The new wave of free trade agreements, written by and for corporate interests, provides little or no benefits for workers, communities, or the environment. Provisions being laid in these new trade deals turn most developing countries into sources of cheap and unprotected labour for transnational companies. Labour rights are being redefined in a way that allows transnational companies to impose brutal working conditions. Once these agreements are signed and ratified, the only legal protection that will fully stand is the abolition of slavery. All other labour rights will be disposable at the companies’ discretion under a wide range of circumstances.
Transnational supply chains have been an expanding economic actor since transnational corporations began outsourcing manufacturing to places where extremely low wages, low or non-existing labour safety standards and even slave labour prevailed or were tolerated. While they have existed since colonial times, supply chains have emerged forcefully in their modern fashion as a consequence of free trade agreements. According to different sources, transnational supply chains currently account for 30 to 60 per cent of all global trade, and depend on the work of over 100 million workers globally. 
Transnational supply chains are highly and critically dependent on trade rules. Therefore, they have become central in the latest trade agreements and negotiations. Some of the contents of the Trans-Pacific Partnership (TPP) are quite telling on what can be expected if TPP and other similar trade agreements are implemented: while transnational supply chains will expand, labour conditions will continue worsening. Tax cuts for corporations, increased corporate concentration and vertical integration, and a new era of corporate privileges will also be part of the menu.
This report focuses on the foreseeable impacts of the TPP provisions on labour conditions.
What is a transnational supply chain?
Transnational supply chains are networks of locally-based enterprises that supply the demands of transnational corporations, mostly for raw materials and parts of manufactured goods. To a lesser degree, they can also provide services. Call centres are perhaps the best-known example, but other services, such as postal services, retail sales, post-market services, and transport management, have become increasingly important. Transnational corporations set the terms of exchange: quality, prices, quantities and deadlines, leaving the supplying enterprises to determine working conditions, safety and environmental management.
One defining aspect of transnational supply chains is the breaking down of the production and marketing processes in as many and as small parts as necessary to maximise profits. Each component is outsourced to different enterprises based offshore, and bought back to obtain and market the final product. In order to maximise their profits, companies will outsource to countries where labour is the cheapest, taxes are the lowest, regulations are the most lax, and the possibilities of litigation or complaints against them are minimal. One single transnational corporation may have hundreds or thousands of suppliers.
The TPP agreement defines transnational supply chains as follows:
“A cross-border network of enterprises operating together as an integrated system to design, develop, produce, market, distribute, transport, and deliver products and services to customers.”
Trans-Pacific Partnership Agreement, Chapter 22, Competition and Business Facilitation, Article 22.1
and turns them into a central component of the chapter on competition and business facilitation policies. Signatory countries become committed to promote them. But the fact that transnational supply chains are defined in this chapter is a paradox: highly concentrated as they are, global chains hinder fair competition.
Labour, the most abused
Cheap, exploited and unprotected labour is the key to the success of transnational supply chains, and the main reason for outsourcing it. As stated in numerous scholarly papers, information technology made them possible, wage gaps made them profitable.  But outsourcing provides other important advantages to transnational companies: they become absentee or ghost employers, invisible and unreachable for workers, and thereof get rid of any legal obligation as employers. In case of accidents or human rights abuses, any litigation against them is very difficult or plainly impossible. They do not pay any kind of insurance or severance. They are minimally affected by workers’ strikes – the worse case scenario for transnational corporations is that shippings are simply delayed. Any additional labour cost arising from a strike – such as hiring new workers to replace those on strike – is covered by the supplier, and not by the transnational company.
Absenteeism is so important for them, that transnational corporations have managed to introduce new language in the latest trade agreements that allows them not to be physically present in the countries where they operate. So far, these provisions have applied to trade in services alone. But it is only a matter of time before they apply to all forms of transnational trade. 
Another actor in this formula is the supplier, the local individual or enterprise that acts as legal employer. Suppliers are not stable, but disposable. Product or service orders are auctioned among them, as described in the box below. Demand is usually for the lowest bids. Discarding one supplier in favour of another more profitable one, is a central and recurring practice which instates permanent competition among suppliers and even among supplying countries to provide the most advantageous deals for transnational corporations. For example, many of Mexico’s maquilas moved to China and Bangladesh when salaries in Mexico could not be lowered any further.
For suppliers, labour costs are critical when securing a deal. Hence, it is not surprising that transnational supply chains often rely on infamous labour conditions and salaries in order to cheapen labour costs as much as possible. Nor that they use trafficked children and slave workers provided by organised crime networks. Other human rights abuses, like unpaid extra working hours, unattainable mandatory daily or hourly output quotas, forbidding the use of toilets, locking in workers, physical punishment, sexual abuse, anti-union measures and threats, are routine. Workers’ exercise of their right to strike seems so menacing to transnational supply chains, that so-called labour disquiet is now mentioned among the biggest threats to transnational supply chains, along with terrorism and war. 
What is true for urban workers is usually worse for rural workers. Rural labor is often more scattered and less organised than workers in cities. Paramilitary forces and other repressive instances act more freely in the countryside. Illiteracy rates are often higher in rural areas, reducing even more the workers’ possibilities to use legal tools to defend themselves. Politicians and policy-makers are usually uninterested in protecting rural areas or small farmers’ rights. In addition, the general population is less informed about abuses in the countryside than in the cities, making solidarity and political awareness less common. As a result, rural areas are fertile ground for slavery, and even more so in large-scale plantations. Cases of slavery reported in oil palm plantations in Southeast Asia, sugar cane in Brazil or horticultural produce grown in greenhouses in Mexico confirm this.
Transnational supply chains ensure human trafficking stays profitable
The labour record of global supply chains is so bad that a few countries have moved to pass legislation requiring that products that reach their territories do not involve slave labour. The United Kingdom’s Modern Slavery Act is one such example. Large businesses are legally required to release an annual slavery and human trafficking statement to the British government. Around 50 other countries and the International Labour Organization (ILO) have developed voluntary protocols and standards.  These attempted protections are far from effective, and companies have shown little interest in actually complying. 
“The estimated illicit profit generated by trafficked labourers is placed at approximately US$ 32 billion annually, while the cost of coercion to workers in the form of lost wages, deductions, excessive fees and/ or overcharges is estimated at almost US$ 21 billion. Some argue that this makes human trafficking the third most profitable global business for organised crime, following illicit drugs and the arms trade.”
Philip Hunter and Quinn Kepes, “Human trafficking & global supply chains: A background paper”, Office of the United Nations High Commissioner for Human Rights (OHCHR), November 2012
“One important feature of a Global Value Chains world is the search for a “just right fit”: doing the right slice of the chain in the correct place. Because transportation and telecommunications costs are comparatively low, companies can source slices anywhere in the world. One result is that labour costs, especially for manufacturing chains, continue to fall.”
Deborah Kay Elms, “Asia-Pacific megaregional free trade agreements: fostering global supply chains?”, Asian Trade Center, September 2014
“Traidcraft has collated examples of allegations against UK-linked companies covering forced evictions, unacceptable labour standards, pollution which damages both livelihoods and health, and even beatings and deaths. The Business and Human Rights Resource Centre has documented allegations against 127 UK companies, the majority relating to harm caused in developing countries. But despite these allegations, no UK company has ever been prosecuted in the UK for an offence related to serious harm abroad.”
“Above the Law? Time to hold irresponsible companies to account” Traidcraft, November 2015
The false promise of more jobs
Transnational supply chains are promoted through the promise of more available jobs. Concrete experiences tell a different story. According to ILO statistics, unemployment is growing faster in “emerging” and “developing” countries (the suppliers of global supply chains) than in “developed” countries. Statistics also show that most new employments in non-developed countries are generated within the informal economy.
Other trends, such as trade in automation technology, indicate that a decreasing number of jobs is a likely scenario. Ten out of the 20 top markets for US automation technology are countries in the supplying end of global chains. China is one of the fastest-growing markets for automated manufacturing.  Industry reports indicate that around 60 per cent of all jobs can be automated in at least 30 per cent of their activities with current technology.  And no mistakes should be made: the core purpose of automation is reducing labour costs by reducing the number of workers, lowering their wages and/ or increasing working hours without increasing wages.
More abuse is being legalised
Since abuses and violence against workers in transnational supply chains have been widespread and well documented, one could expect a serious global effort to control, ban and punish these practices.
But what is being imposed through the latest trade agreements is exactly the opposite. Trade agreements and negotiations are being used to institutionalise abuse and to facilitate it in countries where some labour protections still stand.
The TPP agreement is no exception. It includes the following definition as part of its chapter on labour:
“Labour laws means statutes and regulations, or provisions of statutes and regulations, of a Party that are directly related to the following internationally recognised labour rights:
- 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 child labour, a prohibition on the worst forms of child labour and other labour protections for children and minors;
- the elimination of discrimination in respect of employment and occupation; and
- acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.”
Trans-Pacific Partnership Agreement, Chapter 19, Labour. Definitions
Although these provisions are repeatedly presented as a breakthrough for trade agreements, since the TPP is the only text that includes explicit and mandatory labour rights, it is in fact a serious and dangerous slide back. ,
First, what is implicit in this text is that any other existing labour legislation will not be considered as such under this agreement, and hence fundamental principles and rights can be questioned, deleted, scrapped and given away in exchange for promises of foreign investment. Among these, the right to strike, health care, paid holidays, retirement, paid sick or maternity leave, and protection against harassment, just to mention some. And if any country still upholds them, it can be sued by transnational corporations through the infamous Investor-State Dispute Settlement system (ISDS).
Second, two of the four promises made in the chapter relate to the elimination of slavery and forced labour, something that the vast majority of countries abolished at least 50 years ago. The rest of the rights mentioned in this “breakthrough” are just part of the ILO Declaration on Fundamental Principles and Rights at Work, signed almost 20 years ago as the very minimum that all countries should respect, and can be waived or derogated under certain circumstances.
Universal Declaration of Human Rights? The Universe might not include workers.
Of course, the chapter on labour is not the only one in the TPP agreement that threatens basic rights and protections. The chapter on Intellectual Property Rights (IPR) calls for the abolition of fundamental rights, such as the right to be considered innocent until proven guilty. Other chapters facilitate hazardous waste trade between member countries, making the dumping of such substances legal. Several chapters force countries to consult with transnational corporations the drafting and passing of bills, and so on.
Some of these threats are branded by the involved governments as ungrounded fears,  arguing that either national laws or other international agreements will prevail, with or without the new trade agreements. However, TPP, for example, includes the following convoluted article:
“If a Party considers that a provision of this Agreement is inconsistent with a provision of another agreement to which it and at least one other Party are party, on request, the relevant Parties to the other agreement shall consult with a view to reaching a mutually satisfactory solution. This paragraph is without prejudice to a Party’s rights and obligations under Chapter 28 (Dispute Settlement).”
Trans-Pacific Partnership Agreement, Chapter 1, Relation to Other Agreements, Article 1.2.2
In other words, if any international agreement becomes a roadblock for transnational trade or investment, it can be set aside, and countries that refuse to do so can be sued through the dispute-settlement system.
Human rights conventions may be rendered inapplicable. In this scenario, the advancement of workers’ fundamental rights will depend much more on the power dynamics behind the ISDS system, which clearly favours investors, rather than any judgement delivered by international human rights courts.
The legal framework agreed in TPP will not only institutionalise abuse of workers, it will make wider abuses possible in countries that still maintain certain legal protections. An obvious goal is to expand sweatshops and out-grower schemes to countries where the work force is neither sufficiently cheap nor sufficiently unprotected. This does not mean that more jobs will be available; it means that competition amongst countries to provide cheap and unprotected labour will increase, and one of the most powerful bargaining chips countries will use is to give away labour rights that are not included in the narrow and regressive definition provided by TPP. The final result will be lower wages and less legal protection for workers everywhere.
Poor or inhumane working conditions are just one more reason to reject the new wave of trade agreements. A lot is being said about the United States’ withdrawing from the agreements they have signed or negotiated, as if policies on trade would improve. It is quite the opposite: the Trump government is after even more abusive regulations, and other industrialised countries are using Trump’s rhetoric to push for the same. Only wide and active information sharing and mobilisation campaigns will stop this menace. Our rights, our freedom, our dignity and our future are at stake.
1. International Trade Union Confederation (ITUC), “Frontlines report 2016 - Scandal: inside the global supply chain of 50 top companies”, 2016, https://www.ituc-csi.org/IMG/pdf/pdffrontlines_scandal_en-2.pdf
2. International Trade Union Confederation (ITUC), “Frontlines report 2016 - Scandal: inside the global supply chain of 50 top companies”, 2016, op.cit.
3. Annie Kelly, “Nestlé admits slavery in Thailand while fighting child labour lawsuit in Ivory Coast”, The Guardian, 1 February 2016, https://www.theguardian.com/sustainable-business/2016/feb/01/nestle-slavery-thailand-fighting-child-labour-lawsuit-ivory-coast
4. Amnesty International, “Palm Oil: Global brands profiting from child and forced labour”, 30 November 2016, https://www.amnesty.org/en/latest/news/2016/11/palm-oil-global-brands-profiting-from-child-and-forced-labour/
5. “Brazilian Coca-Cola Manufacturer Accused of Slave Labor”, TeleSur, 26 August 2016, https://www.telesurtv.net/english/news/ Brazilian-Coca-Cola-Manufacturer-Accused-of-Slave-Labor-20160826-0007.html
6. Richard Marosi, “Desperate workers on a Mexican mega-farm: ‘They treated us like slaves’”, Los Angeles Times, 10 December 2014, http://graphics.latimes.com/product-of-mexico-labor
7. Roel Nieuwenkamp, “Tackling modern slavery in global supply chains”, OECD Insights, 11 March 2016, http://oecdinsights.org/2016/03/11/tackling-modern-slavery-in-global-supply-chains
9. See: Article 10.6 of the TPP agreement, available at https:// ustr.gov/sites/default/files/TPP-Final-Text-Cross-Border-Trade-in-Services.pdf and Article 20.11 of RCEP, available at http://www.bilaterals.org/?rcep-draft-chapter-on-trade-in
10. “The British Standards Institute (BSI) has identified the most significant challenges the global supply chain network is likely to face this year in a recent report. Seven key concerns have been highlighted, which could pose the greatest disruption for companies resulting in financial losses and blights on reputations. These threats include global health issues like the Zika virus, theft, terrorism and conflicts, and labour disquiet.” “Seven biggest threats to global supply chain”, MDA, 22 April 2016, http://www.mdams.com/biggest-threats-to-global-supply-chain/
11. Douglas Bulloch, “Textile wars: ‘Will made in Italy’ replace ‘Made in China’?, Forbes, 16 February 2017, https://www.forbes.com/sites/douglasbulloch/2017/02/16/textile-wars-will-made-in-italy-replace-made-in-china/#5bd925c975b5; Duncan Kennedy, “Coming into fashion: a Chinese mark on Italian clothes”, BBC News, Italy, October, 2010.
12. Roberto Saviano, Gomorra, Oscar Mondadori, Milano, 2006
13. Duncan Kennedy, “Golpe a las falsificaciones en Italia, BBC News, Rome, 13 February 2010
14. Michel Peraldi, “La central de autobuses de Alicante es el centro del mundo. Guerras en las fronteras y paz en el mercado a lo largo de las rutas norteafricanas hacia Europa, in Víctor Zúñiga, compilador, Identidad y diversidad: dilemas de la diversidad cultural, Fórum Universal de las culturas, Monterrey, Nuevo León, México, 2007. pp. 87-89.
15. International Labour Organisation (ILO), “ILO standards on forced labour: the new protocol and recommendation at a glance”, 2016, http://www.ilo.org/global/topics/forced-labour/publications/WCMS_508317/lang--en/index.htm
16. See: Doireann Clobby, “UK Modern Slavery Act: the first 100 fail to make a statement”, LexisNexis, March 2016, http://bis.lexisnexis.co.uk/blog/posts/human-trafficking-awareness/uk-modern-slavery-act-the-first-100-fail-to-make-a-statement, and Ryan J. Turner, “Transnational supply chain regulation: Extraterritorial regulation as corporate law’s new frontier”, MelbJlIntLaw 188, Melbourne Journal of International Law, Melbourne, 2016, http://www.austlii.edu.au/au/journals/MelbJIL/2016/8.html
17. “2016 Industrial manufacturing trends”, Strategy &, PWC, 2016, https://www.strategyand.pwc.com/media/file/2016-Industrial-Manufacturing-Trends.pdf
18. “Automation Market”, Whitepaper, HW&Co., 2017, http://www.harriswilliams.com/system/files/white-paper/intelligent_automation_whitepaper_vfinal_4.12.2017.pdf
19. The US Trade representative, for example, has stated that “TPP includes the strongest labor provisions of any trade agreement in history.” United States Ministry of Trade, “Factsheet: Protecting workers”, 2015, https://ustr.gov/sites/default/files/TPP-Protecting-Workers-Fact-Sheet.pdf
21. International Trade Union Confederation (ITUC), “Trans-Pacific Partnership labour chapter scorecard: fundamental issues remain unaddressed”, 2015, https://www.ituc-csi.org/IMG/pdf/trans_pacific.pdf
22. The Trans-Pacific Partnership agreement model labour & dispute resolution chapter, available at: http://www.ituc-csi.org/IMG/pdf/full_ituc_transpacific_partnership_labor_chapter.pdf
24. Safdar Hussain et al., “Integration and effective supply chain management: A review of agriculture in Pakistan and China”, Journal of Economics and Sustainable Development, Vol.6, No.21, 2015, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2796787
26. Pradeepa Jayaratne, Lee Styger, Nelson Perera. “Sustainable supply chain management: using the Sri Lankan tea industry as a pilot study”, 25th Annual Australia New Zealand Academy of Management (ANZAM) Conference, pg. 1-22, http://ro.uow.edu.au/gsbpapers/179/
27. Normansyah Syahruddin, “Sustainable supply chain management: a case study on cocoa industry in Indonesia”, Università degli studi di Bergamo, Bergamo, 2012, https://aisberg.unibg.it/handle/10446/27514?mode=simple.1875#.WdYo5ROCzOR
28. Stephen W. Maina, “Relevance of sustainable agricultural network standards and rainforest alliance certification in promoting governance and achieving national policy recommendations in Kenya’s tea sector”, The international journal of science & technoledge, Vol. 3(4) 2016, pg. 80-87, http://www.theijst.com/wp-content/uploads/2016/05/32.-ST1604-127.pdf
29. Dorcas Nuertey, “Sustainable supply chain management for Cocoa in Ghana”, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana, 2015 http://ir.knust.edu.gh/bitstream/123456789/7505/1/Dorcas%20Nuertey.pdf
30. Jack G.A.J. van der Vorst & Joost Snels, “Developments and needs for sustainable agro-logistics in developing countries”, Wageningen University and Research Centre, World Bank Position Note, January 2014, http://documents.worldbank.org/curated/en/518411468060560130/text/858250WP0Posit00Box382162B00PUBLIC0.txt
31. Olivier de Schutter, “Addressing concentration in food supply chains. The role of competition law in tackling the abuse of buyer power”, Briefing note by the Special Rapporteur on the right to food, December 2010, http://www.srfood.org/en/briefing-note-addressing-concentration-in-food-supply-chains
32. Jack G.A.J. van der Vorst & Joost Snels, “Developments and needs for sustainable agro-logistics in developing countries”, Wageningen University and Research Centre, World Bank Position Note, January 2014, op.cit.
33. Olivier de Schutter, “Addressing concentration in food supply chains. The role of competition law in tackling the abuse of buyer power”, Briefing note by the Special Rapporteur on the right to food, December 2010, op.cit.
34. Mark Vicol, “Corporatisation of rural spaces: Contract farming as local scale land grabs in Maharashtra, India”, Land grabbing, conflict and agrarian-environmental transformations: perspectives from East and Southeast Asia, Netherlands, BRICS Initiatives for Critical Agrarian Studies (BICAS), 2015, https://www.iss.nl/fileadmin/ASSETS/iss/Research_and_projects/Research_networks/LDPI/CMCP_38-Vicol.pdf
35. See: Réseau des acteurs du Développement Durable (RADD), Struggle to Economise Future Environment (SEFE), YETHIO, Synergie Nationale des Paysans et Riverains du Cameroun (Synaparcam), GRAIN and the World Rainforest Movement (WRM), “The seed of despair: communities lose their land and water sources due to OLAM’s agribusiness in Gabon”, 10 July 2017, https://www.grain.org/e/5755
36. Shivani Agarwal, “Issues in supply chain planning of fruits and vegetables in agri-food supply chain: A review of certain aspects”, IMS Business School, Kolkata, India, 2017, http://www.managejournal.com/up/conference/20170210154426.pdf
37. Olivier de Schutter, “Addressing concentration in food supply chains. The role of competition law in tackling the abuse of buyer power”, Briefing note by the Special Rapporteur on the right to food, December 2010, op.cit.