Acton Commentary

Gephardt, Big Labor, and the Undermining of the World Trade Organization


In a recent television interview, Democratic Presidential candidate Representative Richard Gephardt (D-Mo.) loudly proclaimed that he has been seeking to pressure the World Trade Organization (WTO) to impose minimum labor standards on member nations. Appearing on NBC’s Meet the Press , Gephardt said, “we need to find a way to bring about minimal standards in the world within the World Trade Organization.” His proposed standards would include such things as mandatory “living wages” and the right to unionize, as well as a ban on child labor, sweat shops, and prison labor. His stated goal is to recognize and protect “human rights” in the “lowest-wage” nations.

Achieving decent standards of living and doing away with the evils that Gephardt enumerates are laudable goals. As the cliché has it, though, good intentions are not enough. What Gephardt’s statements fail to recognize is that, for people of good will, support for free trade is founded not on a desire to exploit the workers of the developing world, but on a desire to improve their condition. The fundamental economic truth reflected in trade is that, in a free exchange, both parties are made better off. If both developing and developed nations are able to participate freely in such exchange, one will not profit at the expense of the other. The activity of free exchange thereby befits the dignity and creativity of the human person.

For Gephardt, however, the economic development of lower-wage countries (such as Mexico) must come at the expense of higher-wage countries (such as the United States). He says that the creation of jobs overseas is “not helping workers in our country, and it’s not even helping the workers in the countries where the jobs are going. People do not have a wage that they can survive on, that they can live on.” Such an economic worldview assumes that there is only so much to go around, and that productive human activity does little to create new sources of capital, credit, production, and economic opportunity. The WTO, despite its deficiencies, has consistently recognized the opportunities offered by economic globalization and the pitfalls of economic protectionism.

For its part, the WTO recognizes that the parochial labor politics offered by Gepthardt are outside its purview. The WTO publication “Trading into the Future: The Introduction to the WTO” , explains that labor standards are “not on the agenda,” and a subject that “should not be mentioned here at all because there is no work on the subject in the WTO, and it would be wrong to assume that it is a subject that ‘lies ahead.’” Instead, the WTO officially recognizes the International Labour Organization (ILO) as the appropriate body to deal with “core” labor standards of the kind proposed by Mr. Gephardt. Furthermore, the WTO maintains that the pressure to institute labor standards using the WTO is a form of political maneuvering and that the “political angle” is the foremost goal of such maneuvering. The issue at hand is an institutional one: whether or not the WTO is the proper medium through which to regulate such labor standards. Rep. Gephardt’s opinion is clear—he wishes to use the WTO to advance organized labor’s political agenda by appropriating its authority, a move that many nations deem in the WTO report, “a smokescreen for protectionism.”

Lest this characterization of Mr. Gephardt’s position seem too strong, his belief that neither higher-wage countries nor lower-wage countries are helped by business expansion into developing countries tells the tale. The fact that wages in developing countries do not enjoy a “one to one” correspondence to those of higher-wage countries does not necessarily constitute economic injustice to the workers in lower-wage countries. Often, the choice in many developing countries is not between two jobs, with one paying better than the other. More often, the choice is starker—between grinding poverty or work in a foreign company that has taken the risk of investing in the resources of the country and its people. In this context, the gradual process of economic development, with its attendant improvements in education, training, and capital-formation, is the only long-term solution to the problem of global poverty.

Mr. Gephardt’s call to institute labor standards via the WTO looks like a political maneuver designed to appeal to his political base within the Democratic Party. His attempt to link labor issues and the WTO seems to be a thinly veiled effort to institutionalize policies of economic protectionism that would have significant negative effects on the economic development of poor nations and those workers for whom he professes so much concern. The combination of labor standards and international trade rights he proposes, would, in effect, work as a kind of sanction against developing countries, simply because their markets do not yet support wages equivalent to more developed countries. The WTO has properly understood this danger and appropriately deferred on the matter of labor standards to the ILO. Mr. Gephardt’s proposal to use the WTO as a means of protectionism should be rejected, along with the anti-growth, “big labor” presidential politics that underwrite it.