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Henner Gött Editor

Labour
Standards in
International
Economic Law
Labour Standards in International Economic Law
Henner G€ott
Editor

Labour Standards in
International Economic Law
Editor
Henner G€ott
Georg-August-University G€ottingen
Institute of International and European Law
G€ottingen, Germany

ISBN 978-3-319-69446-7 ISBN 978-3-319-69447-4 (eBook)

https://doi.org/10.1007/978-3-319-69447-4

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© Springer International Publishing AG 2018

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Preface

Ensuring a decent level of worker protection in the globalized economy remains

one of the central challenges of economic globalization. This profoundly intricate
issue will likely remain unresolved until all its aspects are properly understood. The
present volume assembles timely analyses, written by expert scholars and experi-
enced practitioners, of the most pressing legal questions arising in the field. It
bridges existing gaps between the different sub-fields of law and surpasses the
boundaries of professional and epistemic communities, to foster a more compre-
hensive understanding of labour standards in international economic law.
Most contributions to this volume were inspired by presentations given at the
G€ottingen Conference on Labour Standards in International Economic Law, con-
vened on 1–2 October 2015 by the Institute of International and European Law’s
Department of International Economic and Environmental Law in G€ottingen.
Additional chapters on further important issues were included to round off the
compilation.
It is a keen pleasure to acknowledge all those who have made this volume
possible. First and foremost, I wish to express my sincere gratitude to Peter-Tobias
Stoll, whose expertise and unfailing and dedicated support have made both the
conference and this volume possible. Special thanks are due to all the authors for
their invaluable contributions to this book and to the conference. Furthermore, I
wish to thank Mary Footer, Pablo Lazo Grandi, Inmaculada Martı´nez-Zarzoso,
Frank Schorkopf, Friedl Weiss and Ruben Zandvliet for enriching the conference as
speakers and chairs. Last but not least, I am grateful to Anna Kozyakova, Mauricio
Pacheco, Doris Ruhr, Laura Wanner, Oskar de Wyl and Jia Xu, who served as
members of the conference organization team, and to Jasmin Evers, Laura Wanner
and Oskar de Wyl for assisting me with the edition of the manuscript.

G€ottingen, Germany Henner G€ott

August 2017

v
Contents

Labour Standards in International Economic Law: An Introduction . . . 1

Henner G€
ott

Part I Setting the Scene

International Economic and Social Dimensions: Divided or Connected? . . . 11
Peter-Tobias Stoll
The ILO’s Mandate and Capacity: Creating, Proliferating
and Supervising Labour Standards for a Globalized Economy . . . . . . . 37
Claire La Hovary
Why the Shift from International to Transnational Law Is Important
for Labour Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Anne Trebilcock

Part II Labour Regulation of Trade, Investment and Finance

The Implications of EC – Seal Products for the Protection
of Core Labour Standards in WTO Law . . . . . . . . . . . . . . . . . . . . . . . . 69
Thomas Cottier
The WTO and Child Labour: Implications for the Debate
on International Constitutionalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Franziska Humbert
Labour Standards and Trade: Need We Choose Between ‘Human Rights’
and ‘Sustainable Development’? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Tonia Novitz
Civil Society Meetings in EU Free Trade Agreements: The Purposes
Unravelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Jan Orbie, Lore Van den Putte, and Deborah Martens

vii
viii Contents

Comparative Conclusions on Arbitral Dispute Settlement in Trade-

Labour Matters Under US FTAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Patrick Abel
An Individual Labour Complaint Procedure for Workers, Trade
Unions, Employers and NGOs in Future Free Trade Agreements . . . . . 185
Henner G€ott
Implications of CETA and TTIP on Social Standards . . . . . . . . . . . . . . 211
Reingard Zimmer
Mainstreaming Investment-Labour Linkage Through ‘Mega-Regional’
Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Henner G€
ott and Till Patrik Holterhus
Labour Standards and the World Bank. Analysing the Potential of
Safeguard Policies for Protecting Workers . . . . . . . . . . . . . . . . . . . . . . 273
Franz Christian Ebert

Part III Business Conduct and Labour Standards

Soft Standards and Hard Consequences: Why Transnational Companies
Commit to Respect International Labour and Social Standards,
and How This Relates to Business and Regulation . . . . . . . . . . . . . . . . . 307
Katja Gehne
The Promotion of Labour Standards Through International Framework
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Rüdiger Krause
Transnational Labour Litigation: The Ups and Downs Under the Alien
Tort Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Anja Seibert-Fohr
Promoting Labour Standards in Global Supply Chains Through
Consumers’ Choice: Is Social Labelling Effective? . . . . . . . . . . . . . . . . . 355
Nazli Aghazadeh

Part IV Labour Standards in International Economic Law: A Proposal

for Practice
A Model Labour Chapter for Future EU Trade Agreements . . . . . . . . . 381
Peter-Tobias Stoll, Henner G€ott, and Patrick Abel
Contributors

Patrick Abel Georg-August-University Göttingen, Institute of International and

European Law, Göttingen, Germany
Nazli Aghazadeh Georg-August-University Göttingen, Institute of International
and European Law, Göttingen, Germany
Thomas Cottier University of Berne, World Trade Institute, Berne, Switzerland
Franz Christian Ebert Max Planck Institute for Comparative Public Law and
International Law, Heidelberg, Germany
Katja Gehne BASF, Ludwigshafen, Germany
Henner G€ott Georg-August-University Göttingen, Institute of International and
European Law, Göttingen, Germany
Till Patrik Holterhus Georg-August-University Göttingen, Institute of Interna-
tional and European Law, Göttingen, Germany
Claire La Hovary University of Glasgow, School of Law, Glasgow, Scotland
Franziska Humbert University of Berne, Berne, Switzerland
Oxfam Germany, Berlin, Germany
udiger Krause Georg-August-University Göttingen, Institute of Labour Law,
R€
Göttingen, Germany
Deborah Martens Ghent University, Ghent, Belgium
Tonia Novitz University of Bristol Law School, Bristol, UK
Jan Orbie Ghent University, Ghent, Belgium
Lore Van den Putte Ghent University, Ghent, Belgium
Anja Seibert-Fohr Ruprecht-Karls-University, Heidelberg, Germany

ix
x Contributors

Peter-Tobias Stoll Georg-August-University G€ottingen, Institute of International

and European Law, G€ottingen, Germany
Anne Trebilcock Georg-August-University G€ottingen, Institute of Labour Law,
G€
ottingen, Germany
Former Legal Adviser and Director of Legal Services, International Labour Orga-
nization, Geneva, Switzerland
Reingard Zimmer Berlin School of Economics and Law, Berlin, Germany
Labour Standards in International
Economic Law: An Introduction

Henner G€
ott

Content
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

The ever-progressing globalization of the economy and the growing economic

interdependence of states has a profound and lasting impact on the world of labour.
As the International Labour Organization (ILO) has pointed out in its 2008 Decla-
ration on Social Justice for a Fair Globalization, this impact is ambivalent:
[O]n the one hand, the process of economic cooperation and integration has helped a
number of countries to benefit from high rates of economic growth and employment
creation, to absorb many of the rural poor into the modern urban economy, to advance
their developmental goals, and to foster innovation in product development and the
circulation of ideas[.]
[O]n the other hand, global economic integration has caused many countries and sectors
to face major challenges of income inequality, continuing high levels of unemployment and
poverty, vulnerability of economies to external shocks, and the growth of both unprotected
work and the informal economy, which impact on the employment relationship and the
protections it can offer.1

Against this backdrop, securing and improving adequate levels of worker pro-
tection while preserving the benefits of globalization has become an issue of utmost
importance.2 What is at stake is not only to ensure effective compliance and
implementation as a factual matter. Rather, there is also the normative question
which level of protection is adequate, or, in other words, how labour standards
should be protected and promoted in the light of the challenges posed by a

1
ILO Declaration on Social Justice for a Fair Globalization, adopted on 10 June 2008.
2
The ILO has conceptualized this question in its Decent Work Agenda, as laid down in its 2008
Declaration on Social Justice for a Fair Globalization. See International Labour Office (1999) and
Vosko (2002).

H. G€ott (*)
Georg-August-University G€
ottingen, Institute of International and European Law, G€
ottingen,
Germany
e-mail: [email protected]

© Springer International Publishing AG 2018 1

H. Gött (ed.), Labour Standards in International Economic Law,
https://doi.org/10.1007/978-3-319-69447-4_1
2 H. G€
ott

globalized economy.3 Given the complexity of both the factual and the normative
dimension, it can hardly be surprising that no coherent, sustainable and satisfying
solution has been identified so far.
The status quo is that the protection and promotion of labour standards within the
context of economic globalization is dealt with in numerous contexts, which have
spawned a variety of different and disparate approaches both within and beyond the
confines of international law.4
Within the realm of international law, the two areas of prime relevance are
international labour law on the one hand and international economic law on the
other.
International labour law is concerned with the formulation and implementation
of internationally recognized labour standards, rights and policies. With its origins
dating back to the so-called ‘first globalization’ at the end of the nineteenth century,
it has demonstrated remarkable long-term viability.5 The ILO, the central interna-
tional organization in the field, has developed a comprehensive body of treaties,
recommendations, declarations and other instruments and a rich organizational
practice on the creation and implementation of labour standards. As to the current
economic globalization, the ILO has engaged in various initiatives to secure
adherence and to further promote labour standards.6 For one part, it has engaged
in both revisions and a prioritization of its numerous instruments. This resulted,
most prominently, in the identification of fundamental labour standards in the 1998
Declaration on Fundamental Principles and Righta at Work, which has become a
point of reference both for a realignment of resources and activities inside the ILO
and for numerous instruments and initiatives developed elsewhere. Moreover, the
ILO has defined and committed to pursue strategic objectives (job creation, fun-
damental principles and rights at work, social protection and social dialogue, as
well as gender equality as a crosscutting objective) in its Decent Work Agenda,
manifested in its 2008 Declaration on Social Justice for a Fair Globalization. At the
same time, the ILO has continued to experience major challenges to its work, both
internally and externally, some of which have the potential to substantially com-
promise its impact and, ultimately, even its relevance.
The second central body of law, international economic law, including interna-
tional trade law as well as international investment law and the law of international
financial institutions, frames and accompanies economic globalization through a

3
This normative dimension is relevant both for those concerned with positive international law and
those concerned with developing and changing this law as a matter of politics.
4
To promote coherence between these contexts has time and again amounted to a challenge in
itself. A prominent example is the—eventually unsuccessful—attempt to introduce labour stan-
dards into the law and practice of the WTO, on this see e.g. Leary (1997) and Weiss (2005).
Another example is the lengthy struggle to achieve at least some coherence between the so-called
EWI indicators used in the World Bank’s Doing Business Reports and the implementation and
further promotion of ILO conventions, Bakvis (2009).
5
On the origins and development see Servais (2014), p. 19 et seqq.
6
Maupain (2013), p. 51 et seqq.
Labour Standards in International Economic Law: An Introduction 3

rapidly developing body of norms. These norms are mostly laid down in multilat-
eral, regional and bilateral treaties and are significantly developed further by the
practice of powerful international organizations, such as the World Trade Organi-
zation (WTO), the Organization for Economic Co-Operation and Development
(OECD) or the Bretton Woods Institutions. These treaties and organizational
practices have had a profound impact on the current state of economic globaliza-
tion. In this context, they have also contributed to (re-)configuring the parameters
within which contemporary industrial relations take place. That being said, labour
standards have never been a central concern in international economic law—
indeed, they have at times been facing outright opposition.7 Yet, their role appears
to be slowly increasing at least in certain areas, for example in the context of
regional trade agreements.8
While international economic law and international labour law are two central
fields of concern, it would be negligent not to look beyond these two bodies of law.
With the international legal order being more developed and multifaceted than ever
before in history, it is only natural that the issue of protecting and promoting labour
standards in the globalized economy also touches on other areas of international
law, such as international institutional law or international human rights law.9
Certain human rights guarantees in regional and universal human rights instruments
have become central points of reference, like Art. 11 ECHR and the corresponding
jurisprudence of the European Court of Human Rights, to name one prominent
example. In a similar vein, there are important links to the level of domestic law.10
What is more, labour standards play an increasing role in transnational economic
and social self-regulation by non-state actors. Non-state actors, such as enterprises,
trade unions and NGOs, have always played an important part in the formulation
and implementation of labour standards, both on the domestic and the international
level.11 As economic globalization coincides with diminishing regulatory capaci-
ties of states, self-regulation by non-state actors becomes more relevant also for
other parts of the international economic order.12 Many non-state actors have
developed own approaches to the protection and promotion of labour standards,

7
See e.g. the WTO’s refusal to include labour standards in its work, as prominently spelled out in
Singapore Ministerial Declaration, 18 Dec 1996, WT/MIN(96)/DEC, para. 4.
8
Including in recent major trade agreements, see e.g. Chapter 23 CETA. According to a 2016 ILO
study, ‘nearly half of trade agreements with labour provisions came into existence since 2008 and
over 80 per cent of agreements entering into force since 2013 included them’, ILO (2016), p. 22.
9
See e.g. Kolben (2010) and Swepston (2013).
10
As a general matter, international labour law heavily relies and depends on its implementation
through national legislators and authorities, see e.g. the obligations in Art. 19 (5) ILO Constitution.
Moreover, the issue of protecting labour standards in a globalized economy can become relevant in
civil litigation before domestic courts, see e.g. the pending case of Regional Court (Landgericht)
Dortmund, Mohammad Jabir et al. v. KiK Textilien und Non-Food GmbH, Case-No.7 O 95/15.
11
The most prominent example is the ILO’s tripartite structure, Art. 3 (1) and Art. 7 (1) ILO
Constitution. On further examples see Hepple (2005), p. 69 et seqq.
12
For a more general account see Peters et al. (2009).
4 H. G€
ott

some of which are transcending (or even clearly lying beyond) the realm of
international law in the traditional sense. Intricate examples for unilateral or
contractual cross-border self-regulation by enterprises, trade unions and NGOs
can be found in corporate codes of conduct, international framework agreements
or social labelling schemes.13 While evidently introducing normative propositions
on labour standards in globalization, the legal quality and relevance of these private
initiatives remain—at least from an international lawyer’s point of view—highly
uncertain.
The approaches to the protection and promotion of labour standards that can be
found in each of the aforementioned areas differ significantly as to their respective
rationale, scope, means and efficacy. Each of them has its own objectives, charac-
teristics, potentials and pitfalls. These divergencies in substance go along with a
considerable separation, and at times isolation, of professional and epistemic
communities of those who are concerned with international economic law and
those concerned with the protection and promotion of labour standards, both in
academia and in practice. This multidimensional fragmentation has repeatedly
resulted in remarkable misunderstandings, such as an unbalanced perception of
labour standards as mere obstacles to doing business, or unfortunate limitations of
political debates, e.g. when the question of how to improve labour chapters in trade
agreements is reduced to the issue whether these chapters should be enforceable by
temporary suspensions of trade benefits (so-called ‘trade sanctions’) or not. Perhaps
more than ever before, there is a need for increased coherence between approaches,
as there is a need for enhanced mutual understanding between communities.
This volume addresses some of the most pressing issues arising at the tangent of
international economic law and international labour standards. It deliberately
adopts a comprehensive perspective, covering the manifold approaches and the
different professional backgrounds mentioned above. Its aim is to provide analysis
and assessment of the law and practice, to broaden the perspective beyond
sub-fields and communities and to combine the threads in a single volume in
order to provide guidance to academics and practitioners who are facing the
challenge of securing adequate levels of worker protection in the globalized
economy.
The first part of the volume prepares the ground for the discussions in the
subsequent parts by elucidating the historical, organizational and conceptual back-
ground which informs labour standards and their role in international economic law
today.
The protection and promotion of labour standards in the international economic
order is by no means a new issue. As Peter-Tobias Stoll points out in his contribu-
tion, it has been a recurring issue ever since the end of the nineteenth century. In
order to shed light on the multiple connections and divisions between the economic
and social dimensions of international law and relations, he embarks on a historical
and analytical tour d’horizon. Claire La Hovary picks up in the present, assessing

13
See e.g. Davarnejad (2011), Burkett (2011) and Seidman (2009).
Labour Standards in International Economic Law: An Introduction 5

the ILO’s mandate and capacity to create, proliferate and supervise labour standards
in the globalized economy. Tripartism, the ILO’s most important foundational
feature, and its operationalization have come under severe pressure in the course
of the ILO’s post-2012 constitutional crisis. Yet, despite current difficulties,
La Hovary argues that ‘the current crisis affecting the ILO also suggests that the
organization does matter, as does its supervisory system’. While the ILO will
remain an institution of paramount importance in the field, it must not be
overlooked that contemporary labour law has transcended the traditional structures
of domestic and international law. It operates, in the words of Anne Trebilcock,
‘within, between and beyond States to form a type of (imperfect and incomplete)
multi-layered global governance’. In her contribution, Trebilcock points out why
this shift from international to transnational labour law matters for labour standards.
She concludes that transnational labour law’s ‘broader vision of reuniting the social
and the economic [. . .] seems at least theoretically better placed to test different
solutions until the most promising can emerge within a particular context’.
After the scene is set, the contributions in the volume’s second part explore the
role of labour standards in the most prominent fields of international economic law,
which are trade, investment and finance.
Given that initiatives to include provisions on labour into the multilateral trade
regime failed both in the case of the General Agreement on Tariffs and Trade
(GATT) and again when establishing the WTO, Thomas Cottier explores whether
the recent WTO EC - Seals case will be of help in this regard. He concludes that the
WTO’s case law is worth studying and that such studies will likely reveal some
policy space ‘to support and pursue labour standards and human rights abroad,
using the means and instruments of trade policy in a well-calibrated manner’.
Franziska Humbert, in focusing on child labour, advocates in favour of an
ILO-WTO implementation mechanism. This institutional solution, she argues,
can be seen in line with a ‘constitutionalist approach’.
Many of the preferential trade agreements that have recently been concluded or
are currently being negotiated to try to rectify the WTO’s refusal to address labour
standards. As Tonia Novitz explains, in EU trade agreements, there is ‘an apparent
shift away from a human rights [. . .] perspective to one more focused on sustainable
development’, which in her view warrants caution. The same holds true in view of the
involvement of the civil society in this context, as Jan Orbie, Lore Van den Putte and
Deborah Martens conclude after a look to the actual practice of such civil society
mechanisms in the light of their objectives. Their analysis reveals that civil society
involvement in free trade agreements lacks a clear definition of purpose. As they put
it: ‘It appears unclear what exactly civil society should be doing in this regard.’
The relevance of labour provisions in trade agreements largely depends on their
implementation and enforcement mechanisms. The North American Free Trade
Area (NAFTA) side agreement on labour employed a specific arbitration model,
which the US has used, with certain modifications, in its subsequent trade agree-
ments. As Patrick Abel points out in his comparative analysis, however, these
mechanisms suffer from ‘an unsuitable procedural and institutional design’,
which may explain that the mechanisms have only poorly been used and have not
6 H. G€
ott

lived up to expectations. Drawing from these findings, Henner G€ ott explores the
potential of ‘an Individual Labour Complaint Procedure for Workers, Trade
Unions, Employers and NGOs in Future Free Trade Agreements’. This proposal
is aiming at endowing those actors which have a genuine interest in the implemen-
tation of labour chapters in trade agreements with the procedural means to do so,
thus enhancing the chapter’s overall performance. The debate on labour chapters in
trade agreements has an immediate and continuing practical relevance. The
EU-Canada Comprehensive Economic and Trade Agreement (CETA), which was
signed in October 2016 and is being provisionally applied at the time of this writing,
has received widespread public attention and criticism in Europe. The same is true
for the envisaged EU-US Transatlantic Trade and Investment Partnership (TTIP),
which, despite its fate being uncertain after the last presidential election in the USA,
is likely to remain a point of reference in future trade negotiations. Reingard
Zimmer analyses these agreements with a special focus on social standards. She is
particularly concerned about the far-reaching mechanisms for regulatory coopera-
tion and investment protection.
Next to trade provisions, investment liberalization and protection is an integral
part of recent trade agreements. Henner G€ ott and Till Patrik Holterhus discuss
whether the combination of investment and labour chapters in recent free trade
agreements may enhance the role of labour standards in international investment
law. They conclude that there are indeed ‘opportunities to promote an adequate
balance of investor and labour concerns’, but the provisions in contemporary
agreements and drafts ‘do not in themselves sufficiently steer towards this goal’.
Besides trade and investment, the law of international financial institutions is the
third important pillar of international economic law. In historical perspective, the
World Bank Group member organizations’ approaches to labour standards have
repeatedly led to conflicts and critique. Franz Christian Ebert explains that, in
2016, the World Bank has ‘for the first time [set out] detailed labour standards
requirements for both the Bank’s staff and its borrowers’, which, however, have
their shortcomings.
The volume’s third part addresses the numerous and diverse non-state actor
approaches to enhance the protection and promotion of labour standards in the
globalized economy.
The inclusion of labour standards in self-imposed corporate codes of conduct has
received wide resonance in academia and practice, including both appraisal and
critique. Katja Gehne approaches this phenomenon from a practitioner’s point of
view. Finding that ‘soft standards at the international level have emerged as a
standard of responsible business management’, she argues that they ‘could be part
of a (para-)legal answer to deficiencies of national states’ human rights protection
systems’. To step in governance gaps is also the purpose of joint endeavors of trade
union federations and multinational groups to strengthen labour standards in cor-
porate governance by way of international framework agreements. In his contribu-
tion, R€
udiger Krause highlights that the success of such agreements largely depends
on them being implemented in strong and resilient industrial relations, which in turn
they are able to reinforce. Therefore, he calls for the conclusion of more robust
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