What is a social clause?
In the context of globalization, a social clause essentially refers to a provision in a trade agreement aimed at conditioning access to a market to the respect of certain labour standards. The social clause provides for the establishment of institutional mechanisms to promote cooperation between parties and to ensure compliance with their commitments. These provisions also include a dispute resolution mechanism that could result in monetary or trade sanctions.
Social clauses are based on a set of rights, often inspired by the International Labour Organization (ILO) fundamental conventions, covering subjects that are considered as fundamental principles and rights at work: freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of worst forms of child labour; and the elimination of discrimination in respect of employment and occupation.
Models of social clauses
According to the ILO, social clauses linked to free trade agreements fall into two main categories: the promotional approach and the conditional approach. The conditional approach is consistent with the North American model (United States and Canada) in which non-compliance with the clause entails stronger consequences, particularly, the possibility of resorting to sanctions in order to ensure effective implementation of obligations vis-à-vis the rights of workers. The promotional approach adopted by the European Union is, by contrast, a model based on cooperation to enforce workers’ rights rather than on sanctioning mechanisms.
All social clauses include:
- a list of rights to be respected (often linked to a set of international instruments and conventions);
- a commitment to ensure the enforcement of its own labour laws with appropriate administrative measures;
- a mechanism for cooperation between the signatory parties;
- a conciliation mechanism in the event of a dispute; and
- a commitment to promote transparency and public participation.
Ways to implement a Social Clause
- Adopting parallel agreements to a free trade agreement, for example the North American Agreement on Labour Cooperation (NAALC) associated with the North American Free Trade Agreement (NAFTA).
- Including labour chapters directly into the trade agreement. All US Free Trade Agreements since 1999.
- A combination of both: negotiating a parallel agreement while including a labour chapter directly in the trade agreement. Canada adopted parallel agreements until 2008, a combination of both for all trade agreements signed between 2008 and 2014, and finally, a chapter on labour in more recent trade agreements, with South Korea and the European Union.