Free trade or women`s rights?
January-March 2018
By: Kate Lappin

Preferential trade agreements are designed to facilitate greater market competition and the freer flow of global capital, enabling increased access to resources and cheap labor in signatory countries. Investors are attracted to the comparative advantage of cheap, nonunionized and unregulated labor provided by countries such as Cambodia, Myanmar and Vietnam. Consequently, preferential trade agreements push down wages in an attempt to compete in a race to the bottom for cheaper exports across the region, not just in signatory countries. If other countries wish to continue to attract investment, they need to reduce costs. Export industries often have little cost margin, meaning that wages and conditions are targeted.

Nafta provides a good example of the likely consequences of preferential trade agreements that include countries at different stages of development. While labor productivity grew after the signing of the agreement and exports increased, wage compensation in Mexico declined by 20 percent between 1994 and 2011. As women comprise an increasing percentage of workers in export industries, they are most likely to experience the downward pressure on wages, conditions and rights.

The investor-state dispute regime has also been utilized to challenge increases in wages and conditions (for example, in the case of Veolia versus Egypt), and UN experts have noted that such cases have a “chilling effect” on governments. As women make up the largest percentage of minimum and low-paid workers, they depend more on state wage-setting mechanisms.

Gender-equal trade?

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