Labour issues in international trade agreements: two solitudes? Where does Canada stand vis-a-vis the integration of labour standards and international trade agreements? Are we making progress?

Author:Armstrong, Tim
Position::Cover Story

The International Public Policy Debate

That there has been a long-standing debate over the linkage of workers rights to international trade agreements is well known. Opponents - principally the developing countries, including China, but also many employers and employer organizations - contend that any such linkage would jeopardize legitimate `comparative advantages' of developing countries and thus impair their export trade - one of the best weapons for improving economic performance and alleviating poverty. Neoclassical economists, as well as many lawyers and trade policy analysts, largely agree. Their contention is that proponents of the linkage use human rights and other moralistic arguments to further a protectionist agenda.

Proponents of the linkage advance a number of counter-arguments, the most prominent of which is that a set of core labour standards - the right of association and free collective bargaining, the prohibition on the use of forced or compulsory labour, the abolition of child labour, and the elimination of discrimination in employment and occupation - can be adopted without impairing the pace of economic progress in developing countries or elsewhere. Those who resist the adoption of core standards are accused of `social dumping.' It is argued that the core rights or standards may be distinguished from specific entitlements - wages, vacation and holiday pay, hours of work, health and safety standards, and the like - that, because of their substantive nature, would be difficult, if not impossible, to harmonize on a global basis, given the widely disparate states of development of the roughly 200 nation states now participating in international commerce. Some proponents of linkage also contend that violations of core labour standards are so manifestly unacceptable, on moral and humanitarian grounds, that compliance should be a threshold condition of entry into any rules-based system of international trade such as the World Trade Organization (WTO).

The Canadian System (1)

Before turning to the way in which Canada and the international community are dealing with this fundamental dispute, a brief description of Canada's labour and employment law system might be helpful. In Canada, legislative jurisdiction over labour policies is constitutionally divided between the federal government and provincial and territorial governments. (2) The federal government has jurisdiction over labour and employment matters in airlines, railways, broadcasting, banking, inter-provincial transport and grain handling, as well as the federal public sector. It also controls unemployment insurance by virtue of a constitutional amendment. Other industries and sectors, covering approximately 90 per cent of Canadian workers, fall under provincial jurisdiction for all labour and employment-related purposes, including collective bargaining, health and safety, general labour standards legislation, and human rights.

The Canadian collective bargaining system is based on the United States Wagner Act (1935). Despite the interdependent labour and product markets between Canada and the United States and their similar economic structures and close institutional ties, the operation and impact of collective bargaining laws have been generally more favourable to workers and unions in Canada. Although there has been some decline in Canadian trade union density as a percentage of the non-agricultural workforce - it is still in the 30 per cent range - the decline has been marginal in comparison to the United States, where union density has dropped from approximately 30 per cent in the 1960s to under ten per cent today. The differences between Canadian and American collective bargaining laws lie more in their administration than in their substantive features, although Canada's rules relating to union organizing are generally more favourable to unions, as are its remedies for unfair labour practices. The Canadian system of collective bargaining is highly decentralized and by and large is based upon individual and plant-specific bargaining units. There is, in general, little support, legal or otherwise, for industry-wide or sectoral bargaining.

The political characteristics of the mainstream Canadian labour movement are more similar to European collectivist movements than to the business unionism prevalent in the United States. The Canadian labour movement tends to be socially active and partisan in politics, while the American movement, led by the AFL-CIO, operates without a clearly articulated social philosophy. Canadian jurisdictions have more highly developed and regulated legislative provisions on employment standards (that is, minimum wages, hours of work, termination notice, severance pay, and so on). Some Canadian jurisdictions have moved further in newer standards areas, such as pay equity.

Finally, virtually all primary adjudication related to labour and employment matters is vested in various quasi-judicial boards, agencies, and commissions. This is true for collective bargaining and related matters, employment standards, occupational health and safety, and human rights. The role of Canadian courts is limited to judicial review. In exercising their review powers, the courts are concerned in the main with whether the particular tribunal under review has exceeded its jurisdiction, in which case its decision will be set aside. Otherwise, the court usually defers to the decision of the relevant specialty tribunal. Where an employment matter is not covered by statute - for example, individual contracts of employment in non-unionized work settings - the courts are called upon to deal with claims for wrongful dismissal, where common law principles are applied.

International Efforts to Address the Labour/Trade Linkage Dispute

For many years, little progress has been made in resolving the two divergent trade/labour linkage positions outlined above. However, in the past few years there have been clear and encouraging signs that the two polarized positions are converging, at least insofar as the mainstream participants are concerned, and that a formula and forum for reconciliation is taking shape. Central to this convergence is a reinvigorated International Labour Organisation (ILO) (3) under the leadership of its director general, Juan Somavia, formerly Chile's...

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