Japan: Resurgence Of The Social Clause?: A Critical Analysis Of Labor Provisions In RTAs In The Asia-Pacific Region

1. Introduction: Resurgence of the social clause

Discussion concerning the so called "social clause"¹ took place under the GATT/WTO,² and was finally settled in 1996 by the WTO Singapore Ministerial Declaration paragraph 4, which reads:

The ILO assumed this consignment with the WTO in 1998 by adopting the Declaration on Fundamental Principles and Rights at Work and its Follow-up (hereinafter, "the Declaration").⁴ On the one hand, the Declaration stated that all ILO Members have an obligation to respect, promote, and realize the principles concerning the four (five after the 2022 Amendment ⁵) fundamental labor rights: (1) freedom of association and the effective recognition of the right to collective bargaining, (2) the elimination of all forms of forced or compulsory labor, (3) the effective abolition of child labor, (4) the elimination of discrimination in respect of employment and occupation, and (5) a safe and healthy working environment.⁶

On the other hand, the Declaration denied the use of trade sanctions to enforce these fundamental labor rights by stressing that labor standards should not be used for protectionist trade purposes.⁷ Instead, the Declaration introduced "a promotional follow- up," consisting of annual follow-up concerning non-ratified fundamental Conventions and global report on fundamental principles and rights at work.⁸

Accordingly, Members of the ILO committed themselves to respect, promote, and realize the principles concerning the four (five after the 2022 amendment) fundamental labor rights, regardless of whether they ratified the corresponding eight (ten after the 2022 amendment) ILO Conventions (see Table 1).

Table 1. Fundamental principles and rights at work and the corresponding ILO Conventions

While the Declaration settled the discussion on the social clause by consigning the ILO to commit its Members to respect, promote, and realize the fundamental labor rights and monitoring them through promotional follow-up, more and more regional trade agreements (hereinafter "RTAs") came to refer to the Declaration and oblige parties to implement the fundamental labor rights. This phenomenon is known as the resurgence of the social clause. The US took the lead in the resurgence since the early 2000s through its FTAs, which referred to the Declaration as a baseline reference for labor standards.⁹ It

Document ILC.110/Resolution 1.

must be noted that labor provisions¹⁰ of the US FTAs can be dated further back to the North American Agreement on Labor Cooperation of 1994 that provided for implementation and enforcement of domestic labor laws.¹¹ The European Union (EU) followed suit, by referring to the Declaration in Trade and Sustainable Development (TSD) chapters of its FTAs/EPAs¹² since the EU-Korea FTA of 2011.¹³

There are two types of resurgence of the social clause: reference to the Declaration in RTAs. The first is a direct reference to the Declaration, and the second is an indirect reference to the ILO Conventions corresponding to the four (five) fundamental labor standards of the Declaration.¹⁴ While the US has never adopted the second type of resurgence, the EU has consistently adopted it, whereby the Parties are encouraged or mandated to ratify the ILO Conventions corresponding to the four (five) fundamental labor standards of the Declaration (see Table 2).

Table 2. Two types of resurgence of the social clause in the RTAs of the US and EU

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Footnotes

1 A social clause is a legal provision in a trade agreement aimed at removing the most extreme forms of labor exploitation in exporting countries by allowing importing countries to take trade measures against exporting countries that fail to observe a set of internationally agreed minimum labor standards. See H. Lim, "The Social Clause: Issues and Challenges," ILO, no date. Available at < https://training.itcilo.org/actrav_cdrom1/english/global/guide/hoelim.htm > (Accessed January 20, 2024.)

2 See, for instance, Steve Charnovitz, "The influence of international labour standards on the world trading regime: A historical overview," International Labour Review, Vol.126, No.5, 1987, pp.565–584.

3 WTO, Singapore Ministerial Declaration, adopted December 13, 1996, para.4.

4 ILO, ILO Declaration on Fundamental Principles and Rights at Work and its Follow- up, adopted in 1998 and amended in 2022. Available at < https://www.ilo.org/wcmsp5/groups/public/---ed_norm/--- declaration/documents/normativeinstrument/wcms_716594.pdf > (Accessed January 20, 2024.)

5 On June 10, 2022, the International Labor Conference adopted a resolution amending the Declaration to encompass "a safe and healthy working environment." See ILO

6 ILO, supra n.5, Section 2.

7 Ibid., Section 5.

8 Ibid., Annex II and III, respectively.

9 See, for instance, J.B. Velut et al, Comparative Analysis of Trade and Sustainable Development Provisions in Free Trade Agreements, London School of Economics and Political Science, 2022, p.17.

10 The term "labor provisions" is broadly defined as "a provision that explicitly refers to labour, social, development, and human rights considerations, which may have an impact on the rights, functioning, treatment, and well-being of a country's labour force."

See Gabrielle Marceau et al., "The Evolution of Labour Provisions in Regional Trade

Agreements," Journal of World Trade, Vol.57, No.3, 2023, pp.361–410, p.364. Besides direct and indirect reference to the Declaration, which are the subject matter of this study, "labor provisions" include reference to labor standards and labor laws in preambular clauses, obligations regulating domestic labor laws, and general exceptions clause for trade in goods. See ibid., p.365.

11 See, for instance, ibid., pp.374–377.

12 See ibid., pp.383–385. Before inserting Trade and Sustainable Development Chapters in its FTAs/EPAs, the EU has included labor provisions in its unilateral Generalized System of Preferences (GSP) with developing countries since the mid-1990s, first through a sanctioning mechanism (since 1995) and then through special incentives for countries complying with the ILO core labor standards (since 1999). See James Harrison et al., "Labour Standards Provisions in EU Free Trade Agreements: Reflections on the European Commission's Reform Agenda," World Trade Review, Vol.18, No.4, 2019, pp.635–657, pp.638–639.

13 EU-Korea FTA, signed October 6, 2010, entered into force July 1, 2011. In this study, the RTAs are referred to with their years of entry into force.

14 See Marceau et al., supra n.11, pp.386–387.

Originally published by The Research Institute of Economy, Trade and Industry (RIETI)

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