The International Trading System at Crossroads: Achieving Balance between Trade Liberalization and Workers Protection in Trade Agreements

Abstract

Although economic integration has brought positive economic impacts on most states participating in the global economy, there has been an increased dissatisfaction with it among less- skilled workers in the developed world, mainly in the United States (hereinafter the US). Economic integration among nations has helped strengthen the global market, lift living standards, reduce global poverty, and most importantly, make the world more interconnected and interdependent. This unprecedented growth in the global economy has been driven by trade liberalization policies of the international trading system. Nevertheless, there has been evidence showing broad opposition to free trade agreements (hereinafter FTAs) among some communities in the US. Among those communities massively hurt by economic integration are less-skilled workers, who have been contending that existing FTAs have failed to preserve their bargaining power in relation to capital owners and that only multinational corporations (hereinafter MNCs) have realized the benefits of the expanded market. The increased rejection to economic integration and existing trade arrangements among workers has resulted in the resurgence of protectionism in the US. The financial crisis of 2008 caused an economic shock and led to an increase in the US’s unemployment rate. The US since then has been facing difficulties in saving domestic jobs and creating opportunities. The rejection of international trade kept increasing among less-skilled workers, and in response to this rejectionism, the US has begun to adopt more protectionist policies and measures departing from its conventional trade policy, which has favored trade liberalization and open market. The level of aggression against international trade and economic integration has heightened even more in the very recent years. This is evident by the increase in the number of the protectionist measures and policies adopted in recent years. To save the consensus in favor of economic integration among workers, it is significant that the negative impact of international trade on workers is alleviated. Embracing protectionism by the US is not the optimal answer to the grievance of workers. Retreating from international trade and closing borders is inconsistent with international trade law and from an economic standpoint may only make matters worse. Instead, countries participating in the global market, among of which is the US, should ensure that the workers’ leverage and bargaining power in their relation to capital owners is well protected in FTAs. This can be done, among other things, by including stronger labor obligations in FTAs. FTAs should not allow participating states to lower the protection provided to their workers to attract foreign trade and investment. The main aim of the discussion in this dissertation is then to explain why there has been opposition to international trade among workers in the developed world and the US, and how existing FTAs have failed to protect the leverage and bargaining power of workers.