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Labor Clauses in Trade Agreements: worker protection or protectionism?

Author

Listed:
  • Céline CARRERE

    (University of Geneva)

  • Marcelo OLARREAGA

    (University of Geneva)

  • Damian RAESS

    (University of Bern)

Abstract

We explore the impact on bilateral trade flows of the inclusion of a labor clause (LC) in Trade Agreements (TAs). Using a gravity type framework, we find that the introduction of LCs has on average no impact on bilateral trade flows. However, there is some interesting heterogeneity. Exports of low-income countries benefit from the introduction of LCs in North-South trade agreements. Interestingly, the impact is stronger when accompanied by deep cooperation. On the other hand, stronger enforcement mechanisms, at best, marginally reinforce the impact of LCs. The results are clearly inconsistent with the idea that LC are set for protectionist reasons, casting doubt on the reluctance by low-income countries to include labor clauses in their trade agreements. Key Words: Labor Clause, Free Trade Agreements, Gravity Equation

Suggested Citation

  • Céline CARRERE & Marcelo OLARREAGA & Damian RAESS, 2017. "Labor Clauses in Trade Agreements: worker protection or protectionism?," Working Papers P200, FERDI.
    • Handle: RePEc:fdi:wpaper:3960
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    References listed on IDEAS

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    Cited by:

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    2. Jacopo Timini & Nicola Cortinovis & Fernando López Vicente, 2020. "The heterogeneous effects of trade agreements with labor provisions (Updated March 2021)," Working Papers 2017, Banco de España, revised Mar 2021.
    3. Mei-Line Le Goueff-Duong, 2019. "The role of the European Union in the promotion of sustainable development while concluding its external agreements: the example of the FTA EU-Vietnam [Le rôle de l'Union européenne dans la promoti," Post-Print hal-02389640, HAL.
    4. Robertson,Raymond, 2021. "Deep Integration in Trade Agreements : Labor Clauses, Tariffs, and Trade Flows," Policy Research Working Paper Series 9599, The World Bank.
    5. Naoto JINJI & Isao KAMATA, 2020. "Do Labor Clauses in Regional Trade Agreements Reduce the Trade Creation Effect?," Discussion papers e-20-002, Graduate School of Economics , Kyoto University.
    6. Di Ubaldo, Mattia & Gasiorek, Michael, 2022. "Non-trade provisions in trade agreements and FDI," European Journal of Political Economy, Elsevier, vol. 75(C).

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    More about this item

    Keywords

    Labor Clause; Free Trade Agreements; Gravity Equation;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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