly equipped to address the distinctive character of AI-induced labor disruption. Rooted in a product-specific, sectoral logic, the Agreement on Safeguards fails to accommodate the cross-cutting, anticipatory nature of AI shocks, and excludes services altogether. To address this gap, the chapter proposes a new WTO instrument: a special safeguard mechanism specifically designed to enable members to respond to systemic employment dislocation linked to trade in AI-intensive products and services. It outlines the foundations for such a mechanism, proposes core design elements, and considers necessary guardrails to prevent protectionist misuse. Rather than eroding multilateralism, this approach seeks to preserve it: by equipping the WTO with tools that enable governments to manage labor transitions within a rules-based framework, this chapter aims to reaffirm the WTO’s relevance in an era of general-purpose technological disruption.

Suggested Citation

  • Tsai-fang Chen, 2026. "Forging Trade Rules in the Age of AI: The Case for Special Labor Safeguards," Economics, Law, and Institutions in Asia Pacific, in: Junji Nakagawa & Taro Hamada & Yoshimichi Ishikawa (ed.), Geopolitical Risks and Geoeconomics in International Economic Law, chapter 19, pages 379-394, Springer.
  • Handle: RePEc:spr:eclchp:978-981-95-6996-0_19
    DOI: 10.1007/978-981-95-6996-0_19
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