The European Union trade policy and labour standards : the case of free trade agreement with Colombia and Peru

Abstract

Economic global competition is seriously threatening labour standards worldwide, and especially in most developing countries, where governments are not interested in improving core labour standards in order to take a competitive advantage and to attract foreign investments. Developed countries, in their turn, try to fight back their loss of competitiveness by removing some labour rights gained by employees in the past decades. Such a dynamic inevitably produces a race to the bottom, which can only be stopped by linking international trade and labour standards. Nonetheless, attempts to reach such a linkage within the World Trade Organisation have been unsuccessful. As a consequence, the European Union is trying to link trade and labour standards by including social clauses in unilateral trade preferences as well as in bilateral and regional trade agreements with developing countries. This research will examine the EU’s trade policy with regard to labour standards in developing countries, in particular the failed attempts to include labour standards in the multilateral trading system, and the EU unilateral preferential regimes and bilateral trade agreements, with a special attention to the recent free trade agreement with Colombia and Peru. The analysis of this agreement is particularly interesting since Peru and Colombia are characterised by widespread violations of labour rights, and it will help us to understand if the policy of the EU on labour standards in developing countries is really aimed at improving the conditions of local workers and, if so, if it is really effective.