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GTAP Resource #2147

"Effects of a Humanitarian WTO Social Clause on Welfare and North-South Trade Flows"
by Flasbarth, Axel and Markus Lips

The integration of core labour standards into the WTO has been demanded mostly on either humanitarian or fair trade grounds. Whereas the humanitarian integration of core labour standards is a question of means, the fair trade reasoning is a question of empirical relevance. This paper contributes to both questions by estimating the effects of an introduction of core labour standards by means of a general equilibrium model.
Trade sanctions in form of a tariff increase hardly reduce the import pressure for OECD countries, because trade diversion from non-violating countries occurs. A drastic reduction of child labour only has a marginal effect on trade flows. Both, trade sanctions as well as reduction of child labour leads to slight welfare losses. A relative small trade liberalization combined with a humanitarian social clause suffices to more than compensate them.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: The Swiss Review of International Economic Relations, 61 (2) pp 159-188
Date: 2006
Created: Lips, M. (7/28/2006)
Updated: Dimaranan, B. (9/5/2006)
Visits: 1,275
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