Question

The USA and China are engaged in a trade battle. We have a huge trade surplus with China ($400 + billion per year). It is a complicated issue. Among the many issues, labor rights, are front and center. China, and other countries, are often accused of exploiting laborers (e.g. low pay, unsafe conditions, child labor, etc.). Please share your brief comments: As Americans, do we have a right to pressure China to improve their labor practices? As a consumer, do you consider that your products (e.g. athletic gear) may be produced by workers that are not given the same protections as USA workers?

Answer 1

Labor standard is still not a part of the trade agreements between two countries. However, inclusion of labor standard has been an issue for a long time in international trade. In the global marketplace, trade is linked with economic condition, labor market, technological development, telecommunication and economic integration. Generally, in a labor abundant country, labor is available at a cheaper rate and hence, labor exploitation is easier due to greater supply in comparison to demand. Hence, in the absence of any strong law for labor standard, exploitation of laborer is easier. Labor distortion has impact on international trade. There is no specific enforcement to link between labor standard and access of market. However, US has right to cut or restrict import of Chinese goods and services under questionable practice of low labor standard. Under Free Trade Agreements, some provisions relating to labor laws are included following ILO core laws. These includes, cash standard on minimum wages, child labor prohibition, occupational health and safety and elimination of forced labor. Therefore, if Americans refused to buy products imported from China, US government may suspend imports showing ILO labor standard.

Consumer buys a product based on the utility derived from the it and budget. Consumer rarely considers the labor standard of the country from where goods are imported. However, as a rational citizen and consumer, it is ethical to judge the labor standard. As labor values are implicit within the goods used by the consumer, the it needs to be checked whether the worker producing the goods is provided required protection at the workplace or not. Hence, if the labor standard of the exporting country is higher than that in US, social value of the good increases. If the labor standard of the exporting country is lower than that in US, it must be considered to improve labor standard globally.