The WTO and the Social Clause: Post-Singapore

Abstract

In December 1996, the first Ministerial Conference of the newly created World Trade Organization (WTO) was held in Singapore. The Conference attracted considerable attention, particularly the negotiations concerning the controversial issue of the 'social clause'-the linking of labour standards with trade liberalization. A compromise on the issue resulted in a paragraph on labour standards in the final Declaration of the Conference, the first time that a reference to such standards was included in a WTO official document At first blush, the paragraph appears to close the door to further consideration of the link of trade with labour standards within the WTO, but this is unlikely to be the case. The efforts to examine the link between labour standards and trade within the WTO will continue after Singapore. The WTO was established at Marrakesh in 1994 at the conclusion of the Uru-guay Round to provide an institution to administer the General Agreement on Tariffs and Trade (GATT) and other Uruguay Round agreements as well as to provide a more effective dispute resolution mechanism than existed under GATT. The subject of a social clause was discussed at Marrakesh, but no decision was taken on the subject While a Committee on Trade and Environment was set up as a result of pressure from developed countries, no WTO committee or working group was created on labour standards and trade. The only mention of the subject at Marrakesh was a brief reference in the Chairman's lengthy list of issues that could eventually be considered in the WTO work programme. The Ministerial Conference meets every two years and is the highest WTO authority. At the first Conference in Singapore a number of important issues, in addition to the social clause, were on the agenda. A virtually complete agreement on Information Technology was adopted at the Conference, working groups were established to examine the relationship between trade and the areas of investment, competition policy and government procurement, the Committee on Trade and Environment was established as a permanent WTO body, and the WTO signed a cooperative agreement with the IMF, similar to an agreement earlier signed with the World Bank. Several months after Singapore a much-heralded agreement on telecommunications was adopted. Once again, the ministers refused at Singapore to set up a committee or working party on trade and labour standards.