IDEAS home Printed from https://ideas.repec.org/p/fdi/wpaper/3959.html
   My bibliography  Save this paper

Labor Clauses in Trade Agreements: worker protection or protectionism?

Author

Listed:
  • Céline CARRERE

    (Université de Genève)

  • Marcelo OLARREAGA

    (Université de Genève)

  • Damian RAESS

    (University of Bern)

Abstract

We explore the impact on bilateral trade flows of the inclusion of a labor clause (LC) in Trade Agreements (TAs). Using a gravity type framework, we find that the introduction of LCs has on average no impact on bilateral trade flows. However, there is some interesting heterogeneity. Exports of low-income countries benefit from the introduction of LCs in North-South trade agreements. Interestingly, the impact is stronger when accompanied by deep cooperation. On the other hand, stronger enforcement mechanisms, at best, marginally reinforce the impact of LCs. The results are clearly inconsistent with the idea that LC are set for protectionist reasons, casting doubt on the reluctance by low-income countries to include labor clauses in their trade agreements. Key Words: Labor Clause, Free Trade Agreements, Gravity Equation

Suggested Citation

  • Céline CARRERE & Marcelo OLARREAGA & Damian RAESS, 2017. "Labor Clauses in Trade Agreements: worker protection or protectionism?," Working Papers P200, FERDI.
  • Handle: RePEc:fdi:wpaper:3959
    as

    Download full text from publisher

    File URL: http://www.ferdi.fr/sites/www.ferdi.fr/files/publication/fichiers/p200-ferdi-_c.carrere-m.olarreaga-d.raess_.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Maria Cipollina & Luca Salvatici, 2010. "Reciprocal Trade Agreements in Gravity Models: A Meta‐Analysis," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 63-80, February.
    2. Greenhill, Brian & Mosley, Layna & Prakash, Aseem, 2009. "Trade-based Diffusion of Labor Rights: A Panel Study, 1986–2002," American Political Science Review, Cambridge University Press, vol. 103(4), pages 669-690, November.
    3. Rho, Sungmin & Tomz, Michael, 2017. "Why Don't Trade Preferences Reflect Economic Self-Interest?," International Organization, Cambridge University Press, vol. 71(S1), pages 85-108, April.
    4. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    5. Drusilla K. Brown, 2000. "International Trade and Core Labor Standards: A Survey of the Recent Literature," Discussion Papers Series, Department of Economics, Tufts University 0005, Department of Economics, Tufts University.
    6. 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.
    7. Vincent Vicard, 2009. "On trade creation and regional trade agreements: does depth matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 167-187, July.
    8. Chase, Claude & Yanovich, Alan & Crawford, Jo-Ann & Ugaz, Pamela, 2013. "Mapping of dispute settlement mechanisms in regional trade agreements: Innovative or variations on a theme?," WTO Staff Working Papers ERSD-2013-07, World Trade Organization (WTO), Economic Research and Statistics Division.
    9. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    10. Rudra, Nita, 2002. "Globalization and the Decline of the Welfare State in Less-Developed Countries," International Organization, Cambridge University Press, vol. 56(2), pages 411-445, April.
    11. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    12. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    13. Hafner-Burton, Emilie M., 2005. "Trading Human Rights: How Preferential Trade Agreements Influence Government Repression," International Organization, Cambridge University Press, vol. 59(3), pages 593-629, July.
    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. Robertson,Raymond, 2021. "Deep Integration in Trade Agreements : Labor Clauses, Tariffs, and Trade Flows," Policy Research Working Paper Series 9599, The World Bank.
    2. Naoto JINJI & Isao KAMATA, 2020. "Do Labor Clauses in Regional Trade Agreements Reduce the Trade Creation Effect?," Discussion papers e-20-002, Graduate School of Economics , Kyoto University.
    3. Rodrigo Fagundes Cezar, 2022. "The Intricacies of Firms’ Support for Labor Provisions in US Trade Agreements," Global Policy, London School of Economics and Political Science, vol. 13(4), pages 483-494, September.
    4. Di Ubaldo, Mattia & Gasiorek, Michael, 2022. "Non-trade provisions in trade agreements and FDI," European Journal of Political Economy, Elsevier, vol. 75(C).
    5. 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.
    6. Mei-Line Le Goueff-Duong, 2019. "The role of the European Union in the promotion of sustainable development while concluding its external agreements: the example of the FTA EU-Vietnam [Le rôle de l'Union européenne dans la promoti," Post-Print hal-02389640, HAL.

    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. Céline Carrère & Marcelo Olarreaga & Damian Raess, 2022. "Labor clauses in trade agreements: Hidden protectionism?," The Review of International Organizations, Springer, vol. 17(3), pages 453-483, July.
    2. 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.
    3. Anderson, James E. & Vesselovsky, Mykyta & Yotov, Yoto V., 2016. "Gravity with scale effects," Journal of International Economics, Elsevier, vol. 100(C), pages 174-193.
    4. Anderson, James E. & Yotov, Yoto V., 2020. "Short run gravity," Journal of International Economics, Elsevier, vol. 126(C).
    5. Rod Falvey & Neil Foster-McGregor, 2022. "The breadth of preferential trade agreements and the margins of exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 181-251, February.
    6. Harald Oberhofer & Michael Pfaffermayr & Richard Sellner, 2021. "Revisiting time as a trade barrier: Evidence from a panel structural gravity model," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1382-1417, November.
    7. Jacqueline Karlsson & Helena Melin & Kevin Cullinane, 2018. "The impact of potential Brexit scenarios on German car exports to the UK: an application of the gravity model," Journal of Shipping and Trade, Springer, vol. 3(1), pages 1-22, December.
    8. Kenta Yamanouchi, 2019. "Heterogeneous Impacts of Free Trade Agreements: The Case of Japan," Asian Economic Papers, MIT Press, vol. 18(2), pages 1-20, Summer.
    9. Anderson, James E. & Borchert, Ingo & Mattoo, Aaditya & Yotov, Yoto V., 2018. "Dark costs, missing data: Shedding some light on services trade," European Economic Review, Elsevier, vol. 105(C), pages 193-214.
    10. Bergstrand, Jeffrey H. & Larch, Mario & Yotov, Yoto V., 2015. "Economic integration agreements, border effects, and distance elasticities in the gravity equation," European Economic Review, Elsevier, vol. 78(C), pages 307-327.
    11. Jayjit Roy, 2014. "On the robustness of the trade-inducing effects of trade agreements and currency unions," Empirical Economics, Springer, vol. 47(1), pages 253-304, August.
    12. Sophie Hatte & Pamina Koenig, 2020. "The Geography of NGO Activism against Multinational Corporations," The World Bank Economic Review, World Bank Group, vol. 34(1), pages 143-163.
    13. Kazunobu Hayakawa & Tadashi Ito & Fukunari Kimura, 2016. "Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non-tariff Barrier Removal," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 317-326, February.
    14. Hayakawa, Kazunobu & Yoshimi, Taiyo, 2016. "Gravity with multiple tariff schemes," IDE Discussion Papers 614, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Jonathan Timmis, 2012. "The Internet and International Trade in Goods," Discussion Papers 12/08, University of Nottingham, GEP.
    16. Jason H. Grant, 2013. "Is the growth of regionalism as significant as the headlines suggest? Lessons from agricultural trade," Agricultural Economics, International Association of Agricultural Economists, vol. 44(1), pages 93-109, January.
    17. Franco, Sebastian & Frohm, Erik, 2018. "Reduced "Border Effects", FTAs and International Trade," Working Paper Series 356, Sveriges Riksbank (Central Bank of Sweden).
    18. Gabriel Felbermayr & Benedikt Heid & Mario Larch & Erdal Yalcin, 2015. "Macroeconomic potentials of transatlantic free trade: a high resolution perspective for Europe and the world," Economic Policy, CEPR;CES;MSH, vol. 30(83), pages 491-537.
    19. Jonathan Timmis, 2012. "The Internet and International Trade in Goods," Discussion Papers 12/03, University of Nottingham, School of Economics.
    20. Christian Henn & Brad McDonald, 2014. "Crisis Protectionism: The Observed Trade Impact," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 62(1), pages 77-118, April.

    More about this item

    Keywords

    Labor Clause; Free Trade Agreements; Gravity Equation;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

    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:fdi:wpaper:3959. 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: Vincent Mazenod (email available below). General contact details of provider: https://edirc.repec.org/data/ferdifr.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.