Developing a novel index to evaluate labour chapters in trade agreements: Canada’s ambition–enforceability compromise

• Date: 07 May 2021
• Pages: 65-82
• Published date: 07 May 2021
• DOI: https://doi.org/10.1108/JITLP-10-2020-0056
• Subject Matter: Strategy,International business,International business law,Economics,International economics,International trade
• Author: Hanna Williams,Meredith B. Lilly

Developing a novel index

to evaluate labour chapters in

trade agreements: Canada’s

ambition–enforceability

compromise

Hanna Williams and Meredith B. Lilly

Norman Paterson School of International Affairs, Carleton University,

Ottawa, Canada

Abstract

Purpose –Lack of progress advancing labour provisions in multilateral trade instruments has led some

countries to developtheir own labour chapters in bilateral and plurilateral tradeagreements. This study aims

to track the evolutionof 25 years of labour chapters in Canadiantrade agreements.

Design/methodology/approach –Modelled on Hoekman (1995), the authors present a novel index

using the InternationalLabour Organization’s (ILO) core labour standards tocompare and evaluate ambition

and enforcementin Canada’s labour chapters.

Findings –The quality of Canada’s labour chaptershas steadily improved from 1994 to 2020, with scores

rising from 46 to 91 out of 100. In addition, Canadahas used its negotiating leverage to encourage partners

with weak labour regimesto make improvements. Yet, the highest quality chapterswere achieved with trade

partners similar to Canada, and thosechapters have not pushed either party to improve their own domestic

labour regimes. The authors discuss the limits of the ILO standards for addressing contemporary debates

about labourand trade.

Originality/value –The authors’assessment provides the f‌irst empirical evidence to demonstrate that

Canada’s labour chapters have evolvedover time, and that the origins of this evolution predate the Liberal

government’s progressivetrade agenda by several decades. The authors also suggest that Canada’s“middle

road”compromise on ambitionversus enforceability may increase the relevanceof the index for research on

other middlepowers and potentially countries in the globalsouth.

Keywords Trade agreements, NAFTA, CETA, CPTPP, Inclusive trade, Labour provisions

Paper type Research paper

1. Introduction

As trade agreements increasinglycome under scrutiny in rich countries for offshoring jobs,

and in poor countries for failing to “f‌loat all boats”, the importance of labour chapters in

those agreements has received new attention. Many advanced Western democracies have

begun championing inclusivetrade, a concept loosely used to reference the notion that trade

agreements should benef‌it everyone. Chapters on labour and environment have become

more commonplace in many bilateral and plurilateral agreements, while other like-minded

countries have also added new human rights provisions and gender chapters (Lilly, 2018;

WTO, 2016).

The authors acknowledge funding from the Social Sciences and Humanities Research Council,

Insight Development Grant.

Novel index to

evaluate

labour

chapters

65

Received22 October 2020

Revised19 February 2021

Accepted19 February 2021

Journalof International Trade

Lawand Policy

Vol.20 No. 2, 2021

pp. 65-82

© Emerald Publishing Limited

1477-0024

DOI 10.1108/JITLP-10-2020-0056

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1477-0024.htm

On the surface, the inclusion of labour chapters seems positive, particularly to rich

democracies that are actively seeking to protect jobs and stave off populist backlash to

globalization. Developing countries in the global south are more circumspect, with some

viewing the trend as nothing more than an attempt by rich countries to reset the rules in their

favour by removing the competitive advantage of low-cost labour in the global south (Pahle,

2010;Dehejia and Samy, 2004). Debate remains active, and World Trade Organization (WTO)

members have failed to make broad multilateral progress on these issues for decades.

Because of this impasse, somecountries have simply proceeded to negotiate stand-alone

labour chapters via bilateral and plurilateral trade agreements. The content of those

chapters and level of ambitiondisplayed over time has received less public scrutiny (Global

Affairs Canada, 2016;Sapir, 1995;Pahle, 2010). In seeking to evaluate the ambition and

quality of labour chapters, it is importantto control for the characteristics of trade partners.

Richer countries are better positioned to have strong labour provisions ref‌lected in their

agreements because they are starting from a more advanced domestic context. Poor

countries may lack domestic frameworksfor labour rights, or the capacity to negotiate them

with other countriesvia trade agreements (Kim, 2012).

To capture these various competing interests, we sought to identify a country that has

engaged in the development of labour provisions both at the WTO and with individual

trading partners through an extensive record of bilateral or plurilateral agreements. We

selected Canada, a countrywith 14 trade agreements in force, and an original member of the

General Agreement on Tariffs and Trade (GATT). As a middle power with a modest

population, Canada lacks the necessary clout to simply assert labour provisions in

agreements with many trade partners. At the same time, as a G7 economy and one with a

long history of multilateral cooperation, Canada is often recognized as an important “trial

market”for countries seeking to penetrate the much larger American market next door

(Hart, 2002).

This paper examines all of Canada’s labour chapters over 25 years, evaluating the

content, ambition and enforceability of its labour provisions. To do so, we develop a unique

index based on Hoekman’s(1995)approach to evaluate and ultimatelyscore Canada’s labour

agreements over time. Through this research, we also seek to address the following

questions: how have labour provisions changed in Canada’s trade agreements over time;

how does the level of economic development by Canada’s trade partners inf‌luence the

quality of those bilateral labour chapters; and what broader trends can be learned from

Canada’s labour agreements for other countries? Overall, we f‌ind that Canada’s trade

agreements have indeed improved in scope, depth and enforceability, with scores rising

from 46 out of 100 in the 1990s to over 90 in the recently concluded US–Mexico–Canada

Agreement (USMCA). We also report f‌indings that considertrade partner level of economic

development, and the broader implications of our index for addressing contemporary

debates surroundinglabour and trade, particularly among rich countries.

The paper proceeds as follows. First, we review the literature and evolution of labour

chapters in trade agreements over time. Next, we outline our methods for developing the

labour chapter index, and subsequently present the results of our evaluation and index

scores. This is followed by a discussion and suggestions for future policy application and

research.

2. Labour chapters in trade agreements

The inclusion of labour provisions intotrade agreements is a relatively recent development

but builds on the foundation createdby the InternationalLabour Organization (ILO) in 1919.

Using a unique tripartite structure comprised of governments, employers and workers, the

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