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Dylan Schick — Tue, 08 Aug 2023 13:50:03 +0000

In Bangladesh a garment worker can…. “rise at 4.00 am ….work for two hours on household chores then walks for an hour to the garment factory where she works until10 or 11 o’ clock at night. After another hour’s walk home she spends two hours on housework, after which she lays down at 2. a.m to sleep – for two hours.”

Canada’s international feminism focuses heavily on integrating women in international trade. Development of women-run SMEs is a big focus. Unfortunately, Canada has overlooked a bigger issue. Its own protections against exports from heavily female industries in the developing world are some of the highest in the OECD. These industries are some of the highest value exports from developing countries to Canada, and Canada’s tariffs may suppress both trade-led growth and the wellbeing of millions of women in export-led industries in the developing world.

Canada has an opportunity to focus on the issue this fall. Its General Preferential Tariff (GPT) and Least Developed Countries Tariff (LDCT) are under review. Finance Canada is quietly consulting on what to do about least developed countries (LDCs) which could lose zero tariffs if they are graduated from the LDCT. It is also proposing removing/graduating several other countries from GPT tariff preferences. The tariff reshuffle is triggered by UN reclassifications: Bangladesh, Nepal and Laos are no longer considered least developed countries. Several other countries have been graduated from lower middle-income status to upper middle-income status. If Canada follows international practice (it doesn’t have to), these graduations would maintain very high tariffs on exports from many developing countries and they could remove eligibility for zero-tariff treatment from others.

A tariff is a tax on imports. High tariffs can destroy whole industries by increasing prices on goods, rendering them uncompetitive in export markets. Prime Minister Justin Trudeau’s rapid-fire response to Trumpian tariffs of 10 per cent on aluminum and 25 per cent on Canadian steel exports to the U.S. was in response to that threat. Tariffs also increase prices for consumers and/or depress wages in producing countries. Trudeau’s response was also intended to address the prospect of lower salaries and living standards in Canada.

The Canadian tariff is mostly open to developing countries’ exports except for four areas: tariffs on supply managed products, dairy and poultry; random tariffs that protect specific industries; and high average tariffs (17 per cent) on goods from labour-intensive industries like textiles, apparel and footwear (TAF). There is also a new group of geopolitical tariffs that are intended to reverse China’s dominance over Canadian imports.

Exports from the female-staffed TAF sector are often among the highest value exports from developing countries to Canada. Exporting countries range from Bangladesh, Nepal, Cambodia and Vietnam, to Peru, Guatemala, Sri Lanka and Tunisia. Least developed countries Bangladesh, Nepal and Cambodia are eligible for zero tariffs as are Peru and Vietnam because of free trade agreements. However, exports from many other countries, e.g., Guatemala, Sri Lanka, Tunisia, South Africa and Lebanon are subject to duties as high as 17 per cent. And Bangladesh, Nepal and Laos are about to be graduated from the zero tariffs of the LDCT.

In many countries, around 60-80 per cent of the workforce in TAF industries is female. There are centuries-old traditions of underpaying women in these sectors, because female labour was in olden times considered supplemental to male labour. Poor pay and other forms of mistreatment (poor working conditions, long working hours, sexual harassment and age discrimination) continue to be systemic throughout many TAF industries. If tariffs are high, producers will depress wages and working conditions to remain competitive in export markets.

About 65 million women work in the apparel sector in Asia, the highest employer of women in industry. In 2013, Maclean’s magazine noted that workers were paid 12 cents to produce a T-shirt sold for $14 in Canada. If the country is not an LDC, Canada’s tariffs will apply. A 17 per cent tariff on a T-shirt with an import price of around $5.69 may net the government over 96 cents in revenues. HST on the sale price of $14 nets the government another $1.82.

Half a century ago, these “pink tariffs” protected TAF industries in Canada from competition. They are no longer needed. Canada has labour shortages, not labour surpluses. Most TAF industries offshored by the 1990s to labour-surplus countries. Canada imports 95 per cent of its apparel. If necessary, the remaining highly specialized five per cent made-in-Canada products can be protected by tariffs on individual tariff lines. Budget 2023 claims that graduating countries will help Canada’s FTA negotiations. There is little evidence of that, and alternatives exist. And inflation post-COVID provides a strong economic rationale for reducing pressures on Canadian consumers by leaving LDC tariffs at zero while reducing the tariffs on non-LDC TAF imports.

Eons ago, the GPT (GSP in most other countries) was created to help newly independent developing countries gradually acquire market access to developed market economies. During colonialism, tariffs and taxes suppressed industrialization in many colonies, but not in all dominions. The destruction of the 1,000-year-old cotton producing and exporting businesses in India by the imposition of high tariffs and taxes is an example. Cotton production essentially relocated to industrializing Europe behind high tariff walls. The chakra in India’s flag not only represents spirituality, but it evolved from a spinning wheel. One of India’s earliest nationalist struggles was to re-shore textile industries to India.

GPT/GSP schemes were flawed from the beginning because most did not address tariffs on TAF industries. For example, Canada never had a GPT on TAF; it had just a general MFN tariff of 17 per cent. Long after independence, tariffs and other trade restrictions in main TAF export markets remained high, either to protect labour in developed countries or to accumulate revenue for governments. In the developing world, they slowed down a critical part of the industrialization in the shift from agriculture to labour-intensive industries.

Consumers in Canada benefited from a 2003 preferential scheme for least developed countries that dropped tariffs to zero and substantially increased imports of TAF items from some LDCs. By 2017, Bangladesh and Cambodia (which is not yet up for graduation) cut into China’s dominance of the apparel market. They substantially increased their market share to 21 per cent of Asian apparel exports to Canada. Loblaw’s Joe Fresh line, for example, sources from Bangladesh. Finance Canada will consult on new tariff levels for graduating LDCs Bangladesh, Nepal and Laos, in fall 2023.

While LDCs face graduation to the GPT, another group of countries is up for graduation from the GPT. Guatemala, for example, is eligible. Despite an average 17-per-cent tariff on TAF exports, it has bravely grown these exports to Canada. Graduation from the GPT will simply maintain the 17-per-cent tariff against main Guatemalan exports to Canada. That makes little development sense. Guatemala badly needs more labour-intensive growth to address crime, drugs and illegal migration. Allowing TAF exports from Guatemala and similar countries to enter Canada at minimal or zero duties can help economic growth in exporting countries. It would be a win for both Canadian consumers and geopolitics.

While the UN deems graduating countries to be doing better, their TAF sectors rarely improve at the same pace as other sectors. UN classifications do not take inequality into consideration. Canada’s last GPT reform in 2014 used UN criteria to graduate 72 countries off the GPT eligibility list. According to a government spokesman, these countries were “booming and no longer underdeveloped” and didn’t need any more of Canada’s limited preferences. The 72 included Kuwait, Bahrain and Qatar, which were indeed booming.

However, the graduations also included South Africa, Jamaica, Thailand, Tunisia, Lebanon, Mauritius, the Dominican Republic, Ecuador and the Caribbean small island states. These countries variously experience rampant inequality, youth bulges, nasty geopolitics, chronic unemployment and a lack of broad-based growth. Most have TAF export industries. None of them needed in perpetuity a 17-per-cent trade-stopping or wage-depressing tariff in labour/gender-intensive sectors. After that graduation, a range of non-TAF items from toothbrushes to bikes cost Canadians more. The government netted $312 million in revenues, a paltry contribution to an annual budget of $300 billion.

Finance Canada is proposing a GPT+ scheme similar to the EU’s scheme for graduating countries. It is consulting on a package: a lower tariff in exchange for the right to review labour and environmental standards in eligible developing countries. Graduating LDCs – Bangladesh, Laos and Nepal – are eligible for the scheme and, in a useful move, Finance has selected as eligible some lower middle-income TAF exporting countries: Sri Lanka, Pakistan, Egypt, El Salvador and Kenya.

If the proposed preferential tariff is anything higher than zero, it will have incremental costs to consumers and producers. Pakistan, Egypt and Sri Lanka all export apparel to Canada but so far, their exports are a small fraction of Bangladesh’s market share. Further, most exporting countries and SMEs develop industrial clusters by evolving along the TAF spectrum to footwear, headwear and other spin-offs. Non-apparel TAF goods appear to be excluded from the proposed preferential bodog online casino tariff and that exclusion could mean additional costs to Canadian consumers and businesses and continued low wages to workers. The average MFN tariff on footwear is around 18 per cent.

The existence of such high tariffs on heavily gendered industries, and the limited reforms under consideration, are simply inconsistent with Canada’s international feminist initiatives. A more useful approach would be to review the Canadian tariff from a trade and gender perspective with a view to dropping or eliminating most tariffs on TAF imports and maintaining the zero tariff on countries that already benefit from it. Canada could exclude from consideration any countries where there are geopolitical or human rights concerns.

Will low or zero tariffs benefit women workers in the developing world? Low tariffs may result in export-led growth but they do not necessarily translate into higher wages. Traditions of discrimination against female workers and the profit or taxation motives of global value chains and governments are too entrenched.

Stanford University researchers note that in Asia, workers’ single biggest concern is wages. Globally, only two per cent of garment workers make a living wage and most work overtime to make ends meet. Bangladeshi researchers confirm that growth gains in the sector have been achieved by workers putting in vast amounts of overtime. Even with record growth, profits to the industry can be siphoned off further up the value chain, including by governments. Female workers do not necessarily benefit from the growth process.

Responsibility for low wages and poor labour standards is shared between global value chains that often pressure manufacturers to lower prices, importing governments that impose high taxes and producing governments that turn a blind eye to repressive labour practices. Around 60-70 per cent of the value of an apparel item can be accrued outside the producing country in distribution, retail, marketing and taxes. If Canada chooses to initiate labour and environment reviews as conditions for lower tariffs, dialogue with producing-country governments (as per EU practice) is not enough. The CUSMA labour, gender and environment chapters are better alternatives because they do not place responsibility solely on producing countries. Instead, they make room for a whole-of-supply-chain dialogue with multinational corporations and importing and producing countries.

Sharing the responsibility could also provide options for cleaning up environmental pollution caused by TAF industries. And given the severe demand shock COVID-19 delivered to the TAF sector, (exports from LDCs are down from just under four billion in 2017 to just under three billion in 2022), an ILO-style dialogue between all participants along the value chain is long overdue. That dialogue should reach agreement on a quid pro quo on wages – lower tariffs in exchange for higher wages, and agreements to clean up environmental pollution. A real feminist initiative would be to begin an international consultation along these lines.

Canada’s current tariff policies are simply inconsistent with its trade-must-benefit- gender foreign policy positioning. Female workers, including workers in SMEs, which in developing countries tend to cluster around main export industries, need to benefit from international trade. Finance Canada’s proposed reforms go part of the way but there is much more to be considered. The consultations this fall need expert input, public discussion and parliamentary debate. It makes as much sense to ensure that Canada’s own trade policies are woke as it does to tell other countries how to do better.

Canadas_Tariff_Review_Not_Woke_Broke

Fauzya Moore is an Ottawa-based consultant and writer. She has worked as a Senior Economic Advisor at the various iterations of Global Affairs Canada, and also as a Senior Advisor on Governance at the Treasury Board of Canada. She most recently co-wrote the Asian Development Bank’s 2022 Global Aid for Trade Report. She is a graduate of the Harvard Kennedy School (2009) where she held both a Fulbright scholarship and a fellowship from the Ash Centre for Governance and Innovation. She has worked in both the developed and developing world.

To read the full commentary as it was originally published by the Canadian Global Affairs Institute, please click here.

To read the full paper, please click here.

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Ken Levinson — Tue, 16 Aug 2022 17:31:02 +0000

Broad-based tariffs including tariffs on manufactured imports would boost U.S. economy by 7% and create 10 million jobs.
Real household incomes rise by 10%.
Tariffs reduce imports and stimulate domestic manufacturing output by 19%.
Tariffs would generate $603 billion in new revenue, enabling cuts in income tax or other taxes.
CPA modification of standard trade model allows for pro-growth results from reduced imports

National policy has recently been moving towards industrial strategy to rebuild our industrial base. Tariffs were increased under the Trump administration to the dismay of many who predicted economic disaster which did not materialize. Under Biden, Congress has approved subsidies for semiconductor and solar manufacturing in the CHIPS Act and in the Inflation Reduction Act of 2022.

As the “Washington Consensus” on trade liberalization frays, new economic analysis is needed to guide decision making in an emerging post-neoliberal era of geopolitical and industrial competition among nations. To this effect, CPA helped develop the Job Quality Index to track the quality of jobs on offer each month, as a supplement to job creation numbers. CPA also developed the Domestic Market Share Index to track the domestic producer share of the U.S. goods market to gauge the competitiveness of our home industries at home.

Trade modeling has often projected economic results from trade liberalization agreements that did not materialize (for further detail, go here). The standard trade model projects gains from trade liberalization and losses from industrial strategies to re-shore industry. But those projections are at odds with the successful growth strategies of Japan, China, South Korea and early America which grew through the use of broad tariffs and other mechanisms to restrict imports and incentivize the local growth of investment and jobs.

CPA has spent the past year analyzing and improving the standard trade model, working with some of the developers of the standard GTAP trade model, to more accurately gauge the impacts of tariff intervention as a growth strategy to create jobs and protect from future supply chain shocks.

The new CPA working paper describes the results of improving the standard trade model, demonstrating the benefits of broad-based tariffs throughout the economy. The model’s results show that comprehensive tariffs would stimulate the U.S. economy and lead to the creation of 10 million new jobs. The tariffs implemented in the model reflect the proposals of the CPA Model Tariff schedule. In our simulation, these tariffs stimulate the domestic manufacturing industry and lead to real gains in domestic employment and income. We found double-digit growth in output in most manufacturing sectors, higher incomes in all industries, and broad-based growth across the entire economy.

The CPA model used for this simulation is a modified version of the standard Global Trade and Analysis Project (GTAP) model. The GTAP trade model was developed at Purdue University in the 1990s and is widely used by academic researchers and federal government agencies to model trade policies. The GTAP model, like other computable general equilibrium models (CGE), often assumes that the total supply of labor, investment and capital in the economy is fixed, limiting the ability for domestic production to rise when trade patterns change. Our modifications to several key parameters change these dynamics by allowing firms to increase their inputs and produce more as imports decline. The tariff effectively raises returns to labor and capital as domestic output in tariffed sectors increases.

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The CPA Model Tariff Schedule analyzes the impacts of a 15% revenue tariff increase on all imported goods, as well as a 35% tariff increase on imported goods for economic reasons and their importance to national resilience. While we assume the U.S. imposes the 35% tariffs only on Non-Free Trade Agreement (NFTA) countries, these tariff increases can be imposed globally. For this simulation, The U.S. has Free Trade Agreements (FTAs) with 20 countries including Canada and Mexico. Non-FTA countries comprise all other countries, including China and the 27 European Union members. Industries where the U.S. has little domestic production capabilities due to physical limitations (selected minerals) receive a zero percent tariff increase.

Our simulation of the Model Tariff Schedule leads to increases in real GDP (7%) and domestic output (19%). We observe relatively large gains in chemical manufacturing (30%), textiles and clothing (54%), and electrical (52%).

Growth in domestic production requires more workers. The economy adds 9.9 million workers, including 3 million additional workers in manufacturing and 6.9 million in service sectors. Although the growth in output is led by manufacturing sectors, higher employment in the service sector supports the expanding manufacturing sector and incomes. For example, our simulation shows strong growth in health care and government employment. See Table 1 for further details of simulation results.

Tariff revenue rises sixfold to reach $696 billion a year. This is far more revenue than corporate taxation currently generates for the U.S. Treasury. In this Model Tariff scenario, the federal government could abolish corporate taxation outright or cut personal income taxes by 25%. In our simulation, we turn the $603 billion gain in tax revenue into household and business income to avoid the deflationary effect of the government absorbing more funds.

Table 1: Main Results

Indicator	Actual, 2021	Post-Shock	Change	Change
Billions	Billions	%	Billions
Real GDP	$22,996	$24,523	6.6%	$1,527
Private Consumption	$15,742	$18,990	20.6%	$3,248
bodog online casino Gov Consumption	$4,053	$4,891	20.7%	$838
Investment	$4,120	$4,948	20.1%	$828
Total Tax Revenue	$4,626	$5,580	20.6%	$955
Employment (Millions)	155.2	165.1	6.4	9.9
Tariff Revenue	$93	$696	651.0%	$603
Imports	$3,397	$3,154	-7.1%	-$243
Exports	$2,478	$2,163	-12.7%	-$315

Source: U.S. Bureau of Economic Analysis. Figures reported here scale 2014 simulated results to 2021 data.

*All data in billions USD except Employment

The trade balance changes very little as both imports and exports fall. This result may seem unintuitive with a 35% tariff. While imports fall as the tariff makes imported goods more expensive, the GTAP model has several inbuilt dynamics that drive exports down. Export goods become relatively more expensive as the tariffs raise many input prices. Further, the model stipulates real exchange rate appreciation (a higher value for the dollar) as imports fall. In future studies of the economic impact of tariffs, we will attempt to explore alternative scenarios for exports. Lastly, lower imports will divert exports to domestic consumption, causing a reduction in exports However, the model’s implication that a comprehensive trade policy must include exchange rate regime management is valid.

Model Modifications

We added three main elements to the standard GTAP model to reflect a more realistic response to a tariff. First, we add new supply elasticities for factors of production (i.e. land, labor, capital) so that inputs and therefore output could increase in response to a trade shock–such as a tariff. The standard GTAP model does not allow for these changes in economy-wide supply, making the economy unrealistically rigid.

The second modification was to the Armington elasticities. These elasticities affect how purchasers react to the price differences between domestic goods and imports. These elasticities were modified to reflect a more realistic fall in exports and imports in the GTAP model from the tariffs. The GTAP model assumes markets are competitive and export volumes will respond strongly to any increase in the price of exports. That logic is based on the assumption of perfect competition across markets. There is evidence that U.S. exports of manufactured goods are concentrated in oligopolistic markets where prices will have less impact on volumes. We therefore modified those elasticities to reflect a more realistic response of trade quantities to price changes.

Lastly, we modified the model to return the gain in tax revenue back to consumers and producers. This adds further stimulus to GDP as it helps firms invest in production and gives consumers more spending power. This is a minor stimulus by comparison to the effects of the tariff changes.

Conclusion

Our simulation of the Model Tariff Schedule shows that tariffs on manufactured goods would deliver broad-based benefits to output, employment, and household incomes. Our changes to the standard GTAP model address some of the unrealistic rigidities built into the model. Further work is needed to strengthen the model to more accurately reflect a global response to trade policies.

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Courtney Brown — Mon, 21 Feb 2022 21:02:07 +0000

On February 17, 2022, USTR released its annual report on notorious markets for counterfeiting and piracy. The Press Release from USTR provided the following description of the report.

“WASHINGTON – The Office of the United States Trade Representative (USTR) today released the findings of its 2021 Review of Notorious Markets for Counterfeiting and Piracy (the Notorious Markets List). The Notorious Markets List highlights online and physical markets that reportedly engage in or facilitate substantial trademark counterfeiting or copyright piracy.

“‘The global trade in counterfeit and pirated goods undermines critical U.S. innovation and creativity and harms American workers,’ said Ambassador Katherine Tai. ‘This illicit trade also increases the vulnerability of workers involved in the manufacturing of counterfeit goods to exploitative labor practices, and the counterfeit goods can pose significant risks to the health and safety of consumers and workers around the world.’

“Reflecting the Biden-Harris Administration’s worker-centered trade policy, the 2021 Notorious Markets List’s issue focus section examines the adverse impact of counterfeiting on workers involved with the manufacture of counterfeit goods. The section describes how the illicit nature of counterfeiting requires coordination between relevant actors in order to effectively uncover and combat labor violations in counterfeiting operations across the globe.

“The 2021 Notorious Markets List also identifies 42 online markets and 35 physical markets that are reported to engage in or facilitate substantial trademark counterfeiting or copyright piracy. This includes identifying for the first time AliExpress and the WeChat e-commerce ecosystem, two significant China-based online markets that reportedly facilitate substantial trademark counterfeiting. Also, China-based online markets Baidu Wangpan, DHGate, Pinduoduo, and Taobao continue to be listed, as well as nine physical markets located within China that are known for the manufacture, distribution, and sale of counterfeit goods.

“Background

“USTR first identified notorious markets in the Special 301 Report in 2006. Since February 2011, USTR has published annually the Notorious Markets List separately from the Special 301 Report, to increase public awareness and help market operators and governments prioritize intellectual property enforcement efforts that protect American businesses and their workers.

“he Notorious Markets List does not constitute an exhaustive list of all markets reported to deal in or facilitate commercial-scale copyright piracy or trademark counterfeiting, nor does it reflect findings of legal violations or the U.S. Government’s analysis of the general intellectual property protection and enforcement climate in the country concerned. Such analysis is contained in the annual Special 301 Report issued at the end of April each year.

“USTR initiated the 2021 Notorious Markets List Review on August 30, 2021, through publication in the Federal Register of a request for public comments.

While counterfeiting can be found in every country, the USTR report is focused on online and physical locations where IP rights holders express concern with large volumes of counterfeit goods and poor enforcement. Many countries are flagged as hosting online problem actors and/or for having one or more physical locations where significant counterfeiting is occurring. The list is not intended to be exhaustive.

For example, the 42 online sites listed include eleven online markets where the country or countries where the servers operate are not known. In addition, online markets are attributed to nineteen countries (some online markets may list more than one country). China is listed for seven; Russia for five, the Netherlands for three, France, Bulgaria, Indonesia and Iraq for two and all other listed countries for one (Egypt, Finland, Iceland, Romania, India, Czech Republic, Vietnam, Panama, Israel, Singapore, Jordan and Switzerland).

In addition, eighteen countries are listed with one or more physical markets in the report. The eighteen countries include Argentina, Brazil, Cambodia, Canada, China, India, Indonesia, Krygyz Republic, Malaysia, Mexico, Paraguay, Peru, Philippines, Russia, Turkey, Ukraine, United Arab Emirates and Vietnam.

China has been and continues to be the country from which the greatest value and volume of counterfeit goods are seized each year by the U.S. Customs and Border Protection Service as this quote from page 41 of the report makes clear.

“China continues to be the number one source of counterfeit products in the world. Counterfeit and pirated goods from China, together with transshipped goods from China to Hong Kong, accounted for 83 percent of the value (measured by manufacturer’s suggested retail price) and 79 percent of the volume of counterfeit and pirated goods seized by U.S. Customs and Border Protection (CBP) in 2020.

A major purpose of the report each year is to highlight markets perceived as problematic and to focus USTR, foreign governments, market owners and businesses on the need to improve efforts to reduce counterfeiting in those markets. The report reflects the situation with individual markets and, where progress has been made, where ongoing issues may exist. As the press release and report make clear, the notorious market report is not a review of countries compliance/improvements on intellectual property protection. That is handled in the annual Special 301 Report which is released at the end of April.

While China criticized the report as not reflecting its efforts at improving IP enforcement and for not dealing with counterfeiting issues within the U.S., the criticism is misplaced. See Inside U.S. Trade’s World Trade Online, China blasts U.S. notorious markets list as ‘irresponsible,’ hypocritical. First, the report that looks at China’s efforts on intellectual property more broadly is the annual Special 301 Report. The next report will be released by the end of April 2022. Second, the report is generated in large part by a review of submissions by companies to its annual Federal Register notice, hence the term “reportedly” used in the report. Finally, USTR’s task is to examine how trading partners are implementing intellectual property rights and obligations and how effective enforcement is. The report fulfills the mandate but doesn’t suggest that counterfeiting isn’t a problem globally or that efforts are required around the world to address the problem, including in the U.S.

Of particular interest in this year’s report is the issue focus section which looks at the effects of counterfeiting on working men and women. I copy pages 3-9 of the report below.

“Issue Focus: The Adverse Impact on Workers Involved in the Manufacture of Counterfeit Goods

“This Administration is committed to a worker-centric trade policy as an essential part of the Build Back Better agenda that protects workers’ rights by fighting forced labor and exploitative labor conditions, and increases transparency and accountability in bodog sportsbook review global supply chains. This year’s NML Issue Focus3 examines the adverse impact of counterfeiting on the workers who are involved in the manufacture of counterfeit goods. Inadequate labor market regulations contribute to the trade in counterfeit and pirated goods.4 Counterfeit manufacturing often occurs in clandestine work places outside the reach of labor market regulations and inspection systems, which increases the vulnerability of workers to exploitative labor practices. Evidence indicates that the production of counterfeit goods exists alongside widespread labor abuses, from substandard and unsafe working conditions to child labor and forced labor. The illicit nature of counterfeiting requires coordination between relevant actors, including IP right holders, labor organizations, workers’ rights associations, and government enforcement agencies in order to effectively uncover and combat labor violations in counterfeiting operations across the globe.

“I. Counterfeit Manufacturers Operate Outside the Law, Increasing Worker Vulnerability

“Counterfeit product manufacturing occurs in illicit operations that by nature do not operate within the wide range of regulations, licensing requirements, government oversight, and government inspections that not only ensure products are safe for consumers, but also ensure that the rights of workers are protected. A recent report by the Transnational Alliance to Combat Illicit Trade (TRACIT) outlines how the illicit trade in counterfeit merchandise is a subset of the informal economy that exists beyond the reach of the state such that production of these goods may be partially or totally concealed to avoid payment of taxes or to avoid labor or product regulations. The informal economy in which counterfeiting thrives makes the occurrence of labor abuses, including forced labor and child labor, in counterfeit production sites difficult to detect and report.

“Counterfeiting operations often exist outside of the monitoring ability of organizations including international and non-governmental organizations, such as the International Labor Organization’s Better Work Program, the Fair Labor Association, the Worker Rights Consortium, and the Clean Clothes Campaign.6 These organizations issue detailed public reports on workers’ rights violations, drawing upon their investigations, research, and interviews at production facilities. However, facilities engaged in the production of counterfeit goods do not receive the same level of oversight and are not included in these investigations or reports. Therefore, the public pressure on companies and governments to improve working conditions and address forced labor and child labor violations in legitimate production facilities does not exist in the same way for facilities that produce counterfeit goods.

“The regulatory and supervisory pressure, whether by government oversight or inspections by other organizations, on producers of legitimate goods does not, of course, eliminate workers’ rights abuses, leaving potential violations undetected or unremediated in workplaces around the world. Working conditions in counterfeiting facilities, however, are observed to a much lesser degree and, therefore, have a much smaller opportunity to be remedied. As pointed out by the United Nations Office on Drugs and Crime (UNODC), if workers’ rights violations “can happen in global companies whose supply-chain practices are at least open to some degree of scrutiny, then the situation would be much worse for workers in a clandestine setting.”

“II. Evidence of Forced Labor and Other Labor Violations in Counterfeiting Operations

“Government authorities, non-governmental organizations, and investigative journalists have documented evidence revealing that forced labor and child labor exists in counterfeit manufacturing operations, as well as other labor violations such as hazardous working and living conditions, restrictions on freedom of movement, and suppressed wages or wage garnishment. The informal economy, which includes the workplaces that produce counterfeit goods, is known to be where the vast majority of child labor, forced labor, and human trafficking occurs. As reported by UNODC, workers are often coerced into producing counterfeit items, and children and migrants who have been smuggled into a country are among the most vulnerable targets. The U.S. Department of Homeland Security agrees, explaining that counterfeit goods are “often produced in unsafe workplaces, with substandard and unsafe materials, by workers who are often paid little or sometimes nothing in the case of forced labor.” These abuses are not isolated to certain products or areas, but occur in counterfeit manufacturing facilities across countries, regions, and industrial sectors.

“For example, in 2020 in Istanbul, Turkey, an investigative firm found evidence of child labor while conducting raids on production facilities of counterfeit luxury goods. Children were working on machinery to produce counterfeit handbags and engaged in detailed sewing work, a task for which employers sometimes prefer to hire children. In 2017 in Lima, Peru, owners of a counterfeit lightbulb operation that were found to be utilizing forced labor, including of minors, were charged with aggravated human trafficking. The workers were reportedly locked in shipping containers while the production was carried out in twelve-hour shifts.

“Non-governmental organizations and industry contacts have reported that factories located in China making counterfeit products often have unsafe working conditions that do not adhere to local or international environmental, health, and safety standards. Right holders report that detecting these facilities is increasingly difficult for them because the operators know their operations are illegal and therefore take measures to evade detection. For example, some factories producing counterfeit goods operate at night or with blacked out windows and limited ventilation, even if they use dangerous chemicals. One brand protection manager explained that factories making counterfeit goods often save money by using chemicals, dyes, and adhesives that look and perform similarly to those in legitimate products but are unsafe for workers. Another contact claimed to have visited three counterfeit manufacturing factories in 2021 and described the conditions as ‘horrendously unsafe.’

“Recently, labor violations have been reported in the production of counterfeit personal protective equipment and other COVID-19 related products. These counterfeit products have been reported to be made in unsterile conditions, including in sweatshops previously used to make other types of counterfeit goods.

“Finally, existing data shows a correlation between the use of forced labor and child labor in the global production of certain products and the types of products that are most commonly counterfeited. Data from the World Customs Organization, Organisation for Economic Cooperation and Development, and U.S. Customs and Border Protection identifies some of the top counterfeited products as garments, electronics, footwear, and fashion accessories. As reported by the U.S. Department of Labor, these product categories are also among those associated with labor exploitation, including child labor and forced labor. Similarly, China is the top country of origin for counterfeit goods seized by U.S. Customs and Border protection as well as the country with the greatest number of products made with forced labor, including state-sponsored forced labor.

“III. More Research, Coordination, and Documentation Is Needed

“The Federal Register Notice for the 2021 Notorious Markets List solicited information from the public on this Issue Focus. Few submissions provided relevant information. The lack of information, examples, and anecdotes on this pervasive issue highlights not only the need for more data on the adverse impact of counterfeit manufacturing on workers, but also the need for coordination between entities monitoring and enforcing intellectual property violations and labor violations. Additional data in this area can also improve our understanding of how illicit supply networks operate, as well as how they recruit, use, and abuse their labor force.

“The lack of data can be largely attributed to the fact that counterfeiters work in the shadows of the informal economy and right holders only have visibility into counterfeit manufacturing facilities when they accompany law enforcement on raids. Law enforcement raids on counterfeiting facilities rarely involve participation from labor inspectors. The general absence of labor inspections in counterfeit manufacturing facilities leads to workers’ rights abuses going undetected and unresolved, and leaves little recourse for workers who have been compelled by coercion or force to produce counterfeit goods.

“In its recent report on the use of forced labor in counterfeit manufacturing and other sectors of the informal economy, TRACIT calls on governments to “strengthen inter-agency and inter-departmental cooperation at the national level, particularly by improving law enforcement capacities.” To help facilitate that coordination, the U.S. Department of Labor produces reports on international child labor and forced labor and provides other tools like the Better Trade Tool and Comply Chain that serve as valuable resources for research, advocacy, government action, and corporate responsibility to document the current situation of global labor abuse and take action. Further coordination between governments and relevant stakeholders would undoubtedly lead to the documentation and reporting of many more labor violations in the global counterfeit marketplace.

“IV. Conclusion

“Manufacturers of counterfeit goods operate outside of regulations and inspection systems, leading to widespread labor violations alongside already well-known intellectual property violations. There is an opportunity for the companies and enforcement authorities that work to shut down counterfeiting operations for intellectual property violations to collaborate and coordinate with those focused on forced labor and other workers’ rights violations to uncover and remedy these critical issues. bodog online casino If labor inspectors, labor-focused organizations, workers’ rights associations, and others target counterfeit manufacturing facilities for enforcement, this will not only protect workers and consumers, but will also reduce global trade in counterfeit goods. Increased coordination between those that engage in labor monitoring and those that engage in intellectual property enforcement holds the potential to advance research on the subject and to remedy labor abuses that currently go unaddressed.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.

To read the full commentary from Current Thoughts on Trade, please click here.

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Courtney Brown — Sun, 13 Feb 2022 19:36:37 +0000

My last post from February 11th on forced labor and U.S. law to stop imports from such labor did not include reference to a report released by the International Labor Organization on February 10, 2022 and the U.S. Department of State media note on the note. See February 11, 2022: Stopping imports made in whole or in part from forced labor — U.S. law and the looming challenge on goods made from cotton and polysilicon, https://currentthoughtsontrade.com/2022/02/11/stopping-imports-made-in-whole-or-in-part-from-forced- labor-u-s-law-and-the-looming-challenge-on-goods-made-from-cotton-and-polysilicon/

The ILO press release on the report can be found here. ILO releases the 2022 report of the Committee of Experts on the Application of Conventions and Recommendations, Press release, 10 February 2022, https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_836668/lang–en/index.htm

The State Department media note can be found here (U.S. Department of State, media note, On the Release of the International Labor Organization’s Committee of Experts Report, February 10, 2022, https://www.state.gov/on-the-release-of-the-international-labor-organizations-committee-of-experts-report/) and is copied below.

“The Department of State welcomes the issuance today of a report by a committee of the International Labor Organization (ILO) calling on the government of the People’s Republic of China (PRC) to review, repeal, and revise its laws and practices of employment discrimination against racial and religious minorities in Xinjiang.

“This report, produced by the ILO’s Committee of Experts on the Application of Conventions and Recommendations, expresses deep concern regarding the PRC’s policies and calls on the PRC government to take specific steps toward eliminating racial and religious discrimination in employment and
occupation, and to amend national and regional policies utilizing vocational training and rehabilitation centers for ‘political re-education’ based on administrative detention.

“China joined the ILO in 1919 as one of the founding member states. The United States calls on the PRC to take the steps requested by the Committee of Experts. We also reiterate our call for the PRC to end its genocide and crimes against humanity perpetrated against the predominantly Muslim Uyghurs and members of other ethnic and religious minority groups in Xinjiang, as well as its use of these groups for forced labor in Xinjiang and beyond. The State Department is committed to working with our international partners and allies to end forced labor and strengthen international action against the ongoing genocide and crimes against humanity in Xinjiang.

“The Committee’s report can be found here – https://www.ilo.org/wcmsp5/groups/public/—ed_norm/— relconf/documents/meetingdocument/wcms_836653.pdf .

“For more information on forced labor in the PRC’s Xinjiang Region, please see the linked July 2021 Fact Sheet on the topic: https://www.state.gov/forced-labor-in-chinas-xinjiang-region/“.

The full title of the ILO report is International Labour Organization, Application of International
Labour Standards 2022, Report III (Part A), Report of the Committee of Experts on the Application of Conventions and Recommendations, International Labour Conference, 110th Session, 2022, https://www.ilo.org/wcmsp5/groups/public/—ed_norm/— relconf/documents/meetingdocument/wcms_836653.pdf. The volume is 870 pages in length and reviews compliance with various standards by individual countries. There are discussions on China at pages 431-433 (Minimum Age Convention, 1973 (No. 138) (ratification: 1999)); 433-434 (Worst Forms of Child Labour Convention, 1999 (No. 182) (ratification: 2002)); 514-521 (Discrimination (Employment and Occupation) Convention, 1958 (No. 111)(ratification: 2006)); and 683-689 (Employment Policy Convention, 1964 (No. 122) (ratification: 1997). It is the latter two sections that talk at length about claims made by the International Trade Union Confederation (ITUC) on practices against the Uyghurs in Xinjiang Autonomous Region, the government of China’s response to the claims, and the concerns of the Committee of Experts with requested actions. For example, looking just at the last section, pages 683-685 outlines the claims by the ITUC on employment practices.

“In its observations of 2020 and 2021, the ITUC alleges that the Government of China has been engaging in a widespread and systematic programme involving the extensive use of forced labour of the Uyghur and other Turkic and/or Muslim minorities for agriculture and industrial activities throughout the Xinjiang Uyghur Autonomous Region (Xinjiang), in violation of the right to freely chosen employment set out in Article 1(2) of the Convention. The ITUC maintains that some 13 million members of the ethnic and religious minorities in Xinjiang are targeted on the basis of their ethnicity and religion 684 Report of the Committee of Experts on the Application of Conventions and Recommendations Employment policy and promotion with a goal of social control and assimilation of their culture and identity. According to the ITUC, the Government refers to the programme in a context of ‘poverty alleviation’, ‘vocational training’, ‘reeducation through labour’ and ‘de- extremification’.

“The ITUC submits that a key feature of the programme is the use of forced or compulsory labour in or around ‘internment’ or ‘re-education’ camps housing some 1.8 million Uyghur and other Turkic and/or Muslim peoples in the region, as well as in or around prisons and workplaces across Xinjiang and other parts of the country.

“The ITUC indicates that, beginning in 2017, the Government has expanded its internment programme significantly, with some 39 internment camps having almost tripled in size. The ITUC submits that, in 2018, Government officials began referring to the camps as ‘vocational education and training centres’ and that in March 2019, the Governor of the Xinjiang Uyghur Autonomous Region described them as ‘boarding schools that provide job skills to trainees who are voluntarily admitted and allowed to leave the camps’. The ITUC indicates that life in ‘re-education centres’ or camps is characterized by extraordinary hardship, lack of freedom of movement, physical and psychological torture, compulsory vocational training and actual forced labour.

“The ITUC also refers to ‘centralized training centres’ that are no re-education camps but have
similar security features (e.g. high fences, security watchtowers and barbed wire) and provide similar education programmes (legal regulations, Mandarin language courses, work discipline and military drills). The ITUC adds that the re-education camps are central to an indoctrination programme focused on separating and ‘cleansing’ ethnic and religious minorities from their culture, beliefs, and religion. Reasons for internment may include persons having travelled abroad, applied for a passport, communicated with people abroad or prayed regularly.

“The ITUC also alleges prison labour, mainly in cotton harvesting and the manufacture of textiles, apparel and footwear. It refers to research according to which, starting in 2017, the prison population of Uyghurs and other Muslim minorities increased dramatically, accounting for 21 per cent of all arrests in China in 2017. Charges typically included ‘terrorism’, ‘separatism’ and ‘religious extremism’.

“Finally, the ITUC alleges that at least 80,000 Uyghurs and other ethnic minorities workers were transferred from Xinjiang to factories in Eastern and Central China as part of a ‘labour transfer’ scheme
under the name ‘Xinjiang Aid’. This scheme would allow companies to: (1) open a satellite factory in Xinjiang or (2) hire Uyghur workers for their factories located outside this region. The ITUC alleges that

the workers who are forced to leave the Uyghur Region are given no choice and, if they refuse, are threatened with detention or the detention of their family. Outside Xinjiang, these workers live and work in segregation, are required to attend Mandarin classes and are prevented from practicing their culture or religion. According to the ITUC, state security officials ensure continuous physical and virtual surveillance. Workers lack of freedom of movement, remaining confined to dormitories and required to use supervised transport to and from the factory. They are subject to impossible production expectations and long working hours. The ITUC adds that, where wages are paid, they are often subject to deductions that reduce the salary to almost nothing. ITUC further adds that, without these coercively arranged transfers, Uyghurs would not find jobs outside Xinjiang, as their physical appearance would trigger police investigations.

“According to the ITUC’s allegations, to facilitate the implementation of these schemes, the Government offers incentives and tax exemptions to enterprises that train and employ detainees; subsidies are granted to encourage Chinese-owned companies to invest in and build factories near or within the internment camps; and compensation is provided to companies that facilitate the transfer bodog poker review and employment of Uyghur workers outside the Uyghur Region.

“In its 2021 observations, the ITUC supplements these observations with information, including testimonies from the Xinjiang Victims Database, a publicly accessible database which as of 3 September
2021 had allegedly recorded the experience of some 35,236 ethnic minority members forcibly interned
by the Government since 2017.”

The Government of China provides its views that the claims are false in each case and provides a review of what its actions are intended to accomplish (pages 685-687). However, the Committee of Experts expresses major concerns and seeks additional action/information from China (687-689 copied below).

“The Committee takes due note of the ITUC allegations, the response and additional information provided by the Government and the various employment and vocational training policies as articulated
in various recent ‘white papers’ referred to by the Government in its report and other legal and policy documents referred to by United Nations human rights experts.

“The Committee recalls that the Convention’s objective of promoting full employment does not require ratifying States to guarantee work for all who are available for and seeking work, nor does it imply that everyone must be in employment at all times (2020 General Survey on promoting employment and decent work in a changing landscape, paragraph 54). The Convention does, however, require ratifying States to promote freedom to choose one’s employment and occupation, as well as equal access to opportunities for training and general education to prepare for jobs, without discrimination on the basis of race, colour, national origin, religion or other grounds of discrimination covered under Convention No. 111 or other international labour standards such as the Vocational Rehabilitation and Employment (Disabled Persons) Convention, (No. 159).

“In this context, the Committee notes that training facilities that house the Uyghur population and other Turkic and Muslim minorities separate them from the mainstream educational and vocational training, vocational guidance and placement services available to all other groups in the region throughout the country at large. Such separation may lead to active labour market policies in China being designed and implemented in a manner that generates coercion in the choice of employment and has a discriminatory effect on ethnic and religious minorities. Photographs of the facilities, equipped with guard towers and tall surrounding walls topped with barbed wire further reinforce the observation of segregation. The Committee has observed before that some workers from ethnic minorities face challenges in seeking to engage in the occupation of their choice because of indirect discrimination. For example, biased approaches towards the traditional occupations engaged in by certain ethnic groups, which are often perceived as outdated, unproductive or environmentally harmful, continue to pose serious challenges to the enjoyment of equality of opportunity and treatment in respect of occupation (general observation on Convention No. 111, 2019). The Committee addresses other aspects of the particular system for vocational training and education aimed at the deradicalization of ethnic and religious minorities in its comment on the application of the Discrimination (Employment and Occupation) Convention, 1958 (No. 111).

“The Committee recalls that, while the Convention requires ratifying States to declare and pursue as a major goal an active policy designed to promote full, productive and freely chosen employment with the objective of stimulating economic growth and development and meeting manpower requirements, employment policy must also promote free choice of employment by enabling each worker to train for employment which can subsequently be freely chosen, in accordance with Article 1(2)(c) of the Convention.

“Article 1(2)(c) provides that the national employment policy shall aim to ensure that ‘there is freedom of choice of employment and the fullest possible opportunity for each worker to qualify for, and to use his skills and endowments in, a job for which he or she is well suited, irrespective of race, colour, sex, religion, political opinion, national extraction or social origin’. In its 2020 General Survey on promoting employment and decent work in a changing landscape, paragraphs 68–69, the Committee noted that ‘the objective of freely chosen employment consists of two elements. First, no person shall be compelled or forced to undertake work that has not been freely chosen or accepted or prevented from leaving work if he or she so wishes’. Second, all persons should have the opportunity to acquire qualifications and to use their skills and endowments free from any discrimination. Moreover, the Committee recalls that the prevention and prohibition of compulsory labour is a condition sine qua non of freedom of choice of employment (2020 General Survey, paragraph 70).

“The Committee notes the Government’s statement that the ITUC observations are based on individual statements and are unsubstantiated; however, it notes that the ITUC observations also append additional sources containing statistical data; references to first-hand testimonies, testimonies of eyewitnesses, family and relatives; research papers; and photographs of vocational training and education centres.

“The Committee also notes that, on 29 March 2021, a number of United Nations human rights experts (including Special Rapporteurs and thematic working groups mandated by the UN Human Rights Council) expressed serious concern with regard to the alleged detention and forced labour of Uyghur and other Turkic and/or Muslim minorities in Xinjiang. The UN experts indicate that Uyghur workers have been held in ‘re- education’ facilities, with many also forcibly transferred to work in factories in Xinjiang. They further indicate that Uyghur workers have allegedly been forcibly employed in low-skilled, labour-intensive industries, such as agribusiness, textile and garment, automotive and technological sectors.

“The Committee recognizes and welcomes the strong commitment of the Government to the eradication of poverty. However, it is the Committee’s firm view that poverty eradication and the realization of the right to work to that end encompasses not only job placement and job retention but also the conditions under which the Government executes such placement and retention. The Convention does not only require the Government to pursue full employment but also to ensure that its employment policies do not entail any direct or indirect discriminatory effect in relation to recruitment, conditions of work, opportunities for training and advancement, termination, or any other employment-related conditions, including discrimination in choice of occupation.

“The Committee is of the view that at the heart of the sustainable reduction of poverty lies the active enhancement of individual and collective capabilities, autonomy and agency that find their expression in the full recognition of the identity of ethnic minorities and their capability to freely and without any threat or fear choose rural or urban livelihoods and employment. The obligation under the Convention is not to guarantee job placement and retention for all individuals by any means available but to create the framework conditions for decent job creation and sustainable enterprises.

“The Committee takes due note of the view expressed in the Government’s report that ‘some forces recklessly sensationalize the so-called ‘forced labour’ issue in Xinjiang on various occasions’, adding that this is ‘nothing but a downright lie, a dirty trick with ulterior motives’. The Committee is bound to observe, however, that the employment situation of Uyghurs and other Muslim minorities in China provides numerous indications of coercive measures many of which arise from regulatory and policy documents.

The Government’s references to significant numbers of ‘surplus rural labour’ being ‘relocated’ to industrial and agricultural employment sites located inside and outside Xinjiang under ‘structured Employment policy and promotion conditions’ of ‘labour management’ in combination with a vocational training policy targeting deradicalization of ethnic and religious minorities and at least in part carried out in high-security and high- surveillance settings raise serious concerns as to the ability of ethnic and religious minorities to exercise freely chosen employment without discrimination. Various indicators suggest the presence of a ‘labour transfer policy’ using measures severely restricting the free choice of employment. These include government-led mobilization of rural households with local townships organizing transfers in accordance with labour export quotas; the relocation or transfer of workers under security escort; onsite management and retention of workers under strict surveillance; the threat of internment in vocational education and training centres if workers do not accept ‘government administration’; and

the inability of placed workers to freely change employers.

“The Committee urges the Government to provide detailed updated information on the measures taken or envisaged to ensure that its national employment policy effectively promotes both productive and freely chosen employment, including free choice of occupation, and effectively prevents all forms of forced or compulsory labour. In addition, the Committee requests the Government to take immediate measures to ensure that the vocational training and education programmes that form part of its poverty alleviation activities focused in the Uyghur Autonomous Region are mainstreamed and delivered in publicly accessible institutions, so that all segments of the population may benefit from these services on an equal basis, with a view to enhancing their access to full, productive and freely chosen employment and decent work. Recalling that, under the Employment Promotion Law (2007) and the Vocational Education law (1996), workers have ‘the right to equal employment and to choose a job of their own initiative’ and to access vocational education and training, respectively, the Committee asks the Government to provide detailed information on the manner in which this right is effectively ensured, particularly for those belonging to the Uyghur minority and other Turkic and/or Muslim minorities. The Government is also requested to provide detailed information, including disaggregated statistical data, on the nature of the different vocational education and training courses offered, the types of courses in which Uyghur minorities have participated, and the numbers of participants in each course, as well as the impact of the education and training on their access to freely chosen and sustainable employment.

“Article 3 of the Convention. Consultation. The Committee requests the Government to indicate the manner in which representatives of workers and employers organizations were consulted with respect to the design, development, implementation, monitoring and review of the active labour market measures being taken in the Uyghur Autonomous Region. In addition, and given the focus of the active labour market measures on the Uyghur and other Turkic/Muslim minorities, the Committee requests the Government to indicate the manner in which the representatives of these groups have been consulted, as required under Article 3.

“The Committee is raising other matters in a request addressed directly to the Government.”

The ILO Report references a report from the UN Committee on the Elimination of Racial Discrimination. See United Nations, International Convention on the Elimination of All Forms of Racial Discrimination, Committee on the Elimination of Racial Discrimination, Concluding observations on the combined fourteenth to seventeenth periodic reports of China (including Hong Kong, China and Macao, China), CERD/C/CHN/CO/14- 17, 19 September 2018, pages 7-8 (paras.40-42, copied below), https://tbinternet.ohchr.org/_layouts/15/treatybodyexternal/Download.aspx?symbolno=CERD/C/CHN/CO/14- 17&Lang=En.

“Xinjiang Uighur Autonomous Region

“40. The Committee notes the statements delivered by the State party delegation concerning the non- discriminatory enjoyment of freedoms and rights in the Xinjiang Uighur Autonomous Region. The Committee is, however, alarmed by:

“(a) Numerous reports of the detention of large numbers of ethnic Uighurs and other Muslim minorities, held incommunicado and often for long periods, without being charged or tried, under the pretext of countering religious extremism. The Committee regrets the lack of official data on how many people are in long-term detention or who have been forced to spend varying periods in political “re-education camps” for even non- threatening expressions of Muslim ethno-religious culture, such as a daily greeting. Estimates of the number of people detained range from tens of thousands to over a million. The Committee also notes that the delegation stated that vocational training centres exist for people who have committed minor offences without qualifying what that means;

“(b) Reports of mass surveillance disproportionately targeting ethnic Uighurs, such as frequent baseless police stops and the scanning of mobile phones at police checkpoint stations; additional reports have been received of the mandatory collection of extensive biometric data in the Xinjiang Uighur Autonomous Region, including DNA samples and iris scans, of large groups of Uighur residents;

“(c) Reports that all residents of the Xinjiang Uighur Autonomous Region are required to hand over their travel documents to police and apply for permission to leave the country, and that permission may not come for years. This restriction particularly affects those who wish to travel for religious purposes;

“(d) Reports that many Uighurs who had left China have allegedly been returned to the country against their will. There are fears for the current safety of those returned to China against their will.

“While acknowledging the State party’s denials, the Committee takes note of reports that Uighur language education has been banned in schools in the Hotan (Hetian) prefecture in the Xinjiang Uighur Autonomous Region (arts. 2 and 5).

“42. The Committee recommends that the State party:

“(a) Halt the practice of detaining individuals who have not been lawfully charged, tried and convicted for a criminal offence in any extralegal detention facility;

“(b) Immediately release individuals currently detained under these circumstances, and allow those wrongfully held to seek redress;

“(c) Undertake prompt, thorough and impartial investigations into all allegations of racial, ethnic and ethno-religious profiling, holding those responsible accountable and providing effective remedies, including compensation and guarantees of non-repetition;

“(d) Implement mandatory collection and analysis of data on the ethnicity of all individuals stopped by law enforcement, the reasons for and outcome of those stops, report publicly on the information collected at regular intervals and include it in its follow-up report;

“(e) Ensure that all collection, retention and use of biometric data is regulated in law and in practice, is narrow in scope, transparent, necessary and proportionate to meeting a legitimate security goal, and is not based on any distinction, exclusion, restriction or preference based on race, colour, descent or national or ethnic origin;

“(f) Eliminate travel restrictions that disproportionately affect members of ethnic minorities;
“(g) Disclose the current location and status of Uighur students, refugees and asylum seekers who

returned to China pursuant to a demand made by the State party in the past five years;

“(h) Provide the number of persons held against their will in all extralegal detention facilities in the Xinjiang Uighur Autonomous Region in the past five years, together with the duration of their detention, the grounds for detention, the humanitarian conditions in the centres, the content of any training or political curriculum and activities, the rights that detainees have to challenge the illegality of their detention or appeal the detention, and any measures taken to ensure that their families are promptly notified of their detention.”

As China seems intent on pursuing its policies described above and in the other sections of the ILO Report against the Uyghurs and other minorities, there will remain increased global tensions including trade actions to address what others view as unacceptable actions towards the minorities.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.

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Jake O'Keeffe — Tue, 07 Dec 2021 20:33:03 +0000

Fragmentation of production activity has accelerated in recent years. The global market size for outsourcing has doubled from $45.6 billion in 2000 to $92.5 billion in 2019.¹ According to Grossman and Helpman (2005), firms now outsource a range of activities – jobs related to both manufacturing (such as product design, assembly, research and development) and professional services (marketing, distribution, after-sales services). Given that outsourcing has implications for employment and wages (Hummels et al. 2014), understanding its determinants is crucial for both academics and policymakers. Determinants of outsourcing include contractibility (Grossman and Helpman 2005, Alfaro et al. 2019), communication technology (Fort 2017), globalisation (Ornelas and Turner 2008, Chongvilaivan and Hur 2012, Buehler and Burghardt 2015, Stiebale and Vencappa 2018, Limão and Xu 2021), and prices (Alfaro et al. 2016).

In a recent paper (Chakraborty et al. 2021), we outline that import competition is also an important driver of outsourcing. While most studies look at foreign outsourcing, we focus on domestic outsourcing – an aspect which has largely been ignored in the literature. Additionally, we propose a novel channel that influences outsourcing of production activities by a firm. We posit that an interaction between stringent labour market regulations and an increase in import competition can incentivise firms to outsource manufacturing tasks. We investigate this channel using unique and new data on domestic outsourcing of manufacturing jobs (including to the informal sector) by Indian firms in the context of increased competition from Chinese imports as a result of China’s accession to the WTO in 2001.

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Panel A of Figure 1 shows that outsourcing of manufacturing jobs by Indian firms, as a ratio of the firms’ total wage bill, increased by roughly 300% between 1995-2001 and 2002-2007. Panel B shows the meteoric rise in import competition from China in the Indian market after China’s WTO accession in 2001. The share of manufacturing imports from China as a share of total manufacturing imports skyrocketed by about 400%. This trend is mirrored by the Chinese import penetration ratio, defined as the share of Chinese imports in an industry in total domestic consumption, which increased from less than 1% to almost 8% over the same period.

Panel C of Figure 1 plots a simple unconditional correlation between changes in the Chinese import penetration ratio and outsourcing of manufacturing jobs by Indian firms and shows a strong, positive relationship between the two. Our regression estimates show that this relationship is causal and economically meaningful. Greater import competition from China is associated with a significant increase in domestic outsourcing of manufacturing jobs – a ten percentage point increase in the import penetration ratio leads to 11–14% increase in the ratio of outsourcing expenses to the wage bill of a firm.

Figure 1 Chinese import penetration and outsourcing of manufacturing jobs by Indian manufacturing firms, 1995- 2007

The role of labour regulations

Figure 2 explores the role of labour regulation in shaping the impact of import competition on firm outsourcing. We leverage the substantial heterogeneity in labour market regulations (and their implementation) across Indian states and follow Besley and Burgess (2004), Gupta et al. (2009), and Adhvaryu et al. (2013) to classify Indian states as ‘pro-worker’ or ‘pro-employer’. Figure 2 plots the share of expenditure on outsourcing of manufacturing jobs in the total wage bill of a firm for both states with pro-employer and pro-worker (and neutral) labour laws. The plot shows that there is no clear differential trend in outsourcing between these states before 2001 – the difference in the trend starts to grow significantly along with the increase in import competition from China. Firms located in states with pro-worker labour laws start to outsource substantially more than firms in states with pro-employer labour laws after 2001. For example, the average difference in the ratio before 2001 between pro-worker and pro-employer states is around 38%, which increased to 120% between 2002 and 2007. Indeed, in our paper we show that the positive relationship between import competition and outsourcing of manufacturing jobs is relevant only for firms located in states with pro-worker labour regulations.

We interpret our results with a model where firms employ in-house labour or outsource input production at a lower wage (for instance, to the informal sector). Firms are forward-looking and recognise that they may incur firing costs to retrench or lay off workers in the next period in case of a negative demand shock. An increase in Chinese import competition results in a pro-competitive effect. In other words, relatively low-cost (productive) firms, which are the only ones with the ability to compete with imports from China, are also the ones that feel that competition and, effectively, lose their monopoly power. Their past monopoly power incentivised those firms to restrict their output and to charge high prices and markups. The loss of their monopoly power pushes them to expand output (using the standard monopoly versus competition argument) and increase outsourcing.² This increase in outsourcing can be greater for firms in pro-worker states, since a given amount of outsourcing saves a larger amount of firing costs in the future in case a negative shock hits and firms have to contract. An implication of the model is that firm-level costs and markups (and hence, the prices charged) also decrease with an increase in outsourcing. We find empirical support for these impacts.

Figure 2 Trends in the ratio of outsourcing expenditure on manufacturing jobs to total wage bill: Pro-worker versus pro-employer states, 1995-2007

Notes: Figure plots the ratio of outsourcing expenses of manufacturing jobs in total wage bill multiplied by 100. ‘States with Pro-employer labour Laws’: Andhra Pradesh, Karnataka, Rajasthan, Tamil Nadu and Uttar Pradesh. ‘States with Pro-worker and Neutral labour Laws’: Assam, Bihar, Gujarat, Haryana, Kerela, Madhya Pradesh, Maharastra, Orissa, Punjab, and West Bengal.

The informal sector

Finally, we use data on outsourcing activity by micro enterprises in the informal manufacturing sector in India to examine the linkages between the formal and informal sectors. Firms in the informal sector face lower costs per unit of labour because labour laws are not enforced. We find that greater import competition from China is associated with an increase in the likelihood of informal enterprises selling their final output to other enterprises directly, or through a contractor. This relationship is magnified in states with pro-worker labour regulation. Our results also show that firms that are engaged in such contracts experience an increase in their output and employment. Our study thus highlights the implications of international trade for labour market outcomes and informality in developing countries (Goldberg and Pavcnik 2003, Dix-Carneiro et al. 2021).

Conclusion

We propose outsourcing as a new margin of adjustment by firms to import competition, thereby contributing to a large literature examining the impact of import competition, especially from China, on a range of outcomes in the manufacturing sector. This literature largely pertains to developed countries and focuses on the displacement of labour into unemployment, public assistance, or to other geographies. We study the movement of labour to the informal sector, which in developing countries is a means to survive, since unemployment and public assistance may not be options. By probing the role of labour market regulation in mediating the relationship between import competition and outsourcing, we underscore the significance of domestic institutions for how firms adapt to globalisation.

Pavel Chakraborty is an applied micro-economist. His research mainly focuses on the dynamics of firms in developing countries in relation to various issues regarding international trade, innovation, labour economics, organizational economics, and economic development.

Devashish Mitra is Professor of Economics and Gerald B. and Daphna Cramer Professor of Global Affairs at the Maxwell School of Citizenship and Public Affairs, Syracuse University.

Asha Sundaram is a Senior Lecturer at the Department of Economics, University of Auckland. She has an M.Phil in Economics from the University of Oxford, UK and a PhD from Syracuse University, USA.

To read the full commentary from Vox EU, please click here.

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Johnny Morris — Mon, 21 Jun 2021 20:54:51 +0000

COVID-19 has changed the workplace as we have known it. While the physical space still exists, the overall idea of what a workplace is and what it is for needs to be reimagined. Organizations must deliberately address the changes wrought by the pandemic and the rapid pace of technological investment to enable remote and flexible work. In particular, organizations must take three key actions.

Embrace the hybrid model. The post-pandemic outcome is clear: a hybrid work model in which part of the workforce works outside of the traditional office for part of the time. The more important question: Which portion of the workforce needs to be present in the office, and when, and for what reason?

Employees are craving clarity about what is coming next in terms of work arrangements. It falls on organizational leaders to chart the path for managers and employees. Transparent and frequent communication, with managers playing a key role, can help ensure that the organization moves in unison.

In a recent survey, we found that organizations that articulated more specific policies and approaches for the future workplace have seen employee well-being and productivity rise. More specifically, organizations that have clearly communicated post-COVID-19 work arrangements have seen a two-fold increase to employee-reported feelings of support, a three-fold increase to feelings of inclusion, and an almost five-fold increase to reported feelings of individual productivity. Attempting to force a one-size-fits all solution can have detrimental effects on the workforce, particularly on women, people of lower socio-economic status, and people in less advanced economies.
Reimagine the physical space. The office of the future requires organizations to consider the altered footprint and layout that will emerge from a hybrid work model. Since in-person work will look substantially different, organizations need to make sure that their physical space is in tune with the objectives of the people within it. Pre-pandemic cubicle setups may be a thing of the past, making way for areas of collaboration, innovation, and community-building.

Real-estate footprints of many organizations will also change significantly. Already, we have seen many companies move to new geographies to tap new talent pools. For example, a large technology company recently announced some roles could remain remote indefinitely, allowing them to leverage talent from around the country. Others, such as a large financial company that is planning on having 60 desks per 100 employees, are rethinking their real-estate spend as they move to hybrid working models.
Manage fundamental human needs. The overnight shift to remote work has been one of the most notable real-time social experiments of recent times. It has shown that remote work does not necessarily come at the cost of productivity. In fact, many companies have reported increased productivity. A McKinsey analysis found that more than 20 percent of the workforce could work remotely three to five days a week as effectively as from an office.

However, remote employees complain that it is difficult to feel connected to colleagues and manage work-life boundaries. Some companies are adamant about the value of remote work while also being concerned about its effect on employee well-being. One online retailer, for example, is addressing these concerns and is acquiring over 900,000 square feet of new office space across six U.S. cities. The gradual return of in-person work alongside the newfound importance of virtual workspaces means organizations need to figure out ways to increase connectivity and a sense of belonging, regardless of where employees are.

The relationship between employees and the workplace has changed in ways that require organizations to invest seriously in helping people navigate through their vision for the hybrid workplace and any changes to the physical workspace. Doing so can help employees balance productivity, well-being, and a sense of connection in the evolving future of work.

Marino Mugayar-Baldocchi partners with organizations to provide research-backed expertise on leadership, talent management, learning and development, and future of work topics

Bill Schaninger designs and manages large-scale organizational transformations, strengthening business performance through enhanced culture, values, leadership, and talent systems

Kartik Sharma partners with clients across a variety of sectors on topics regarding analytics-led organizational transformations, with expertise in future of work and talent management to drive lasting impact

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International mobility is an essential aspect of the development process, especially for India, which possesses a large demographic dividend as a distinguishing asset^[1]. Therefore, global labour mobility is a key priority for the country’s economic diplomacy, and India has been an old and vocal proponent for the cause. The nature of work and labour force requirements worldwide have transformed over the past decade, catalysed further by the COVID-19 pandemic-induced digital acceleration. India’s old playbook of economic diplomacy may no longer suit this new and rapidly evolving landscape. India must therefore be cognisant of emerging debates around the future of work and geo-economic trends, to successfully advocate for international labour mobility and prepare its workforce per changing labour force requirements.

Economist Jagdish Bhagwati predicted that global labour mobility would be the engine of twenty-first-century growth, just as the movement of goods drove economic growth in the nineteenth century and that of capital dominated twentieth-century development^[2]. The movement of people across borders is such a potentially powerful engine for development, that were it to be liberalised further, developing country incomes would quadruple and global GDP would double^[3]. However, the political contestation around international migration has hampered its potential, earning it the epithet of “the last bastion of protectionism”^[4].

The movement of people across borders is such a potentially powerful engine for development, that were it to be liberalised further, developing country incomes would quadruple and global GDP would double.

This is especially so for unskilled labour migration — relatively speaking, developed countries tend to welcome skilled migrants (albeit, to an extent) but consider unskilled workers an economic, security and cultural threat^[5]. This has unfortunately tempered the “irresistible forces” propelling migration, primarily that ageing prosperous economies require labour and poor demographically-endowed countries need to export surplus labour^[6]. India is at the centre of this debate — it is among the world’s top origin-countries for migrants, with its international migrants more than doubling over the past 25 years^[7]. It is also one of the top destinations for international migrants — in 2015, India hosted the 12th largest immigrant population globally^[8].

Migration is now recognised as a key function of sovereign diplomacy, going beyond traditional statecraft to ensuring well-governed labour migration, and the training and welfare of migrant workers^[9]. But global labour mobility today is no longer restricted to the physical migration of labour. The forces of globalisation, coupled with technological shifts, are transforming work and production structures. The dematerialisation of the world economy has contributed to the rise of “virtual migration,” a flexible, disembodied labour supply across borders — a form of “migration without migrating” — that is coming to define the new labour economy^[10]. In his book Virtual Migration: The Programming of Globalisation, A. Aneesh draws a distinction between “body-shopping” (hiring skilled workers who work for corporations overseas through sub-contracting practices) and “online programming” (skilled workers living in their home countries and working through the internet for corporations). The latter has received a fillip due to accelerating digital transformation and the shift to remote-first modes of working, engendered by the COVID-19 pandemic. With a large chunk of its workforce part of this ecosystem, India is the world’s largest digital labour supplier^[11]. This phenomenon therefore deserves a place in India’s imagination of its economic diplomacy for the future.

The dematerialisation of the world economy has contributed to the rise of “virtual migration,” a flexible, disembodied labour supply across borders — a form of “migration without migrating” — that is coming to define the new labour economy.

Shifting landscapes

The international mobility landscape is in a state of flux at present, precipitated by accelerating digital transformation and the changing contours of work, and made urgent by the COVID-19 pandemic’s tumultuous impact. This section is an exploration of evolving labour market trends that are expected to have an impact on Indian economic diplomacy’s agenda for promoting global labour mobility.

The COVID-19 pandemic

It would be remiss to discuss global trends affecting international labour mobility without mentioning the COVID-19 pandemic — historically, one of the biggest shocks to global migration^[12]. The pandemic has prompted protectionist restrictions against the movement of people globally. Remittance flows globally declined by 6 percent year-on-year in Q2 of FY2020^[13], and are likely to fall even more sharply — the World Bank has predicted a 13 percent decline in global flows in 2020^[14], and a 23 percent decline in remittance flows to India^[15].

The pandemic’s impact on the labour market has been heterogeneous. Research suggests that migrant workers form a critical chunk of ‘essential services,’ such as healthcare and care work, that have been instrumental in fighting the pandemic across the world^[16]. In some countries like the UK and Germany, migrants have earned considerable public favour by holding up their economies as ‘essential workers’ (Germany chartered flights to bring in agricultural labour). However, others, such as the US and the Gulf (two key destinations for Indian emigrants in particular), have put up protectionist barriers that are unlikely to be relaxed in the near term^[17].

The pandemic will also likely magnify existing issues that had begun plaguing the migration economy, such as growing xenophobia and protectionism. A surge of xenophobia is already being seen in the Gulf countries, where the spread of the virus is being attributed to unskilled migrant workers and employers are being warned not to hire expatriate workers^[18]. Protectionism is also likely to rise in this context; services under mode 4 — the presence or movement of natural persons — have always been the least liberalised of all modes of labour supply (see Figure 1). The pandemic is likely to reverse some of the meagre progress made in this regard^[19]. As a service-led economy, India has long had labour mobility at the top of its trade negotiations agenda. However, there has been little appetite for mode 4 liberalisation in global trade deliberations, much to its discontent. The multilateral Trade in Services Agreement, launched in 2013 for this purpose and to which India was not a party, has also stalled^[20]. India’s service exports continue mainly via mode 1 (cross-border supply)^[21].

The pandemic will likely magnify existing issues that had begun plaguing the migration economy, such as growing xenophobia and protectionism.

Figure 1: World Trade in Commercial Services by Mode of Supply, 2017

Source: World Trade Report 2019: The future of services trade^[22]

Restructuring labour markets and changing labour force requirements

The forces set into motion by the pandemic will likely cause a restructuring of labour markets. For one, the bulk outflow of migrants driven by the pandemic is unlikely to be reversed in equal proportions. Second, the threat of the transmission of infection may keep country borders closed for immigration for a considerable period, especially in developed states where vaccination will arrive first. Third, the recessions and employment crises witnessed across the world will also pressurise countries to put their citizens first, thereby hurting the cause of migration and development. Lastly, technological shifts will increase the demand for high-skilled workers more generally across the board.

The pandemic’s impact on the labour market will be heterogeneous, and it is critical to gauge where opportunities and challenges lie. The Gulf and the US have traditionally been the major destinations for Indian emigrant workers. In its May 2020 report, the International Labour Organisation (ILO) estimated that six million jobs will be lost in the Arab region due to COVID-19 and the oil shock^[23]. The crisis is also likely to intensify the Gulf Cooperation Council’s ‘nationalisation policies,’ instated to create jobs for locals and reduce dependence on international migration^[24]. Bahrain has already announced that jobs left vacant by migrants during the pandemic are to be filled by locals^[25]. However, nationalisation policies are unlikely to have an extreme impact on the need for migrant workers in the short term^[26]; for now, demand for migrants is expected to persist in the construction, care and hospitality sectors^[27]. The region is looking to expand its tertiary-educated talent pool by 50 percent by 2030^[28], and in the longer term, labour requirements in the Gulf are expected to gradually move towards a smaller number of migrants with superior skills. Digital transformation coupled with the climate crisis is also likely to create demand in new sectors — for instance, the energy efficiency sector is expected to be the single largest generator of new employment in the UAE and is estimated to create more than 65,000 jobs by 2030^[29].

Nationalisation policies are unlikely to have an extreme impact on the need for migrant workers in the short term; for now, demand for migrants is expected to persist in the construction, care and hospitality sectors.

US-India relations mostly flourished under former US President Donald Trump, except on the issue of immigration. His temporary ban on several work visa categories hurt Indian H1B-visa workers disproportionately, and stringent conditions for the H1B visas, such as prohibitively high application fees, led India to file a case against the US at the World Trade Organisation (WTO)^[30]. The restrictions are expected to be relaxed under US President Joe Biden. Biden’s campaign promises indicate that he will work to eliminate country-based quotas for high-skilled visas and exempt overseas PhD holders in science, technology, engineering and mathematics from visa caps, which is good news for India. Worryingly, however, Biden has remained conspicuously silent on the subject of the WTO and US tariffs^[31].

In addition to keeping an eye on trends in the above regions, the Indian government must also turn its attention to other key geographies that have considerable potential in this regard. The Organisation for Economic Co-operation and Development (OECD) countries are estimated to need 400 million additional workers by 2050 to hold up their social security systems^[32]. The UK has recently indicated that it will be open to an “unlimited number of highly-skilled Indian workers” from 2021 onwards^[33]. Promisingly, the European Union (EU) is also assessing the prospect of liberalisation of both skilled and unskilled migration. An ILO report suggested that there are higher shortages in the skilled sector in Europe — medicine and engineering being two key areas — even as requirements differ by country and must be assessed accordingly. The mobility of science and technology professionals could, therefore, be a key area for India-EU negotiations^[34]. The EU has acknowledged the pressing need for labour — and the failure of migration regimes thus far — to put in a framework for the recruitment of low-skilled workers in a way that reduces irregular and illegal migration^[35]. The Indian government must note this development, and reinvigorate efforts to work with the EU to a constructive dialogue in this area. The India-EU Declaration of Common Agenda on Migration and Mobility (2016) is a commendable step towards this goal. Future initiatives must focus on key areas of interest like student mobility and the governance and prevention of irregular migration (especially from North India to the EU, which will require the cooperation of the relevant Indian states)^[36]. Additionally, Japan has recently begun liberalising its stance on immigration in recognition of the needs of its ageing population, and foreign workers in the country have doubled since 2013. Japan has fast-tracked permanent residency for skilled workers and, importantly, also passed a law to expand the quantum of blue-collar visas and provide blue-collar workers a path to permanent residency^[37].

The EU has acknowledged the pressing need for labour — and the failure of migration regimes thus far — to put in a framework for the recruitment of low-skilled workers in a way that reduces irregular and illegal migration.

There has also been some speculation recently that the shift to remote, virtual work during the pandemic may provide a fillip to “virtual migration” and the possibility for skilled workers to work across borders more fluently. However, at present, the ILO estimates that only about 18 percent of workers globally are in sectors that can work effectively from home, and have access to a conducive environment and infrastructure to do so. Therefore, this phenomenon may have a more muted impact on international labour mobility than expected^[38].

The future of work

What will the restructuring of labour markets due to emerging technologies likely look like? The deployment of emerging technologies is now causing a ‘hollowing out’ of the global workforce, with middle-skill jobs beginning to vanish. It has also created a ‘skill bias’ — high-skilled labour is in greater demand and has been more resilient and fared better during the pandemic^[39]. White-collar non-routine occupations are also relatively more immune from automation, even though susceptibility to automation remains frustratingly difficult to predict and plan for^[40]. In the long-term, this skill bias is expected to cause a large-scale shift in the structure of demand for labour at the expense of developing countries’ large pools of unskilled labour.

In their book Ghost Work, Mary Gary and Siddharth Suri have pointed to a more recent phenomenon that is emblematic of the effect of digital transformation on labour markets — the rise of a near-invisible global workforce that has emerged to power the platform economy^[41]. The book refers to a virtual, high-skilled globally-distributed workforce that performs flexible, task-based work and reports to an application programming interface (API). India is at the core of this phenomenon, and is rapidly becoming the artificial intelligence (AI) backend office of the world^[42].

Gray and Suri estimate that by 2055, 60 percent of today’s global employment will have converted into ghost work^[43]. This may well happen sooner; with regular jobs disappearing during the global pandemic-induced recession, their ranks have likely been vastly inflated. The size of this workforce is currently difficult to estimate, as the nature of their work is practically invisible. While this type of work has provided opportunities in the form of flexible ‘virtual migration’ and the ability to work for employers across the world, it has also extracted a high cost. Digital blue-collar workers face the problem of plenty — supply of workers vastly exceeds demand for their services — which has squeezed their wages and bargaining power, and led to a feeling of alienation and the loss of job security and mobility. Collective action is harder for them; as the nature of their work is disintermediated, they are dispersed all over the globe and view each other as competition^[44]. The cross-border, invisible and informal nature of this work has created tremendous regulatory challenges. The role of the state must first extend to efforts towards making these labour supply chains visible, by defining platform work clearly and creating comprehensive databases for these workers. India’s Union Budget 2021 has taken a laudable step towards that end by provisioning for a minimum wage across all categories of workers, which will also be tremendously beneficial for these workers if implemented well. The role of economic diplomacy in this regard is crucial — regulation of ‘ghost work’ requires international collaboration and alignment of regulatory practices as workforces are dispersed all over the world.

Digital blue-collar workers face the problem of plenty — supply of workers vastly exceeds demand for their services — which has squeezed their wages and bargaining power, and led to a feeling of alienation and the loss of job security and mobility.

Recalibrate India’s economic diplomacy

In light of the changing global outlook, it is imperative for India to recalibrate its economic diplomacy framework, to enable its advocacy for global labour mobility in the future. This section shall proceed issue-wise and attempt to come up with a broad roadmap for this purpose.

A creative and pragmatic approach

India needs to rethink its approach towards engaging in debates on the future of global labour mobility. India has been disappointed time and again at the WTO — most recently in 2017, when it tabled its draft negotiating text called the Trade Facilitation Agreement for Services^[45] — and regional fora such as at the recently concluded negotiations of the Regional Comprehensive Economic Partnership (RCEP)^[46]. India’s decreasing manufacturing competitiveness has led it to become increasingly defensive in trade negotiations with regard to market access in areas like agriculture, retail and dairy, making it difficult for the country to bargain for greater services liberalisation, as the RCEP negotiations demonstrated. In such a situation, it is patient and creative diplomacy, rather than an offensive stance, that may enable India’s cause.

One solution is to identify bilateral opportunities for partnership rather than multilateral engagement — an idea that has already yielded dividends for India. Among the key barriers for partnerships on global mobility are a lack of trust, concerns around the economic and security-related domestic impact of migration, and (now) health risks. Therefore, while negotiating, India will need to delve into several issues, such as those related to liability for overstay, illegal migration and the enforcement of temporary guest worker rules, and offer to assume some legal responsibility for monitoring and compliance as well^[47].

Among the key barriers for partnerships on global mobility are a lack of trust, concerns around the economic and security-related domestic impact of migration, and (now) health risks.

India also needs to think creatively to carve out greater policy space for itself in negotiations. One solution advanced by the Indian Council for Research on International Economic Relations is the introduction of start-up visas. This will serve to attract innovative talent to the country and also demonstrate India’s willingness to reciprocate on high-skilled labour mobility liberalisation, shifting the country’s policy stance to one more inclined to engage and compromise rather than just demand^[48]. This would also enable India’s diaspora policy, and provide a route for inviting greater diaspora participation in domestic development. While focusing on bilateral engagement, India must continue to push on the multilateral front as well, and remain engaged with the WTO and forums like RCEP, with a view to build consensus on the growing need for well-designed labour mobility channels.

Invest in a capable workforce

A domestic as well as an emigration prerogative, India needs to invest in enhancing the capabilities of its workforce. Skills requirements are not a monolith, and neither is the future of work. Skilling programmes need to address the starting points of learning, for what is a highly segmented workforce.

A workforce of the future needs to be agile and move fluently between occupations. Basic digital fluency will be critical, even as a section of the population needs to be trained in higher-order technological skills. Skill-biased technological change will create greater demand in the areas of AI, machine learning, robotics, big data and natural language processing across the board. Soft skills, meanwhile, are often underemphasised but will be critical to every profession^[49].

Skills requirements are not a monolith, and neither is the future of work. Skilling programmes need to address the starting points of learning, for what is a highly segmented workforce.

India’s National Education Policy has encouragingly aligned vocational education and apprenticeships with formal educational attainments^[50]. The government has done well to engage multiple agencies in migration governance for the purpose of capability-building — with the Ministry of Labour and Employment and Ministry of Skills Development and Entrepreneurship taking on key roles. However, the problem of skill mismatch remains high, as is the challenge of skill recognition across borders. Addressing this will require an integrated policy and certification framework, put into place collaboratively by sending and receiving countries^[51]. It also requires efforts towards strengthening India’s Recognition of Prior Learning (RPL) programme as a priority — much of India’s workforce, contrary to popular perception, is already skilled but unrecognised and uncertified^[52]^[53]. Technology-based solutions can also make intermediation more transparent — online job platforms, skills verification and tests and the verification of contracts will make job matching more efficient^[54].

Capability-building will require a tailored policy. For example, to promote semi-skilled and unskilled worker migration to the EU, India — with the support of EU policymakers — must create training and certification programmes oriented towards EU standards, targeted towards sectors like hospitality, healthcare, construction and care work, which are likely to see high demand^[55].

An updated diaspora policy

Academic and policy discussions have largely tended to focus on the impact of diaspora in their host countries, relatively few studies focus on the political and economic impact on the countries of origin, due to paucity of data. India must look at this phenomenon closely as well^[56]. Unskilled migration usually has a net positive impact on the country of origin, however, skilled migration has both negative and positive effects.

The negative effect that India needs to pay particular attention to is brain-drain, which has arguably had a tangible impact on the quality of Indian universities. India has been a “net exporter of talent,”^[57] which matters for economic diplomacy as well as development, as the country’s domestic fortunes are inextricably tied to its international exercise of influence. This problem requires serious consideration. Labour mobility agreements can be designed to promote this — we can move training to the country of origin and provision for a net ‘brain gain.’ The Australia Pacific Training Coalition (ATPC), a skilling drive to meet the region’s labour requirements, provides a case study for this^[58]. The ATPC has a ‘home’ track and an ‘away’ track, and the ‘away’ track provides language, digital literacy, cultural training, RPL and other necessary work abroad training as well. Crucially, it also has a programme for investing in the return and reintegration of workers through ‘Full Circle Programmes,’ including a promising means to access platforms while away, to support their RPL applications, to know what kind of work is possible and available for returnees.

The negative effect that India needs to pay particular attention to is brain-drain, which has arguably had a tangible impact on the quality of Indian universities.

The attitude of the government towards domestic development and addressing push factors for emigrants often matters immensely for its success with diaspora engagement and reverse migration strategies^[59]. Additionally, India also needs to find more creative and deeper-rooted ways of engaging its diaspora in development initiatives. A successful policy will recognise that the diaspora is not a homogeneous category and must be seen as distinct categories — such as differentiating between non-resident Indians, and ‘older’ migrants who migrated early as distinct from recent migrants. Diaspora policies must then be tailored according to their relevance for these different groups^[60].

A large chunk of the Indian diaspora is highly skilled and diaspora organisations can therefore act as effective mentoring networks and help complement skilling initiatives^[61]. But to be effective, diaspora policy must be more welfare-oriented and empathetic in tone and content^[62]. India needs a migration policy that extends to the treatment of overseas Indian workers. The pandemic has put a spotlight on the shabby, vulnerable living conditions of migrant populations in many parts of the world. This is a failure of the international migration governance framework and further evidence of the urgent need for national economic diplomacy to address this glaring vacuum in policy^[63].

An adaptive and empathetic policy framework

The rising complexity of economic diplomacy requires bureaucracies to design their frameworks to be more adaptive, reasonably decentralised and with strong inbuilt feedback mechanisms^[64]. The necessity of feedback mechanisms is evidenced by India’s experience with migration governance in the Gulf. India-mandated minimum referral wages are facing implementation challenges, due to contract substitution in the destination country (contract substitution refers to an informal practice where foreign workers sign a contract before they migrate, but are compelled to accept a different, weaker contract on arrival in the destination country)^[65]. Indian embassies could act as feedback nodes for policy in this regard. A plurilateral approach including all stakeholders, such as employer and employee organisations, and greater inter-ministerial coordination will promote more effective governance.^[66] The need for domain expertise in India’s bureaucracy^[67], and better systems for retaining and creating institutional knowledge within ministries^[68], have often been brought up as areas of critical reform.

A plurilateral approach including all stakeholders, such as employer and employee organisations, and greater inter-ministerial coordination will promote more effective governance.

Adaptive policy could identify and plug the existence of policy vacuums that impede governance. One such vacuum is wage-theft, especially in the Gulf, where workers are denied their dues by companies in violation of their terms of contract. The e-Migrate platform instituted by the Indian government to coordinate across stakeholders has helped mitigate this problem and could be improved through integration with labour platforms in Gulf countries. Setting up mechanisms for Indian workers to air grievances could also help — the Indian repatriation form to be filled by migrants during COVID-19 did not provide any space for workers to discuss their grievances and seek redressal^[69].

Evidence-based adaptive policy also requires quality data. There is a need for more cross-country, comparative data sets and more data on migration flows and the enforcement of labour laws to realise the vision for a 2030-ready economic diplomacy framework for India.

There is an urgent need for Indian diplomacy to take a more welfare-oriented and rights-based approach towards emigration. India could begin by deliberating upon transitional justice mechanisms to address the immediate grievances and claims of repatriated workers due to the pandemic. India also needs to take this opportunity to push for broader reforms. The pandemic has prompted Qatar to dismantle the ‘Kafala’ system (a legal framework defining employer-employee relations, which has become increasingly exploitative)^[70] and some other Gulf countries have expanded access to free healthcare and mandated private companies to provide accommodation to migrants. Governing return migration flows will now require coordination from both sending and receiving countries, and India must take this opportunity to co-build a welfare framework for migrant workers in cooperation with Gulf governments, for mutual benefit^[71].

The rights-based framework must also extend to immigrants received by India. Indian immigrants migrate irregularly and are often unrecorded, which is why there is a paucity of literature and lack of reliable figures on immigrant migration flows^[72]. The conduct of India as a destination country is a critical component for economic diplomacy, even as it is beyond this paper’s scope.

The rights-based framework must also extend to immigrants received by India.

Upcoming emigrant bill

India’s draft emigrant bill, yet to be passed by parliament, will replace the Emigration Act of 1983 as the overarching and only legal instrument responsible for dealing with emigration and migrant welfare. However, the current draft bill excludes many, such as the families of emigrant workers and irregular and undocumented migrants. This will hurt India’s bilateral and multilateral efforts towards promoting labour mobility. The bill also neglects to focus on migrant rights in their destination country and the governance of return migration^[73].

In a bulletin released in 2007, the World Health Organisation stated that “international human mobility is factorial to the globalisation of infectious and chronic diseases” and that it poses a national security threat^[74]. This is now evident. India’s draft emigrant bill makes no mention of mobility during crises and does not consider the importance of social security and health insurance for its migrants. The pandemic has demonstrated the urgency to work towards greater awareness and access to health and welfare services, and a transnational health framework that is inclusive of migrants. While including these provisions in its own legal framework, India must also work to include this request in its bilateral labour agreements^[75].

Conclusion

Global labour mobility is a critical instrument for promoting India’s development aims, and therefore features increasingly prominently in its economic diplomacy agenda as well. This paper has put forth two broad sets of arguments. One, it has elucidated the changing global outlook for labour mobility considering the pandemic and the evolving future of work. Two, it has provided a roadmap for India to recalibrate its economic diplomacy given this shifting outlook and has provided policy recommendations towards this end.

The subject of international labour mobility has often been averse to international cooperation, with origin and destination countries taking on adversarial stances, resulting in a fragmented and reactive approach to migration. However, a collaborative framework born out of pragmatism and an understanding of changing global trends and common challenges is both possible and desirable to leverage the gains from global labour mobility mutually^[76].

Endnotes

^[1] “Global labour mobility is in India’s interest,” The Hindu, 7 May 2018.

^[2] Basant Kumar Potnuru and Vishishta Sam, “India–EU engagement and international migration: Historical perspectives, future challenges, and policy imperatives,” IIMB Management Review, 27, no. 1 (March 2015), 35–43.

^[3] “Labor Mobility Partnerships (LaMP): Helping Connect International Labor Markets,” Center for Global Development.

^[4] Manjula Luthria, “Three Funerals and a Wedding: Resetting the way we work on migration,” World Bank Blogs, 12 September 2013.

^[5] Lant Pritchett, Let Their People Come: Breaking the Gridlock on Global Labor Mobility(Washington, D.C.: Center for Global Development, 2006).

^[6] “Labor Mobility Partnerships (LaMP)”

^[7] Phillip Connor, “India is a top source and destination for world’s migrants,” Pew Research Center, 3 March 2017.

^[8] Connor, “India is a top source and destination for world’s migrants”

^[9] Gerasimos Tsourapas and Fiona B. Adamson, “How countries use ‘migration diplomacy’ to pursue their own interests,” The Conversation, 4 February 2019.

^[10] Rina Ghose, “Virtual Migration: The Programming of Globalization. A. Aneesh,” Urban Geography 28, no. 5 (2007): 511–12.

^[11] Sangeet Jain, “Reimagining work and welfare for the Indian economy,” Observer Research Foundation, 27 October 2020.

^[12] Delphine Strauss, “Pandemic ends a decade of growth in global migration,” Financial Times, 19 October 2020.

^[13] Strauss, “Pandemic ends a decade of growth in global migration”

^[14] “World Bank Predicts Sharpest Decline of Remittances in Recent History,” World Bank, 22 April 2020.

^[15] “Remittances to India likely to decline by 23% in 2020 due to Covid-19: World Bank,” India Today, 23 April 2020.

^[16] “Labour migration at the time of COVID-19,” International Training Centre of the International Labour Organization, 16 April 2020.

^[17] Strauss, “Pandemic ends a decade of growth in global migration”

^[18] Huda Alsahi, “COVID-19 and the Intensification of the GCC Workforce Nationalization Policies,” Arab Reform Initiative, 10 November 2020.

^[19] Pralok Gupta, “There is no appetite in the world for Mode 4 commitments,” Trade Promotion Council of India, 18 July 2019.

^[20] Linda Yueh, “Economic Diplomacy in the 21st Century: Principles and Challenges,” LSE IDEAS Blog, 27 August 2020.

^[21] “Global services trade: What makes India different,” The Economic Times, 24 August 2019.

^[22] World Trade Organization, World Trade Report 2019: The Future of Services Trade, World Trade Organization, 2019.

^[23] Rejimon Kuttappan, “Indian migrant workers in Gulf countries are returning home without months of salary owed to them,” The Hindu, 19 September 2020.

^[24] Alsahi, “COVID-19 and the Intensification of the GCC Workforce Nationalization Policies”

^[25] Rhea Abraham, “Migration Governance in a Pandemic: What Can We Learn from India’s Treatment of Migrants in the Gulf?” Economic and Political Weekly, Vol 55, Issue No. 32-33 (8 August 2020).

^[26] Alsahi, “COVID-19 and the Intensification of the GCC Workforce Nationalization Policies”

^[27] Froilan T. Malit, Jr and George Naufal, “Future of Work: Skills and Migration in the Middle East” (presentation, Inter-Regional Experts Forum on Skills and Migration in the South Asia-Middle East Corridor).

^[28] “The Future of Jobs and Skills in the Middle East and North Africa: Preparing the Region for the Fourth Industrial Revolution,” World Economic Forum, May 2017.

^[29] “The Future of Jobs and Skills in the Middle East and North Africa”

^[30] Gupta, “There is no appetite in the world for Mode 4 commitments”

^[31] Devirupa Mitra, “What a Biden Administration Could Do – Or Not Do – for India’s Key Priorities,” The Wire, 8 November 2020.

^[32] Rebekah Smith and Cassandra Zimmer, “The COVID-19 Pandemic Will Probably Not Mark the End of the Kafala System in the Gulf,” Center for Global Development, 28 October 2020.

^[33] “Britain has a good news for Indians who want to migrate to UK,” The Economic Times, 17 January 2019.

^[34] Potnuru and Sam, “India–EU engagement and international migration”

^[35] Stefano Bertozz ed., Opening Europe’s doors to unskilled and low-skilled workers: A practical handbook (Bureau of European Policy Advisors, 2010).

^[36] Potnuru and Sam, “India–EU engagement and international migration”

^[37] Noah Smith, “Japan Begins Experiment of Opening to Immigration,” Bloomberg Opinion, 23 May 2019.

^[38] Janine Berg, Florence Bonnet and Sergei Soares, “Working from home: Estimating the worldwide potential,” VoxEU & CEPR, 11 May 2020.

^[39] Sangeet Jain, “The coronavirus has hurtled unprepared economies into the future of work,” Observer Research Foundation, 29 April 2020.

^[40] Daniel Susskind, A world without work: Technology, automation and how we should respond (UK: Penguin UK, 2020).

^[41] Mary L. Gray and Siddharth Suri, Ghost work: How to stop Silicon Valley from building a new global underclass (Boston: Eamon Dolan Books, 2019).

^[42] Abrieu Ramiro, Martin Rapetti, Urvashi Aneja and Krish Chetty, “How to Promote Worker Wellbeing in the Platform Economy in the Global South,” G20 Insights, 7 May 2019.

^[43] Ann Toews, “‘Ghost Work’ in Modi’s India: Exploitation or Job Creation?” Foreign Policy Research Institute, 28 June 2019.

^[44] Ramiro et al., “How to Promote Worker Wellbeing in the Platform Economy in the Global South”

^[45] D. Ravi Kanth, “India sets the stage for a clash with US, EU at WTO,” The Mint, 1 March 2017.

^[46] Surupa Gupta and Sumit Ganguly, “Why India Refused to Join the World’s Biggest Trading Bloc,” Foreign Policy, 23 November 2020.

^[47] Pritam Banerjee, “Fixing India’s Economic Diplomacy,” The Diplomat, 16 June 2017.

^[48] Arpita Mukherjee, Avantika Kapoor and Angana Parashar Sarma, “High-Skilled Labour Mobility in an Era of Protectionism: Foreign Startups and India,” ICRIER Working Paper, July 2018.

^[49] Sangeet Jain, “The National Education Policy 2020: A policy for the times,” Observer Research Foundation, 6 August 2020.

^[50] Ministry of Human Research Development, National Education Policy 2020.

^[51] Panudda Boonpala and Max Tunon, “Quality Not Quantity – It’s Time To Re-Think Overseas Employment,” UN Blogs.

^[52] Laura Sili, “Technology and the future of work in developing economies,” International Growth Centre, 20 March 2019.

^[53] Yueh, “Economic Diplomacy in the 21st Century”

^[54] Steffen Hertog, “The future of migrant work in the GCC: literature review and a research and policy agenda,” London School of Economics and Political Science (paper presented at Fifth Abu Dhabi Dialogue Ministerial Consultation of Abu Dhabi Dialogue Among the Asian Labor Sending and Receiving Countries, 16-17 October 2019).

^[55] Potnuru and Sam, “India–EU engagement and international migration”

^[56] Devesh Kapur, Diaspora Development and Democracy: The Domestic Impact of International Migration from India (Princeton: Princeton University Press, 2010).

^[57] Devesh Kapur, “Migration and India,” Centre for the Advanced Study of India, 30 August 2010.

^[58] Helen Dempster and Andie Fong Toy, “How Has COVID-19 Affected APTC’s Efforts to Promote Labor Mobility in the Pacific?” Centre for Global Development, 13 July 2020.

^[59] Ashley J. Tellis, “Troubles Aplenty: Foreign Policy Challenges for the Next Indian Government,” Carnegie Endowment for International Peace, 20 May 2019.

^[60] Alwun Didar Singh, “Working with the Diaspora for Development Policy Perspectives from India,” CARIM-India Research Report 2012/25, Fiesole, European University Institute and Robert Schuman Centre for Advanced Studies, 2012.

^[61] Mukherjee et al., “High-Skilled Labour Mobility in an Era of Protectionism”

^[62] Parama Sinha Palit, “Modi and the Indian Diaspora,” RSIS Commentary, no. 241 (28 November 2019).

^[63] Nithin Coca, “How can we better protect migrant workers in the next global crisis?” Devex, 24 September 2020.

^[64] “Building bureaucracies that adapt to complexity” (webinar, Overseas Development Institute, 30 November 2020).

^[65] Boonpala and Tunon, “Quality Not Quantity”

^[66] “Global labour mobility is in India’s interest,” The Hindu, 7 May 2018.

^[67] Arjun Bhargava, “Economic diplomacy is now core component of India’s foreign policy,” Observer Research Foundation.

^[68] Banerjee, “Fixing India’s Economic Diplomacy”

^[69] Kuttappan, “Indian migrant workers in Gulf countries are returning home without months of salary owed to them”

^[70] Kali Robinson, “What Is the Kafala System?” Council on Foreign Relations, 20 November 2020.

^[71] Smith and Zimmer, “The Covid-19 pandemic will probably not mark the end of the Kafala system in the Gulf”

^[72] UNESCAP, In-migration: Situation Report, UNESCAP.

^[73] S. Irudaya Rajan, Varun Aggarwal and Priyansha Singh, “Draft Emigration Bill 2019: The Missing Links,” Economic and Political Weekly, Vol 54, Issue No. 30 (27 July 2019).

^[74] Abraham, “Migration Governance in a Pandemic”

^[75] Abraham, “Migration Governance in a Pandemic”

^[76] Potnuru and Sam, “India–EU engagement and international migration”

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Caroline Hillier — Tue, 20 Apr 2021 18:15:49 +0000

For decades, the promise of globalization has rested on a vision of a world in which goods, services, and capital would flow across borders as never before; whatever its other features and components, contemporary globalization has been primarily about trade and foreign investment. Today’s globalized economy has been shaped to a large extent by a series of major trade agreements that were sold as win-win propositions: corporations, investors, workers, and consumers would all benefit from lowered barriers and harmonized standards. American advocates of this view claimed that deals such as the North American Free Trade Agreement would supercharge growth, create jobs, and strengthen the United States’ standing as the world’s largest and most important economy. According to then President George H. W. Bush, “NAFTA means more exports, and more exports means more American jobs.”

A quarter of a century later, such optimism appears profoundly misplaced. NAFTA and other…

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Emily Kachinski — Mon, 08 Mar 2021 20:37:21 +0000

The fallout from the COVID-19 pandemic has been especially damaging to the economic well-being of women—worsening gender inequality by crippling women’s employment and earning opportunities while exacerbating household challenges such as violence against women.

Today—Monday, March 8—marks International Women’s Day, this year aptly themed “Women in leadership: Achieving an equal future in a COVID-19 world.” As the agenda takes shape for the Group of Twenty (G20) presidency—which passed to Italy in December 2020 in the midst of the coronavirus crisis—to address the pandemic, climate change, and other transnational challenges, the bloc must take steps to ensure women are central to the more equitable and inclusive recovery that it seeks, the world’s women need, and the global economy demands.

Gender inequality is certainly not a new feature of G20 economies; only around a third or less of women are formally employed in India, Saudi Arabia, and Turkey, and low rates of female labor-force participation have long mired economies worldwide. But since the onset of the pandemic in early 2020, women’s employment rates have fallen precipitously in many nations, usually at a quicker pace than those of men. In the United States, women suffered 55 percent of job losses in the first few months of COVID-related economic restrictions. By late 2020, some 2.5 million women had lost their jobs or dropped out of the workforce. In Latin America, women were 50 percent more likely than men to lose their jobs as the pandemic took hold—a figure that does not include losses among the large number of women working in the informal economy or performing unpaid work. In Turkey, surveyed women experienced higher levels of job loss than men did after the spread of COVID-19. Across the Middle East and North Africa region, estimates indicate that women will suffer a third of job losses even though they represent only a fifth of the labor force.

Screen Shot 2021-03-11 at 2.01.49 PM

Even when women can find formal employment, wage disparities between women and men have been a key driver of inequality for years: women in the United States make only eighty-two cents for every dollar earned by men, and the gender pay gap is 23 percent globally. The global average of men’s overall income is nearly double that of women, due in part to the fact that women are more likely to be employed in lower-paid, lower-skill work with more job insecurity and fewer benefits.

Youth employment has also been highly vulnerable to the pandemic, dealing young women a double blow. In Argentina, for example, unemployment among those aged fourteen to twenty-nine increased significantly in the first quarter of 2020, to 18 percent, but the figure rose to 24 percent for young women. In the United Kingdom, sectors that shut down due to social-distancing measures employed 25 percent of young men under twenty-five years old but 36 percent of young women in the same age cohort. These sectors employed just 13 percent of workers over age twenty-five.

Beyond employment, women’s enterprises have also been further imperiled by the virus. The latest World Bank Findex in 2017 found that the financial-inclusion gap between men and women, measured in terms of having a bank account, remained at nine percentage points in favor of men in developing economies—unchanged since 2011. In several countries, even those in the middle-income strata, this gap is much more significant. In one COVID-19 impact survey of 30,000 small and micro enterprises worldwide, the gender disparity between shuttered businesses owned by women versus by men reached as high as 10 percent in countries with strict lockdowns. Women around the world also carry out as much as triple the unpaid household and care hours as men do. From India to Japan, and across Europe and the Americas, wage inequality combined with cultural or social norms push women to forego work, especially because of care constraints.

These dynamics account in part for COVID-19’s calamitous, disproportionate effect on women’s earning opportunities across advanced, emerging, and developing countries alike, putting economic participation and prosperity further from their reach. The Women 20 (W20) engagement group has been the traditional hub for consideration of gender issues at the G20. But to address the multitude of acute challenges faced by the world’s women, G20 leaders and finance ministers must now make use of the full range of policy instruments at their disposal. These include gender-responsive budgeting, entrepreneurial and employment tax incentives, healthcare, social-protection measures, improved property rights, increased hiring of women in government, and the collection of disaggregated data to better identify deficits and measure change. The G20 should also take a more integrated and intersectional approach, ensuring women’s inclusion across all of the forum’s engagement and working groups.

The Business 20 (B20), for example, should encourage businesses to promote women to management and decision-making roles; champion employer-provided childcare, healthcare and paid-leave policies, and digital access to close the gender digital divide; and expand access to the platform economy, workplace safety, and gender-elastic lending products and services, including loan-repayment deferments. The Energy Transition and Climate Sustainability Working Group should highlight women’s successes to entice more women to enter non-traditional sectors and engage men and families to shift social norms. Targeted lending and carveouts for women-owned small- and medium-sized enterprises in green business should also be promoted.

The Labour Working Group and Labour 20 (L20) should place the specific needs of women workers—including those in the informal economy—atop their agenda. That should include addressing issues related to wage gaps, childcare, upskilling and on-the-job training, and sexual harassment. As it tackles the education and employment crises, the Education Working Group and Youth 20 (Y20) should focus on young women’s training, skills, and digital access, as well as financial inclusion for productive self-employment and entrepreneurship. These efforts should embrace the future of work and the post-pandemic economy, including ensuring downstream STEM and technical vocational training for the emerging green, orange, care, and digital economies.

The Development Working Group can have an impact in this space by steering multilateral and bilateral donor resources toward the needs of women and girls in low-income countries. Given rapid urbanization in G20 countries and cities worldwide, the Urban 20 (U20) has an important opportunity to advance gender-sensitive urban planning, job creation, and city governance.

In its handover communiqué, the 2020 Saudi W20 stated that “G20 leaders must pave the way for equitable economic recovery where women, as equal partners and key economic actors, are part of the solution.” The Italian presidency must urgently heed this call and advance an energetic, holistic, women-centered agenda that mobilizes resources, directs financing, and ushers in data-informed policies. What’s needed is a strategy that both curbs the damage that the pandemic has inflicted on women and unlocks opportunities for reimagining women’s education, employment, and entrepreneurship in the post-pandemic era. If it succeeds in implementing this two-track strategy, the Italian G20 will be a boon to inclusive growth in member states and the global economy.

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Anne Allen Hodge — Fri, 26 Feb 2021 20:23:52 +0000

This commentary is the second of a four-part series that examines the intersection between trade and gender. Though the term “gender” can encompass a variety of identities, the series will limit its consideration of gender differences to differences between women and men, due to limited data availability and other practical considerations. This installment considers what we can learn from the labor and environment chapters in the United States-Mexico-Canada Agreement (USMCA) to design gender clauses for future agreements. Over the next several months, CSIS will consider three case studies to inform research on existing gendered trade barriers before producing gender-specific model language for policymakers’ use in future trade agreements.

As discussed in the first installment of this commentary series, gender-specific language in trade agreements is rare. Mentions of the unique trade challenges that women face globally—such as gender discrimination in import taxes and reduced access to trade finance—rarely appear. When agreements do include gender provisions, the language is often vague and unenforceable, and seldom requires action. Many countries continue to resist addressing gender in agreements despite findings from the UN Conference on Trade and Development (UNCTAD) that trade policy is not gender neutral. Indeed, data show that trade agreement provisions often have different impacts on women and men and can lead to higher barriers to trade for women.

Though gender provisions that do exist in trade agreements broadly affirm gender equality, advocate for equal pay, and address workplace discrimination against women, more detailed language and obligations can lead to more measurable impacts. These impacts would benefit everyone, not just women. For example, abolishing customs duties, increasing market access, encouraging investment, and supporting women in the workforce can lead to higher employment and GDP, a more highly skilled labor force, and more competitive economic opportunities.

CSIS is conducting research on how best to promote the inclusion of gender commitments in trade negotiations and agreements. In considering the implementation of gender-specific trade language, it is useful to reflect on the treatment of two particular trade topics: labor and environment. Both policy areas have merited their own chapters in trade agreements over the past few decades. In this commentary, we consider how the United States-Mexico-Canada Agreement (USMCA) can inform future agreements’ recognition and treatment of gender disparities. Some of the politics surrounding USMCA negotiations may also foreshadow the political challenges that proposed text on gender could face in the United States.

Labor

The first trade agreement to include labor provisions was the 1994 North American Agreement on Labor Cooperation (NAALC), which accompanied the 1992 North American Free Trade Agreement (NAFTA, the precursor to today’s USMCA). Since then, agreements have added stronger labor-specific provisions; referenced key International Labor Organization (ILO) conventions, such as the Declaration on Fundamental Principles and Rights at Work; and subjected labor chapters to dispute settlement.

Notably, the World Trade Organization (WTO) does not maintain its own labor standards. It instead leaves the treatment of labor to the ILO, which lacks robust enforcement mechanisms. As a result, a number of WTO member states have dragged their feet on including labor clauses in their trade agreements. For example, countries that seek to attract foreign investment might benefit from maintaining low labor standards and resist the inclusion of stringent standards in trade agreements. The United States, however, has taken a different approach; in contrast to its agreements’ historical disregard for gender, the country has proven itself a leader in promoting labor rights through free trade agreements (FTAs). All FTAs the United States has signed since 1994 have included labor provisions, a practice that was established through the May 10 Agreement requiring their inclusion and the 2015 Trade Promotion Authority (TPA) requiring their subjection to dispute settlement mechanisms (DSMs).

Despite U.S. leadership on labor rights issues, the inclusion of these provisions in trade agreements does not guarantee they sufficiently address all labor-related issues, especially those that primarily affect women. Most agreements with labor provisions address key worker rights, such as reasonable working hours, occupational safety and health, minimum wage, and the freedom of association and right to organize. However, few condemn forced labor, and even fewer acknowledge labor challenges that disproportionately affect women, who comprise 59 percent of the world’s employment in services. Such challenges are often implicit; for example, an agreement that does not mandate domestic legislation on parental leave or childcare may hinder women’s ability to start their own export businesses, gain employment to pay for trade finance workshops, or network with trade partners relative to men. Failure to address these issues may widen an existing leadership and pay gender gap, which has only worsened during the pandemic. Enforcement of labor obligations has historically been slow and insufficient. For example, the United States has brought only one labor rights case to an FTA’s DSM, in 2010. An arbitral panel was formed in 2012 and, in 2017, failed to recognize labor rights violations the United States alleged against Guatemala. (The panel left no opportunity for appeal.) Absent effective enforcement action, labor and gender obligations, no matter how robust, will have limited impact.

The Evolution of U.S. Labor Provisions in Trade Agreements

Source: Congressional Research Service

The USMCA, which replaced NAFTA and entered into force on July 1, 2020, has been widely praised for the strength of its labor chapter relative to those in previous agreements, in part due to its ban on imports produced by forced labor. (The ban follows from Congress’s 2015 removal of the “consumptive demand” clause in Section 307 of the Tariff Act of 1930, which permitted the importation of products made with forced labor if domestic demand proved it necessary.) Still, the chapter’s language on gender is weak. In Article 23.9, the United States, Mexico, and Canada “recognize the goal of eliminating discrimination in employment and occupation and support the goal of promoting equality of women in the workplace” (emphasis added); specific measures to act on that recognition and support are not described. In Article 23.12, the parties “recognize the importance of cooperation” in “addressing gender-related issues in the field of labor and employment” but do not commit to specific measures to further that goal. The result: though the USMCA’s labor chapter may represent increased commitment to labor rights overall, it does not actively seek to reduce gender disparities in trade in a specific or enforceable manner. Though some have hailed the USMCA as strong enough to serve as a template for future FTAs, its absence of actionable gender provisions is noteworthy.

Environment

Though the inclusion of environmental provisions in trade agreements may seem nascent relative to labor, environmental protections were introduced in the original General Agreement on Tariffs and Trade (GATT) in 1947—almost 50 years before NAFTA explicitly referenced labor. GATT allows for environmental exceptions to general provisions through Article XX(b) (“necessary for the protection of human, animal or plant life or health”) and Article XX(g) (“relating to the conservation of exhaustible natural resources”). It was updated in 1994 at the WTO’s inception but maintained these clauses. That same year, NAFTA became the first FTA to reference the environment, along with its complementary side letter on North American Agreement on Environmental Cooperation (NAAEC). As with labor provisions, environmental provisions have featured in all U.S. FTAs negotiated since.

The United States has included dedicated environment chapters in its FTAs because it benefits economically from similar environmental standards among its trade partners. Strong environmental regulations in trade agreements prevent a “race to the bottom,” which could further harm the environment and decrease the relative competitiveness of U.S. businesses. Thus, it is in the United States’ interest to ensure that FTA partners enforce their own environmental laws (to avoid weakening or ignoring protections that could unfairly encourage trade or investment) and promote sustainable development (to strengthen partner countries’ capacity to protect their environment). Environment chapters also may require members to implement and enforce multilateral environmental agreements to which signatories of the agreement are party in order to ensure compatibility of the signatories’ environment-related trade policies.

Despite these measures, the United States continues to perform poorly in environmental rankings. The July 2020 Environmental Performance Index (EPI, put out by Yale Center for Environmental Law & Policy) ranks it 24th out of 180 economies, while the December 2020 Climate Change Performance Index (CCPI, released by three German organizations) ranks the United States last out of 58 economies chosen for the index, which collectively contribute more than 90 percent of the world’s greenhouse gas emissions.

Our consideration of environmental trade clauses has less to do with how they reinforce existing systems that suppress women’s trade access and more to do with what their increased prevalence might say about the political feasibility of including gender-specific language in future agreements. Does broad acceptance of the need for environmental chapters bode well for gender chapter advocates?

The USMCA again provides an illustrative example here. Last year, 89 senators voted to ratify the agreement with its standalone environment chapter and the complementary Environmental Cooperation Agreement (ECA), reflecting the environment’s growing political importance. The inclusion of this chapter certainly represents a win for green advocates. Yet, the USMCA does not mention climate change, which is considered by many to be a pillar of the global environmental agenda (and the primary reason that 9 of 10 senators, including now-vice president Kamala Harris, voted against it). The USMCA environment chapter also does not commit its parties to reducing carbon emissions, nor does it reference relevant binding treaties such as the Paris Agreement or explicitly promote renewable energy. In other words, the existence of an environment chapter—or a labor or gender chapter—may not mean much if its substance does not explicitly address key issues.

In the same way that partisan rhetoric surrounded the development of the USMCA’s environment chapter—voiced mostly by Democrats concerned with its weaknesses—a “centrist” position on gender could draw opposition from both sides of the political aisle and threaten the chapter’s ultimate effectiveness. Progressive Democrats could dismiss a tepid chapter on gender issues as not going far enough, while Republicans might oppose what they might see as a social goal whose inclusion is unnecessary for an economic agreement. (In fact, 46 Republicans did just that when they protested a USMCA clause protecting workers from “employment discrimination on the basis of sex.” A footnote was then added to assert that the United States’ existing policies were sufficient to meet this condition.) Such a stalemate would be par for the course in the U.S. Congress, particularly with an evenly split Senate. As a result, it is reasonable to believe that members of both parties could agree only to generalized, value-driven commitments to promote gender equality and women’s economic empowerment in trade agreements. Still, it is important to push for more specific commitments.

Let us be clear: there remains hope for the inclusion of specific gender commitments in U.S. trade agreements. It took time for robust labor and environmental obligations to develop. Those protections evolved from ancillary accords to weak clauses within agreements to full chapters, some of which are enforceable. Gender obligations in trade agreements could benefit from those precedents set by labor and environment negotiations and follow a similar path. It may take time for such obligations to become effective, but the impact that accrues to women in trade—and all market participants—will be well worth the effort.

Gender

Considering the nuances of gender in trade agreements comes after the first hurdle: addressing gender at all.

For most economies, including the United States’, explicitly recognizing the unique difficulties faced by women in trade would be a major first step. Such acknowledgment could appear in an agreement’s preamble, which would not be subject to a DSM and therefore pose minimal political risk. For agreements that reference these challenges but do not have a standalone gender chapter, such as the African Continental Free Trade Area (AfCFTA) agreement that recently entered into force, introducing a gender chapter would reiterate the economy’s commitment to correcting gender imbalances in trade.

Two main approaches have been proposed to promote the inclusion of gender in FTAs. The first is gender mainstreaming, which incorporates gender-related provisions throughout trade deals. By “mainstreaming” gender, the approach allows trade partners to address related issues across all policy areas—even procurement or pharmaceuticals, for example—and to enforce appropriate gender-responsive policies. As described in our first commentary, mainstreaming gender helps prevent uninterested policymakers from relegating the topic to a brief, unenforceable clause or chapter.

The second approach employs standalone chapters dedicated to gender-specific trade issues, such as those in several FTAs written by Canada and Chile. The existing gender chapters in the Canada-Chile, Chile-Argentina, and Canada-Israel FTAs include general provisions on gender issues; commitments to international agreements on women’s rights; and identification of areas of bilateral cooperation, such as capacity building, skills enhancement of women at work and in business, and promoting financial training. To maximize their positive impact on women’s market access, trade agreements should feature both gender mainstreaming and standalone gender chapters.

The USMCA’s failure to describe or commit to addressing gender-specific issues renders its structure inappropriate as a template for future agreements. The politics behind its negotiation prevented parts of the agreement, such as the environment chapter, from fully addressing all relevant issues. Going forward, the Biden administration should prioritize the inclusion and enforcement of gender clauses and chapters in trade agreements. Through use of clear, enforceable, gender-specific language, U.S. trade agreements could credibly commit to improving women’s access to global trade.

In the next installment of this series, CSIS will consider the role that gender may or may not play in trade negotiations. Drawing on available data and primary research, we hope to broadly describe the extent to which the gender of trade negotiators—and of the decisionmakers who determine negotiators’ priorities—may impact the final language of trade agreements.

Ally Brodsky is a temporary research assistant with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jasmine Lim is a program coordinator and research assistant with the CSIS Scholl Chair. Jack Caporal is a fellow with the CSIS Scholl Chair. Will O’Neil is a research intern with the CSIS Scholl Chair.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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