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ECON 4040 Lecture PP Chpt 8 LaborEnv

ECON 4040 Lecture PP Chpt 8 LaborEnv - Labor and...

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Labor and environmental standards and trade Chapter 8
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Formal trade barriers have been declining since WWII. New obstacles have been appearing: Unintentionally as a result of national laws/regulations for domestic reasons As conflicts over product & manufacturing standards
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Integration
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Achieving Deeper Levels of Integration
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No one approach is best Some create larger markets and greater efficiency (e.g. common size electrical outlets) Some freeze in place inferior technology Some less-developed countries have less ability to enforce standards
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Standards across countries vary by level of development
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“Race to the Bottom” Countries with high standards are forced to lower their standards or experience a loss of jobs and industry Unfair trade practice complaint: failure to enact or to enforce standards gives firms in the countries with lower standards a commercial advantage
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Labor Standards
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Labor Standards No universal set of standards. Basic rights proposed by International Labor Organization and OECD: Prohibition of forced labor Freedom of association Right to organize and bargain collectively End to the exploitation of child labor Nondiscrimination in employment
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Other potential standards more contentious: Minimum wage Limits on hours worked Health and safety issues High and low income countries face different constraints
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Labor Standards and Trade Trade economists and labor activists differ over the use of trade barriers to enforce or alter standards. Activists want to use trade barriers to force other countries to enact standards. Economists consider trade barriers typically Expensive Grossly inefficient
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Primary Issues
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The Effectiveness of Trade Barriers on Standards is Questionable Only large countries can hope to use barriers successfully Small country does not impact demand enough Some countries have chosen to suffer large costs from trade sanctions but have not altered policies As more countries join trade barrier, effectiveness increases (e.g. S. African
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