Enforcing respect for Asia's labour standards with targeted sanctions inspired by EU

Without the possibility of sanctions, violations of labour standards in trade agreements are likely to continue. But what kind of enforcement tool could enhance compliance with labour standards? This research argues that by introducing a targeted approach to sanctions, inspired by the European Union’s Common Foreign and Security Policy, it is indeed possible to advance the enforcement of labour standards by ensuring that eventual sanctions would be directed towards those who bear responsibility for the wrongdoing.

European Union trade agreements typically include dispute settlement mechanisms to ensure that they are properly applied and that disputes can be settled. Noncompliance can lead to the suspension of obligations under an agreement. The violation of labour rights, however, does not fall under these dispute settlement mechanisms. European Union free trade agreements have a special and softer so-called overseeing mechanism for the implementation of their Trade and Sustainable Development (TSD) chapter. This goes to show that applying sanctions for the violation of labour standards in trade agreements is a highly contentious issue.

In response to criticism that European Union trade agreements do not succeed in upholding workers’ rights, the European Commission launched in February 2018 a 15-point plan to make TSD chapters more effective at protecting labour standards, but fell short of proposing a sanctions-based approach. Yet, the threat of sanctions is an important incentive to improve the enforcement of labour standards.

The CLS+ project has documented numerous labour rights violations in the region through four case studies. The researchers examined working conditions in global value chains in the garments, footwear and electronics industries in Bangladesh, Cambodia, Pakistan and Vietnam. A team of researchers also put together a Model Labour Chapter, which provides a template for what a strong social clause should look like. Another study, Conditional or Promotional Trade Agreements—Is Enforcement Possible? sought to explain why social clauses have not been successful. One of the reasons is the lack of political will. The study concluded that sanctions should be considered—as a last resort—but they should be there to act as a deterrent.

The power of sanctions does not lie in their activation but in the threat of their activation. Sanctions do not prevent labour abuses, which is the purpose of the social clause. The challenge, therefore, is to design sanctions in a way that does not impact on the workers whom the social clause is supposed to protect.