JUST RELEASED: Private sector guidance on social clauses in trade agreements

IOE, together with several Geneva-based institutions, has published an in-depth analysis of the impact of social clauses in international trade agreements.

The International Organisation of Employers (IOE), in collaboration with TradeLab, Legal Practica and the Graduate Institute Centre for Trade & Economic Integration, have produced a reference report to provide a detailed overview of existing social clauses in trade agreements. The report looks at the success rate of implementation of the social clauses, particularly in developing countries, and the impact and implications of these clauses on the private sector, trade, and business practices, especially for small and medium-sized businesses.

Since the 1990s, more regional trade agreements have included social clauses, which refer to domestic and international labour standards. The inclusion of labour standards in trade agreements aims primarily to level the playing field for global competitors and ensure fair competition. These also aim to protect and promote human rights and sustainable development by effectively implementing labour standards.

While pursuing important goals, these social clauses (especially if misused) risk triggering disputes that could seriously disrupt commerce, supply chains and adversely impact the private sector, significantly smaller businesses in developing countries, as well as undermine the primary purpose of trade agreements which is to improve market access for the countries involved and to guarantee a level playing field.

Employers’ questions and concerns on this international legal web are increasing. IOE, with its partners, produced this paper to address these issues. The publication (available in the “Resources” section) provides practical guidance for employers and businesses. It does so by taking the diverse array of actors, looking at the tensions within, and identifying the opportunities set forth by regional trade agreements.