Using Trade Strategies to Combat Forced Labor
Steve Charnovitz
10 August 2022
What is the role of trade strategies in combatting forced labor?
As an international lawyer addressing an international problem, I always begin analysis with international strategies. Since forced labor is inherently a labor issue, one should begin with multilateral labor strategies.
The international community has long recognized forced labor to be a heinous labor practice. The International Labor Organization (ILO) first legislated against forced labor in 1930 in its Forced Labour Convention (No. 29). 179 nationshave ratified this fundamental Convention. But two major economies – the United States (US) and China – have neglected to sign on.
In 2022, China announced its intention to ratify the Forced Labour Convention (No. 29).
When governments violate the Forced Labour Convention (No. 29), the tripartite ILO can investigate and make recommendations. This is what happened in 1981 when ILO worker delegates complained about the use of forced labor by the Dominican Republic (DR). In 1983, the ILO-appointed Commission of Inquiry issued a detailed report regarding defects in the DR's performance under the Forced Labor Convention (No. 29) and three other fundamental ILO conventions.
Coincidentally in 1983, I was tasked to serve on the US trade negotiating team for the Caribbean Basin Initiative (CBI) which was the first national trade preference program to utilize a labor condition. The DR wanted to gain the new CBI trade preferences, and I crafted a strategy for using expanded market access to the US to incentivize the DR to address forced labor. When I discussed the ILO's review with the DR government, the DR officials remarked to me that the ILO had acquired jurisdiction because the DR had ratified the four ILO Conventions. By contrast, the US had not ratified any of the four applicable ILO Conventions, I was reminded.
Nevertheless, because the US was offering valuable trade benefits, the US had leverage to ask the DR government to commit to labor law reforms. This strategy worked and the US able to secure some commitments from the DR to correct some forced labor abuses (see Steve Charnovitz, "Caribbean Basin Initiative: setting labor standards," Monthly Labor Review, Nov. 1984 at 54; Steve Charnovitz, "International Trade and Worker Rights," SAIS Review, Vol. 7, 1987 at 185, 190).
Over the next 37 years, the new US practice of using positive trade conditionality to upgrade foreign labor rights was repeated for many other countries in trade preference programs and bilateral trade agreements. Despite the unprecedented labor-related trade conditionality in the CBI, the US was able to secure a General Agreement on Tariffs and Trade (GATT) waiver for the CBI.
As an exemplary multilateral organization, the ILO constantly updates its legal norms and strengthens programs toimprove national implementation. In 2014, the ILO adopted a Protocol to the Forced Labor Convention (No. 29) to broaden its regulatory strategy (e.g., trafficking).
Because forced labor involves a vile governmental labor policy, perforce the first-best strategies to address such misbehavior is for governments, unions, and employers to use the ILO to improve deficient national government labor regulations and their domestic enforcement.
When a national labor law underregulates as compared to an applicable ILO convention, the most direct remedy of theinternational community is to try to convince the laggard government of the wisdom of adopting the ILO convention and then implementing it. In other words, the ILO seeks to use legalization to upgrade the law and practice of each ILO member country. To give a symbolic example, if Country A is relying on forced labor, then the ILO will try to get A to improve its domestic laws and stop the forced labor for A's workers.
Although the idea of using trade sanctions to remedy a violation of an ILO convention was provided for in the ILO's 1919 constitution, the ILO has maintained its focus on persuasion rather than sanction (Steve Charnovitz, "The Lost History of the ILO's Trade Sanctions," in ILO 100. Law for Social Justice ILO, 2019).
The ILO has also avoided using trade controls as an instrument for implementation (Steve Charnovitz, "Promoting Higher Labor Standards," The Washington Quarterly, Vol. 18, 1995 at 167, 173). That is, the ILO has not asked Countries B, C, and D to ban the importation of A's products that have forced-labor content. In 1956, the ILO began drafting a supplementary and more focused convention against forced labor. During that debate, the US proposed a prohibition of international trade in goods produced by forced labor (Steve Charnovitz, "The Influence of International Labour Standards on the World Trading Regime," International Labour Review, Sept.-Oct. 1987, at 565, 571). This US proposal presented an opportune moment for the ILO to reconsider whether the ILO should add trade controls to its toolbox. For better or worse, the ILO did not accept the US proposal. I've often wondered whether the challenge of forced labor would have been better overcome if the ILO had agreed to the US proposal to add trade controls to the Abolition of Forced Labour Convention (No. 105).
The ILO has extensive, sophisticated mechanisms for treaty implementation. For the Forced Labour Convention (No. 29), as noted above, a complaint by a labor union can trigger an ILO on-site investigation in the respondent country.Even a century after the ILO first offered individuals a right to apply for a Commissions of Inquiry against a scofflaw government to remedy a treaty violation, the inclusive ILO mechanisms are still cutting edge in comparison to the weak inclusivity of other multilateral regimes toward private actors.
For the Forced Labour Convention (No. 29), a government does not entail any liability until it ratifies the Convention.Thus, if a worker organization wants to complain that China is using forced labor in violation of the Convention, the ILO will not undertake an investigation because China has not yet ratified the Convention. The same lack of supervision exists for the US which has not ratified the Forced Labour Convention (No. 29).
If China achieves ratification of No. 29 in 2022, then the ILO would be able to investigate allegations regarding forced labor in Xinjiang. The ensuing international processes could put pressure on China to reveal and correct forced labor.Such an investigation on forced labor could be triggered by a labor union or by a government that has ratified theForced Labour Convention (No. 29). Because the US has not ratified No. 29, the US would not have standing in the ILO to ask for an investigation of China.
In my view, as the international organization with the clearest legal competence over forced labor, the ILO should be the lead agency to tackle this problem. Many countries regularly accused of harboring forced labor, such as Burundi, Cambodia, Cuba, Eritrea, India, Indonesia, Iran, Malaysia, Myanmar, and Pakistan, and the Russian Federation have ratified the Forced Labour Convention (No. 29), and therefore are reviewable by the ILO. Although any forced labor isreprehensible, the ILO should be particularly vigilant in calling out politically-motivated forced labor. (The country that most notoriously uses forced labor, North Korea, is not an ILO member government).
Since 2000, the ILO has only convened two Commissions of Inquiry regarding forced labor: a case against Qatar in 2014 and a new case against Myanmar in 2022. In my view, the ILO should be vastly expanding its efforts to identify and stamp out forced labor by using independent international commissions of inquiry. In recent decades, although the US has provided more project funding to the ILO, US initiative in the ILO is lacking.
For two fundamental ILO Conventions, the ILO decided in 1951 to establish a special mechanism that acceptscomplaints that a respondent government is violating the terms of those Conventions even when the respondentgovernment has not ratified the treaty. This exceptional mechanism is known as the Committee on Freedom of Association (CFA). The CFA has jurisdiction to oversee implementation of the ILO Convention on Freedom of Association and Protection of the Right to Organise (No. 87) and the ILO Convention on the Right to Organise and Collective Bargaining (No. 98). Although both Conventions No. 87 and 98 are widely ratified, several major economies — notably China, India, and the US — have refused to ratify them. Over the decades, there have been many CFA cases filed against large non-party economies such as China, India, and the US.
I have long lamented the shameful US failure to ratify Convention No. 87. See Steve Charnovitz, "The ILO Convention on Freedom of Association and its Future in the United States," American Journal of International Law, 2008, at 90.
The ILO has not established any special mechanisms for individual complaints on forced labor that would apply to respondent governments (like China and US) that are not parties to the Forced Labour Convention (No. 29). The ILO could do so however.
Today, international action against forced labor involves a contesseration of actors including governments, internationalorganizations, civil society, business associations, and companies.
Among the constructive developments is Alliance 8.7 linked to the United Nations Sustainable Development Goals. Yet when I look back to the World Employment Conference of 1976, the moment in which I first got engaged on forced labor as a global problem, I wonder how much net progress has occurred.
In that context, I will offer commentson what new US trade strategy to combat forced labor should be undertaken in 2022.
- What actions could the S. Government pursue with like-minded trade partners and allies to combat forced labor as an unfair trade practice?
Forced labor is not a trade practice. It is a labor practice.
Forced labor is a violation of basic human rights. What's unfair about the scourge of forced labor is that individuals areensnared into it. The US should focus on better international legal strategies to help these victims escape forced labor and secure decent work.
The key to a successful international effort to combat forced labor is that individual governments, such as the US, should not get distracted by the mythology of unfair trade. Commodifying forced labor can lead to tariffs or imports bans centered on the erroneous notion that merely blocking trade is sufficient to solve the human rights problem.Therefore, the US should refrain from pursuing any activities, alone or with allies, based on the premise that forced labor is an unfair trade practice.
- How can the S. Government bolster the forced labor components of trade agreements and trade preference programs to have greater effect?
- Multilateral trade agreements
Back in 1977, as a US Department of Labor (USDOL) staffer, I assisted in drafting the US proposal to implementthe Congressional directive in the Trade Act of 1974 to seek a labor clause in the GATT (See Steve Charnovitz"Fair Labor Standards and International Trade," Journal of World Trade Law, Jan.-Feb. 1986 at 61, 65).
The US proposal was for a new GATT rule on Minimum International Labor Standards (MILS), including forced labor.But that effort made no progress in the GATT Tokyo Round negotiations. The historical accounts of the Tokyo Round portray this as a failure of the US to gain support, and while that account is technically correct, what really happened ismore sinister. The efforts by USDOL's Bureau of International Labor Affairs to promote a GATT coalition in support of MILS were subverted by the US Department of State.
Now, 45 years later, I would guess that a US initiative for a WTO rule on forced labor might be pursued with greater bureaucratic cohesion. But given the consensus decisionmaking in World Trade Organization (WTO), the outcome would be the same as it was in the Tokyo Round: TheWTO is not going to adopt a substantive rule against forced labor or mandate that goods in international trade be free of forced labor content.
Unlike the WTO, the ILO is not stymied by a consensus rule. Still, I doubt that the ILO would legislate a ban on trade of goods produced by forced labor. Because any strategy to use trade bans on forced labor will only work if a critical mass of economies participates, I suggest that the US ask the ILO and the WTO to do a joint study of what could be accomplished by a global ban on goods (or services) produced with forced labor. Such a study should also proposesolutions to the central problem of regulating goods made with forced labor which is that there is no easy way to objectively determine the process and production methods (PPMs) used in producing goods.
- Free trade agreements (FTAs)
Contemporary US trade agreements contain provisions on forced labor. The US-Mexico-Canada Agreement (USMCA)commits each party to maintain in its statutes "the elimination of all forms of forced or compulsory labor" and to "prohibit the importation of goods into its territory from other sources produced in whole or in part by forced or compulsory labor, including forced or compulsory child labor" (Art. 23.3(1)(b)). The USMCA provides for cooperation to identify goods produced with forced labor, but I have not yet seen any results of that cooperation.
Ideally, the identification of goods produced with forced labor would be done by an international institution in order to provide the greatest likelihood of objectivity. With unilateral determinations as to whether a foreign-made good is produced with forced labor, there will always be suspicions of indirect protectionism.
The use of US FTAs to combat forced labor runs into two practical problems: First, the US has lost its self-confidence to engage in any new FTA. Second, governments relying upon (or tolerating) forced labor are likely to have many othereconomic and political pathologies that will render them unlikely candidates for new US FTAs.
Recently, the US has promoted a new Indo-Pacific Economic Framework with Australia, Brunei, India, Indonesia,Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. From what I can tell, this Framework is not meant to include free trade, so is not an FTA. Other than India, Brunei and the US, all of the other countries on this Indo-Pacific list have ratified the Forced Labour Convention (No. 29). The ideal provisions on forced labor for the Indo-Pacific Economic Framework would be:
- All parties commit to ratifying and faithfully implementing the Forced Labour Convention (No. 29) and its new Protocol.
- All parties agree not to export any goods produced domestically with forced
- All parties agree to develop a mechanism within the Indo-Pacific Framework to identify goods in globaltrade made with forced labor and agree not to import any such
Leaving aside the issue of why provisions on forced labor or other worker rights are included in trade agreements, one can clearly see a trend toward such inclusion particularly in US agreements. Since 2000, all US free trade agreements (FTAs) have mentioned forced labor.
Yet in some other countries, chapters on labor are omitted in contemporary FTAs. For example, the world's largest free trade pact, the 2020 Regional Comprehensive Economic Partnership (RCEP), does not contain a labor chapter and does not contain provisions on forced labor.
Some observers had hoped that RCEP would include a forced labor discipline because there had long been allegations about the use of forced labor in Malaysia. Recently, Malaysia ratified the ILO's new Protocol to the Forced Labour Convention (No. 29). Of the 10 RCEP nations, eight have ratified the Forced Labour Convention (No. 29), but two nations, China and Brunei, have not.
In my view, RCEP missed an opportunity to combat forced labor by not requiring all RCEP members to ratify orcommit to ratifying the Forced Labour Convention (No. 29). This type of requirement was included in the new European Union-Canada Comprehensive Economic and Trade Agreement (CETA) which commits parties to "make continued and sustained efforts to ratify the fundamental ILO Conventions if they have not yet done so" (Art. 23.3(4)).
The June 2022 New Zealand-European Union Free Trade Agreement commits the parties to "respect, promote andrealise the principles concerning the fundamental rights at work, which are the subject of the fundamental ILO Conventions," such as "the elimination of all forms of forced or compulsory labour" (Art. X:3(3)(b)). Since the European Union countries and New Zealand are ILO member governments, there is nothing in this fluffy FTA provision that is ILO-plus. Of course, the European Union (EU) is not an ILO member and so the EU's commitment to New Zealand on forced labor might be viewed as an enhancement of the EU's external obligations on labor.
- Trade preference programs
For many decades, the US Generalized System of Preferences (GSP) has been used by the US to raise concerns about worker rights in beneficiary countries. I was a close observer of the statutory changes made in 1984 that first added the worker rights provisions to the US GSP, and so I was appalled in 1985-86 at how unwilling USTR was at that time to undertake an effective implementation of those provisions. When I joined the Advisory Council of the International Labor Rights Education & Research Fund circa 1987, one of the issues on which we focused was USTR's poorimplementation. A lawsuit against the Executive Branch raised these problems, but was dismissed on jurisdictional grounds (International Labor Rights Educ. & Research Fund v.Bush, 854 F2d 745). As the years went by, USTR began improving its GSP implementation on worker rights.
In 2022, the Congress has allowed the GSP program to expire. Since GSP is designed to help developing countriesthrough trade access, the US Congressional disinterest in maintaining GSP is yet another example of how US isolationism is marginalizing the United States as a global leader.
- What new and innovative trade tools can the S. Government develop and utilize to advance efforts to combat forced labor in traded goods and services?
Open trade and trade liberalization are not a new trade tool, but given how little trade liberalization the US has doneover the past decade, a new round of trade liberalization would be innovative for the US economy that has grown more dependent on unilateralism and protectionism to shelter US companies from foreign competition.
Opening US markets can also provide more leverage for the US to use in bargaining with other countries to achieve thehighest-priority US objectives. Over the years, I have observed that the leverage gainable by the US in granting market access is likely to exceed the leverage gainable by threatening to remove market access.
The forced labor import ban (Section 307) of the Tariff Act of 1930 was an innovative provision in 1930, and has been more effectively implemented in recent years than it had been in the past (See Steve Charnovitz, "Environmental and Labour Standards in Trade," The World Economy, May 1992, at 335, 339).
In my view, the new statutory changes involving Section 307 in Public Law No. 117-78 are a step in the wrong direction because they manifest some of the worst tendencies in US foreign policy: unilateralism and discrimination.By making it more costly to import goods from China, the new US law (UFLPA) may violate WTO rules, undermine sustainable US cooperation with China, and fertilize new vested interests in the US domestic economy that rely on US government tariffs and nontariff barriers.
As with any US unilateral trade sanction, the likelihood of using it successfully to correct foreign government misbehavior is low.
- How can the S. Government make the development of trade policy on forced labor a more inclusive process?
This notice and comment exercise is an important step in the right direction of inclusivity and I applaud USTR for doing it.
Here are three suggestions:
First, as has always been the case, the membership of the USTR Labor Advisory Committee is imbalanced and does not "accurately represent the composition of the American workforce," particularly in an era when less than 11% of US workers are unionized. Instead, the Labor Advisory Committee should be reconstituted to include self-employed and civil society representatives.
Second, USTR should establish an advisory committee to represent the interests of US consumers.
Third, US trade agreements should feature transnational advisory processes. One model is the Joint Public Advisory Committee of the North American Agreement on Environmental Cooperation (1993). I note that the USMCA labor chapter (Art. 23.16) provides a Public Engagement commitment, but no provisions exist for input of transcontinental interests.
Next generation FTAs should include mechanisms to encourage workers, civil society, and business to find common ground in issuing advice. For example, the USMCA environment chapter (Art. 24.5(3)) calls on parties to establishneeded advisory committees, but no USMCA provision sets up a trinational advisory committee to the USMCA Commission. In converting the North American Free Trade Agreement (NAFTA) to the USMCA, the three governments rendered the treaty more nationalistic with a loss of the North American vision and spirit.
- Do you have additional recommendations for monitoring, tracing, or eliminating forced labor in traded goods and services in supply chains?
Although forced labor is a moral and legal problem whether or not goods flow in international trade, one can imagine a system in which any good entering into the channels of global trade is associated with bar coding in blockchain that would identify validated information regarding the labor or environmental conditions associated with production.There should be constant vigorous experimentation with different monitoring systems tested by region or by sector.
Among the goods sectors where tracing experimentation should be pursued are textiles, extractive industries, fisheries, and agriculture.
This is a corrected version of my filing in USTR-2022-0006.
