In the comments, Susan Aaronson says:
The WTO does not cover labor standards explicitly, but policymakers who are concerned about the trade spillovers of China’s labor laws have leverage on China. China recently reformed its labor laws, and it did so in a transparent accountable manner at the national level. However, observers note the labor laws are rarely enforced. Labor laws have implications for the international terms of trade and for the well-being of import-competing firms. If a government ignores its own labor laws, it is effectively allowing its labor intensive firms to become more cost competitive with imports. As economist Drusilla Brown has noted, if the country has international market power (as does China), the contraction in the demand for imports will also reduce the world price of imports, giving rise to a terms-of-trade improvement. If governments attempt to achieve a strategic advantage through their labor standards they are effectively nullifying market access for some of their trade partners. Under GATT Article XXIII, any country in the WTO is entitled to "right of redress" for changes in domestic policy that systematically erode market access commitments even if no explicit GATT rule has been violated. Used creatively, this strategy could enable WTO member states to encourage China to do a better job of enforcing its labor laws.
I look forward to comment.
Susan Aaronson, GWU
I assume she is talking about the "non-violation" complaint in GATT Article XXIII:1(b).
The basic elements of a non-violation claim are: "(1) application of a measure by a WTO Member; (2) a benefit accruing under the relevant agreement; and (3) nullification or impairment of the benefit as the result of the application of the measure." (Japan - Film, para. 10.41)
Application of a measure is a little tricky, but I think the "act of omission" involved in not enforcing labor laws would satisfy this.
One part of the benefit accruing element should be easy to satisfy. Just pick one or more tariff concessions. However, there's more to it. The Film Panel explained that under past GATT precedent, in all but one case, "the claimed benefit has been that of legitimate expectations of improved market-access opportunities arising out of relevant tariff concessions." Under that precedent, for expectations to be legitimate, "they must take into account all measures of the party making the concession that could have been reasonably anticipated at the time of the concession." (Para. 10.61) Thus, you would have to show that the lack of enforcement could not reasonably have been anticipated at the time of the concession.
The third element also presents a problem. The Film panel elaborated on the nullification or impairment ... as the result of element as follows: "it must be demonstrated that the competitive position of the imported products subject to and benefiting from a relevant market access (tariff) concession is being upset by ('nullified or impaired … as the result of') the application of a measure not reasonably anticipated." (Para. 10.82) So, you would have to show "nullification or impairment" that is caused by the absence of labor law enforcement (rather than something else).
My sense is the claim would fail on the second and third elements. It would be hard to prove that lack of enforcement could not reasonably have been anticipated; and proving causation in relation to undermining market access for specific products could be difficult.
Any other thoughts?
