IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/14012.html
   My bibliography  Save this paper

Regional Trade Agreements with Labor Clauses: Effects on labor standards and trade

Author

Listed:
  • KAMATA Isao

Abstract

An increasing number of regional trade agreements (RTAs) include "labor clauses" that require or urge the signatory countries to commit to maintaining a certain level of labor standards. This paper, starting by classifying more than 200 currently effective RTAs depending on the nature and extent of labor provisions, empirically analyzes the effect of a RTA with labor clauses on domestic labor conditions in the signatory countries as well as the effect on trade growth between the countries, using data for up to 220 countries for the period 1995-2012. The study finds that (i) intensive trade with the partner(s) of a labor-clause-inclusive RTA may have a positive impact on labor earnings that concentrate on middle-income countries; but also that (ii) labor clauses may reduce the trade-promoting effect of the RTA for the middle-income countries, especially when the RTA partner is a high-income country. These results offer a policy implication that the inclusion of labor clauses in a trade agreement should involve non-negligible costs for possible benefits that may not be expected for every country.

Suggested Citation

  • KAMATA Isao, 2014. "Regional Trade Agreements with Labor Clauses: Effects on labor standards and trade," Discussion papers 14012, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:14012
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/14e012.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Busse, Matthias, 2002. "Do Labor Standards Affect Comparative Advantage in Developing Countries?," World Development, Elsevier, vol. 30(11), pages 1921-1932, November.
    2. Haberli, Christian. & Jansen, Marion. & Monteiro, José-Antonio., 2012. "Regional trade agreements and domestic labour market regulation," ILO Working Papers 994700163402676, International Labour Organization.
    3. Edmonds, Eric V. & Pavcnik, Nina, 2006. "International trade and child labor: Cross-country evidence," Journal of International Economics, Elsevier, vol. 68(1), pages 115-140, January.
    4. Drusilla K Brown & Alan V Deardorff & Robert M Stern, 2013. "Labor Standards and Human Rights: Implications for International Trade and Investment," World Scientific Book Chapters, in: Zdenek Drabek & Petros Mavroidis (ed.), Regulation of Foreign Investment Challenges to International Harmonization, chapter 5, pages 153-195, World Scientific Publishing Co. Pte. Ltd..
    5. Nuno Limão, 2018. "Trade policy, cross-border externalities and lobbies: do linked agreements enforce more cooperative outcomes?," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 9, pages 257-281, World Scientific Publishing Co. Pte. Ltd..
    6. Vivek H. Dehejia & Yiagadeesen Samy, 2007. "Trade and Labor Standards: A Review of the Theory and New Empirical Evidence," Carleton Economic Papers 07-12, Carleton University, Department of Economics.
    7. Ajit Singh, 2004. "Labour Standards and the 'Race to the Bottom': Rethinking Globalization and Workers' Rights from Developmental and Solidaristic Perspectives," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(1), pages 85-104, Spring.
    8. repec:ilo:ilowps:374238 is not listed on IDEAS
    9. Kyle Bagwell & Robert W. Staiger, 2001. "Domestic Policies, National Sovereignty, and International Economic Institutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 519-562.
    10. Will Martin & Keith E. Maskus, 2001. "Core Labor Standards and Competitiveness: Implications for Global Trade Policy," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 317-328, May.
    11. Huberman, Michael & Lewchuk, Wayne, 2003. "European economic integration and the labour compact, 1850–1913," European Review of Economic History, Cambridge University Press, vol. 7(1), pages 3-41, April.
    12. Lippoldt, Douglas, 2013. "Policy Priorities for International Trade and Jobs," 2013: Employment, Immigration and Trade, December 15-17, 2013, Clearwater Beach, Florida 182509, International Agricultural Trade Research Consortium.
    13. repec:ilo:ilowps:470016 is not listed on IDEAS
    14. Kimberly Ann Elliott, 2003. "Labor Standards and the Free Trade Area of the Americas," Working Paper Series WP03-7, Peterson Institute for International Economics.
    15. Vivek Dehejia & Yiagadeesen Samy, 2004. "Trade and labour standards: theory and new empirical evidence," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 13(2), pages 179-198.
    16. Robert M. Stern, 2003. "Labor Standards and Trade Agreements," Working Papers 496, Research Seminar in International Economics, University of Michigan.
    17. Jai S. Mah, 1997. "Core Labour Standards and Export Performance in Developing Countries," The World Economy, Wiley Blackwell, vol. 20(6), pages 773-785, September.
    18. Spagnolo, Giancarlo, 2001. "Issue Linkage, Credible Delegation, and Policy Cooperation," CEPR Discussion Papers 2778, C.E.P.R. Discussion Papers.
    19. David Kucera & Ritash Sarna, 2006. "Trade Union Rights, Democracy, and Exports: a Gravity Model Approach," Review of International Economics, Wiley Blackwell, vol. 14(5), pages 859-882, November.
    20. Martin, Will & Maskus, Keith E, 2001. "Core Labor Standards and Competitiveness: Implications for Global Trade Policy," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 317-328, May.
    21. Maskus, Keith E., 1997. "Should core labor standards be imposed through international trade policy?," Policy Research Working Paper Series 1817, The World Bank.
    22. Jean-Marc SIROËN, 2013. "Labour provisions in preferential trade agreements: Current practice and outlook," International Labour Review, International Labour Organization, vol. 152(1), pages 85-106, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Isao KAMATA, 2021. "Labor Market Flexibility and Inward Foreign Direct Investment:Incentive or Outcome?," Discussion papers e-20-007, Graduate School of Economics , Kyoto University.
    2. Kamata, Isao, 2018. "Can RTA labor provisions prevent the deterioration of domestic labor standards? : the cases of statutory minimum wages and employment protection regulations," IDE Discussion Papers 716, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Isao Kamatai, 2014. "Regional Trade Agreements with Labor Clauses: Effects on Labor Standards and Trade," Discussion papers e-13-007, Graduate School of Economics Project Center, Kyoto University.
    2. Isao Kamata, 2015. "Labor Clauses in Regional Trade Agreements and Effects on Labor Conditions: An Empirical Analysis," Discussion papers e-14-019, Graduate School of Economics Project Center, Kyoto University.
    3. repec:ilo:ilowps:470016 is not listed on IDEAS
    4. Zhiqi Chen & Afshan Dar‐Brodeur, 2020. "Trade and labour standards: Will there be a race to the bottom?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(3), pages 916-948, August.
    5. Drusilla K Brown & Alan V Deardorff & Robert M Stern, 2013. "Labor Standards and Human Rights: Implications for International Trade and Investment," World Scientific Book Chapters, in: Zdenek Drabek & Petros Mavroidis (ed.), Regulation of Foreign Investment Challenges to International Harmonization, chapter 5, pages 153-195, World Scientific Publishing Co. Pte. Ltd..
    6. Inmaculada Martinez-Zarzoso & Hendrik W. Kruse, 2019. "Are Labour Provisions in Free Trade Agreements Improving Labour Conditions?," Open Economies Review, Springer, vol. 30(5), pages 975-1003, November.
    7. repec:dau:papers:123456789/3202 is not listed on IDEAS
    8. Neumayer, Eric & Soysa, Indra de, 2006. "Globalization and the Right to Free Association and Collective Bargaining: An Empirical Analysis," World Development, Elsevier, vol. 34(1), pages 31-49, January.
    9. Vivek H. Dehejia & Yiagadeesen Samy, 2007. "Trade and Labor Standards: A Review of the Theory and New Empirical Evidence," Carleton Economic Papers 07-12, Carleton University, Department of Economics.
    10. Michaël Bonnal, 2010. "Export Performance, Labor Standards and Institutions: Evidence from a Dynamic Panel Data Model," Journal of Labor Research, Springer, vol. 31(1), pages 53-66, March.
    11. Haberli, Christian. & Jansen, Marion. & Monteiro, José-Antonio., 2012. "Regional trade agreements and domestic labour market regulation," ILO Working Papers 994700163402676, International Labour Organization.
    12. Jean-Marie Cardebat & Alexandru Dimitrescu, 2011. "Social Responsibility of the countries and their international trade : A gravitational approach," Larefi Working Papers 201102, Larefi, Université Bordeaux 4.
    13. Christian E. Weller, 2011. "Could international labour rights play a role in US trade?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(1), pages 39-57.
    14. Eric Neumayer & Indra de Soysa, 2004. "Globalization and the Right to Free Association and Collective," Labor and Demography 0410006, University Library of Munich, Germany, revised 22 Apr 2005.
    15. J. M. Cardebat & Alexandru Dumitrescu, 2013. "Social responsibility of countries and their international trade: A gravitational approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(2), pages 234-252, March.
    16. Hoang, Thi Minh Hang & Nguyen, Thi Lan & Nguyen, Hoang My Linh & Phung, Thi Yen & Tran, Thi Lien Huong, 2014. "Labour provisions in preferential trade agreements: potential opportunities or challenges to Vietnam?," Papers 917, World Trade Institute.
    17. Jean-Marc Siroën, 2012. "Core labour standards and exports," Working Papers DT/2012/18, DIAL (Développement, Institutions et Mondialisation).
    18. Edmonds, Eric V. & Pavcnik, Nina, 2006. "International trade and child labor: Cross-country evidence," Journal of International Economics, Elsevier, vol. 68(1), pages 115-140, January.
    19. Drusilla K. Brown, 2001. "Labor Standards: Where Do They Belong on the International Trade Agenda?," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 89-112, Summer.
    20. repec:dau:papers:123456789/10660 is not listed on IDEAS
    21. Jacopo Timini & Nicola Cortinovis & Fernando López Vicente, 2020. "The heterogeneous effects of trade agreements with labor provisions (Updated March 2021)," Working Papers 2017, Banco de España, revised Mar 2021.
    22. Busse, Matthias, 2002. "Do Labor Standards Affect Comparative Advantage in Developing Countries?," World Development, Elsevier, vol. 30(11), pages 1921-1932, November.
    23. Michaël Bonnal, 2010. "Economic Growth and Labor Standards: Evidence from a Dynamic Panel Data Model," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 20-33, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:14012. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.