Presented by: Lalit Sondhi

Labor Issues- Introduction

 Labour standards are those that are applied to the way
workers are treated. The term covers a wide range of things:
from use of child labour and forced labour, to the right to
organize trade unions and to strike, minimum wages,
health and safety conditions, and working hours.
 The interaction of labor standards and international trade
has become a key issue in the relations between the
advanced industrialized and developing countries in the
past decade.
 Although existing codified labor standards vary from
country to country, depending on the stage of
development, per capita income, political, social, and
cultural conditions and institutions, efforts have been
made to identify and achieve consensus on a group of so-
called core labor standards that ideally should apply
universally.
Introduction
 One of the important social issues in the
developed countries in respect of business with the
developing countries pertains to ill treatment of
labor and children.
 Child labor used in the manufacture of exports
from the developing countries is widely criticized
by people in the developed countries. There is
protest against this in the developing countries
too.
 For example, it is alleged that child labor is used by the
carpet industry in India and some other countries and
social activist in the developed nations demand ban on
the import of goods embodying child labor.
 Similar issue is the sweat labor. The argument here is
that goods are manufactured by labor working in
inhuman/unhealthy working conditions not getting
fair wages should be banned or boycotted. Creating
important developing country, like garments, are
alleged to be suffering from such problem.
Contd…
 Another important issue is trade union rights. Absence of
trade union rights in some countries provides them a cost
advantage, Should the products of such countries be
permitted in other countries? It may be noted that many
multinationals are taking advantage of the absence of trade
union rights in some countries.
 According to an ILO Report, it is a regrettable feature of
many export processing zones that both male and female
workers are trapped in low wage and low skilled jobs and
labor relations and human resource development remain
two of the most problematic aspects of zone function.
Contd…
 The frequent absence of minimal standards and poor labor
management relations have predictable outcomes, such as
high labor turnover, absenteeism, stress and fatigue, low
rates of productivity, excessive wastage of materials and
labor unrest which are still too common.

 While some of the criticisms are valid, it is also a fact that

the developed country firms which are adversely affected
by the cheap, blow up the issues to serve their vested
interests.
Acc to WTO
 According to the WTO the debate on the interaction
between trade and labor standards is in many ways
similar to the debate on trade and environmental
standards.
 A concern expressed in some industrial countries is
that excessively low standards in certain countries will
impose downward pressure on standards, or give the
low standard countries an unwarranted competitive
advantage.
Acc to WTO
 Developing countries, on the other hand, fear that this
argument may be used as a surrogate form of protection.

 As with environmental standards, the WHO was not

designed to set labor standards. This was made clear in the
Singapore Ministerial Declaration of December 1996,
which also acknowledged the competence of the
International Labor Organization (ILO) in the matter of
labor standards.
Acc to WTO
The Singapore Ministerial Declaration concluded that:
 Members are committed to the observance of
internationally recognized core labor standards.
 These standards should be addressed in the ILO,
whose work the Members support.
 Standards are promoted by growth and development,
fostered through tarred liberalization.
 Members reject the use of labor standards for
protectionist purposes and agree that the comparative
advantage of countries must in no way be put into
question.
 Members of the ILO recently agreed on a ‘Declaration
of fundamental Principle and rights at work’, in which
ILO Members agreed to increase the scrutiny of
adherence to core labor rights and reiterated the
commitment in the Singapore Declaration not to use
labor standards for protectionist purposes.
 The WTO points out that the debate on labor standards
distinguish between so called basic labor rights and less
commonly accepted standards.
 Basic labor rights are part of the ILO Conventions in
human rights and labor standards and include the
prohibition of forced labor, the freedom of association, the
right to organize and bargain collectively, the elimination
of child labor exploitation and the non-discrimination in
employment.
 Other less common accepted standard include minimum
ages, limits on the hours worked and occupational safety
and health standards.
Environmental
Issues
Introduction
 Environmental issues have been engaging increasing
discussion in the international business horizon.
 As in the case of some other social issues in the fore,
the environmental issues raised are mostly which
disadvantage the developing countries, ignoring or
relegating to the background several serious which
hold the developed nations or firms from such nations
guilty.
 Some countries prohibit the import of goods which
cause ecological damage. For example, the US has
banned the import of shrimp harvested without turtle
excluder devise because of its concern for the
endangered sea turtles. Countries like India are
affected by it.
 Developing countries are affected by the relocation of
polluting industries from the developed it the
developing ones. Similarly, several products which are
banned in the developed nations are marketed in the
under developed world.
 The dumping of nuclear and hazardous wastes in
developing countries and the shifting of polluting
industries to the developing countries impose heavy
social costs on them.

 The exploitation of the natural resources of the

developing countries to satisfy the global demand also
often causes ecological problems.
 When the multinationals employ in the developing
nations polluting technologies which are not allowed
in the developed countries or do not care for the
ecology as much as they do in the developed nations, it
is essentially a question of ethics.
 Another serious problem is that developed nations
some times raise environmental issues as a trade
barrier or a coercive measure rather than for genuine
reasons.
Acc to WTO
 The debate has intensified in recent years on the links
between trade and the environment, and the role the
WTO should play in promoting environmental
friendly trade.
 A central concern of those who have raised the profile
of this issue in the WTO is that there are
circumstances where trade and the pursuit of trade
liberalization may have harmful environmental effects.
There main arguments are forwarded as to how this might occur.
 First, trade can have adverse consequences on the environment
when property rights in environmental resources are ill defined
or prices do not reflect scarcity .This situation results in
production or consumption ‘externalities’ and can lead to the
abuse of scarce environmental resources and degradation, which
is exacerbated through trade.
 Some of the pollution can be purely local, such as a very noisy
factory. Other pollution can have global repercussions, for
example, the excessive emission of greenhouse gases, the
destruction of rainforests, and so on. Critics argue that trade
liberalization which encourage trade in products creating global
pollution is undesirable.
 The second argument linking trade and the environment is
related to the first one. If some countries have low
environmental standards, industry is likely to shift
production of environment-intensive or highly polluting
products so called pollution havens.
 Trade liberalization can make the shift of ‘smoke stack’
industries across borders to pollution havens even more
attractive. If these industries then create pollution with
global adverse effects, trade liberalization, indirectly,
promote environmental degradation.
 Worse trade induced competitive pressure may force
countries to lower their environmental standards. The
argument in other words, is that trade liberalization
leads to a race to the bottom in environmental
standards.
 The third concern about environmental issues is the
role of trade relating to more social preferences.
 Some practices may simply be unacceptable for certain
people or societies, so they oppose trade in products
which encourage such practice.
 These can include killing dolphins in the process of
catching tuna, using leg hold traps for catching
animals for their furs, or the use of polluting
production methods which have only local effects.
To summarize
 On the other hand, it has also been pointed out that
trade liberalization may improve the quality of the
environment rather than promote degradation.
 First, trade stimulates economic growth and growing
prosperity is one of the key factors in societies demand
for a cleaner environment.
 Growth also provides the resources to deal with
environmental problems at hand – resource which
poor countries often do not have.
 Second, trade and growth can encourage the
development and dissemination of environmental
friendly production techniques as the demand for
cleaner products grows and trade increases the size of
markets.
 International companies may also contribute to a
cleaner environment by using the most modern and
environmentally clean technology in all their
operations.