This study tests whether labour provisions in Preferential Trade Agreements (PTAs) are having a real effect on labour market outcomes.
This study, Preferential trade agreements with labour provisions and labour market outcomes: Evidence from Asia and the Pacific (Labour Provisions in Asia-Pacific Free Trade Agreements Part II) has been commissioned by the United Nations Economic and Social Commission for Asia Pacific (UNESCAP).
The study focuses on three key labour market outcomes that make up the subject of most labour provision: a) Child labour, b) Formal employment, and c) Inequality.
The analysis reveals that PTAs with labour provisions are unlikely to cause better labour market outcomes. It is argued, therefore, that governments sign PTAs with labour provisions after labour market outcomes have improved.
Economies may use this approach to signal to other nations that they care about labour standards, which has been found to increase FDI. Others may choose to undertake these strategies in order to protect their own labour markets from a race to the bottom in labour standards.