Labor provisions in FTA help increase trade value by 28%

On average, a trade agreement (FTA) that includes labor provisions increases trade value by 28%, compared to a 26% increase in an agreement without labor provisions.

This is the research result in the recently published report of the International Labor Organization (ILO) on growth and equity titled "Impact Assessment of warehouse articlesLabor protections in trade and investment agreements”.

The report shows that labor provisions do not reduce or change trade flows, but actually increase access to the labor market. In fact, on average, a trade agreement that includes labor provisions increases the value of trade by 28%, compared to a 26% increase in an agreement without labor provisions.

In addition, labor provisions support access to the labor market, especially for women of working age. Labor provisions positively affect labor force participation rates (helping to increase the proportion of both male and female working-age population participating in the labor force).

The report highlights a significant increase in the number of trade agreements worldwide. In 2014 nearly 55% of export volume fell within the framework of bilateral and multilateral trade agreements. Meanwhile, this number in 1995 was only 42%.

Ms. Marva Corley, senior economist at the ILO, lead author of the report, said: "An increasing number of new trade agreements include labor provisions. As of December 2015, there were 76 trade agreements (covering 135 economies) that included labor provisions, and nearly half were completed after 2008. More than 80% of the agreements entered into force from 2013 has labor provisions.

Currently, a quarter of the trade value of trade agreements falls within the scope of the above provisions. This was close but did not exist before the mid-1990s.

The study also warns that the impact of trade on the labor market paints a colorful picture, especially when it comes to job quality and wage growth.

In Vietnam, among the 16 free trade agreements that Vietnam participates in, the Trans-Pacific Partnership Agreement (TPP) includes a series of clear provisions related to labor.

According to the report, although the TPP does not create any new international labor standards, it does require Vietnam to adopt and maintain in law, regulation and practice the rights set out in the ILO's 1998 Declaration on Fundamental Principles and Rights at Work, including freedom of association, the right to organize and bargain collectively, and eliminate forced labor, child labor and discrimination in the workplace.

The EU-Vietnam Free Trade Agreement (EVFTA), which just completed negotiations in December 2015, also includes labor provisions. This Agreement requires the parties to effectively implement ILO basic labor standards and signed ILO Conventions, and requires the parties to accede to ILO fundamental Conventions that each party has not yet acceded to./.

Source: Vietnam Financial Times Online