`Social Clause' and NAFTA: Protectionists' Stalking Horse

ORGANIZED labor is actively campaigning to include enforcement of "internationally recognized labor rights" in a side agreement that President Clinton wants before submitting the North American Free Trade Agreement (NAFTA) to Congress.

At labor's behest the United Nations Association's Economic Policy Council (EPC) has called for a commitment to observe such rights in NAFTA and to provide trade mechanisms to enforce this pledge.

This idea of labor's rights, long known as the "social clause," also is being pushed in other international forums, and it has been picked up by some environmental groups in connection with both NAFTA and the General Agreement on Tariffs and Trade (GATT).

The "social clause" originated in Bismarck's time. The idea has surfaced periodically since, but has never been accepted: It is correctly perceived as protectionist. When the AFL-CIO got the International Confederation of Free Trade Unions to put the case for the "social clause" to the tripartite International Labor Organization (ILO) in Geneva - since 1919 the only body authorized to promulgate "internationally recognized labor rights" - they were rebuffed.

The AFL-CIO has succeeded in getting Congress to refer to such rights as part of certain unilateral US trade laws, such as the Generalized System of Preferences. However, when Congress included the notion among US objectives for the current GATT negotiations, the US was rebuffed by its trading partners.

The ILO rejects the social clause because it would undercut its very foundation. ILO conventions are voluntary, and the organization's supervisory machinery relies on "sunshine," the weight of international opinion, rather than on trade sanctions, to ensure compliance with the conventions.

An attempt by the European Community to force the social clause on former European colonies through the Lome Convention also failed, as governments perceived the implicit protectionist threat.

Protectionism aside, the social clause could only work in NAFTA or anywhere else if all parties agree on a definition of "internationally recognized labor rights" and concede their sovereignty in this respect to an international tribunal.

The phrase is understood by most governments to refer to the 171 ILO conventions, which are based on European experience. Mexico has ratified 73 of these. The US has ratified only one.

Alternatively, a definition might be negotiated among the NAFTA countries. However, given the differences between US, Mexican, and Canadian systems, it would be quite a feat to reduce these rights to legally enforceable language.

Candidates mentioned for enforcing these rights include a trilateral labor commission, in the case of NAFTA; or, since the ILO and GATT have turned down the honor when disputes arise over multilateral trade, perhaps the World Court. Would the US Congress and Supreme Court give up their jurisdiction over US labor law and practice to any of these bodies? Even if they did, using trade sanctions to enforce labor standards would generate endless litigation, creating the very uncertainty for business that NAFT A was intended to eliminate.

The AFL-CIO knows that Canada and Mexico will not accept a social clause; nor do they really expect the US government to do so. Their harping on this idea thus leads one to suspect that their campaign serves other purposes: to kill NAFTA and/or to bring pressure to change US labor law to restore some of the power unions have lost in the market and at the union ballot box.

The AFL-CIO agreed with the US Council, which represents American business, in the context of the President's Committee on the ILO not to try to change US labor law and practice through ratification of ILO conventions.

Now they propose to have "internationally recognized labor rights" apply and be enforced for all three countries, including the US. Could this be related to the fact that some in the US labor movement are currently touting the German model of industrial relations?

If they are serious about promoting internationally recognized labor rights through NAFTA, the unions should take their cue from the ILO.

Its methods include technical assistance, consultation on improving standards, and procedures whereby complaints can be fully aired in a tripartite forum.

The ILO's techniques of assistance and consultation already are being applied through both public- and private-sector cooperation to improve labor and environmental standards and conditions in NAFTA countries. Under the labor side agreement, the three governments should use these techniques to raise standards and improve their enforcement.

Trilateral labor and environment commissions set up by the side agreements should encourage the private sector to continue the exchange of best practices in the labor and environmental fields, as the US Council has been doing in cooperation with Mexican industry.

This program has so far resulted in more than three dozen joint training events, which probably would not have occurred without NAFTA. In the ILO, sunshine, and not sanctions is the discipline of choice. The same principle should apply to labor standards under NAFTA.