Social Clause in Trade Agreements and China’s Experience

Haoqian Chen

doi:10.4236/blr.2015.61001

Abstract

The debate that whether inserting “social clause” into trade agreements is justified has been heated recently. This article illustrates how the arguments historically put forward to justify the use of the “social clause”, and how effective this mechanism can be for ensuring that work-related social issues are appropriately taken into account in the operation of international trade arrangements in the context of increasingly integrated economy.

Highlights

The competition in the international market where free movements of goods and cultural communication are significantly common is becoming increasingly fierce as the emergence of transnational corporations (TNCs) resulted from the current wave of globalization
Six other FTAs were signed including US-Australia, US-Bahrain, US-Chile, US-Morocco, US-Singapore and Central American Free Trade Agreement respectively (Siroën, 2013), which resemble to the US-Jordan FTA despite the main difference on the existence of an independent tribunal in which dispute can be settled and a fine of a maximum of 15 million dollars a year may be imposed in the event of incompliance (Siroën, 2013)
To control and govern nations which pursue competitive price advantages by squeezing workers’ labour to gain more profits, social clause was introduced into free trade agreements

Summary

Introduction

The competition in the international market where free movements of goods and cultural communication are significantly common is becoming increasingly fierce as the emergence of transnational corporations (TNCs) resulted from the current wave of globalization. Those TNCs strive to shift their manufacturing factories offshore to some developing countries, such as India, Vietnam, China or Bangladesh (Hepple, 2005), drawing on the much cheaper labour to enjoy the cost advantage in global competition, due to the gradually opening policies and the reduced transportation cost by ever-developing technology (Palley, 2004).

Justification of Social Clause

To What Extent Social Clause Operates in International Trade Agreement

The Prospect of Social Clause in China’s Free Trade Agreements

The Necessity of Inserting Social Clause into China’s Free Trade Agreements

Findings

Conclusion