Social Dumping: The Debate on a Multilateral Social Clause

Competition between countries has rapidly increased in the current context of economic globalization. Both indirect competition (through trade) and direct competition (through illegal immigration) can breed social dumping, exerting downward pressure on labor conditions in developed countries. In this paper we show the need for a social clause in order to prevent firms from illegally obtaining a comparative advantage. The adoption of a social clause, based on agreed labour rights by all signatories to ILO Conventions and on the compliance by multinationals, would eliminate social dumping.

Linking labor standards and trade at the multilateral level has received a lot of criticism. Some claim that this is just another strategy to masquerade the protectionist ambitions of developed countries. We believe that it should be adopted at the multilateral level in order to favor an ethical behavior in both trade and investment. This is particularly crucial for less developed countries that have inserted themselves in the international economy.

A balanced analysis of the arguments in favor and against the adoption of a social clause reveals that there is a patent need for an international harmonization of workers' rights regardless of the instruments.