Radhika Gupta
PART I
I. Introduction
Free Trade Agreements (FTAs) have been subject to widespread criticism on the ground that they prioritise business interests to such an extent that they often have adverse social consequences, such as job losses in traditional manufacturing sectors due to free imports, heightened poverty in developing countries, and serious environmental concerns. Civil society groups and trade unions across the world have repeatedly protested against the social impacts of unimpeded liberalisation, leading to calls for rejecting further liberalisation altogether. However, given their proliferation and continued expansion, it is safe to say that free trade is here to stay. In this context, the growing trend of including non-trade interests (NTIs), such as labour and environmental provisions, within FTAs, albeit with questionable effectiveness, appears to be the only viable compromise to mitigate the costs of international economic integration.
Among these NTIs, labour provisions are the most prominent, introduced initially by the United States and later strongly promoted by the European Union. A significant section of the Global South has, for understandable reasons, consistently opposed the inclusion of labour standards in trade agreements, viewing them as another form of “imperialist intervention” in post-colonial societies.
However, several other factors also explain this development. Lisa Lechner, for instance, argues that social and environmental clauses in preferential trade agreements (PTAs) have often resulted from effective lobbying by import-competing firms and trade unions, particularly when low social standards in a partner country intensify import competition. Raess shows empirically that the presence of left-leaning governments and strong trade unions has directly influenced the inclusion of labour provisions in PTAs. Laura C. Macdonald, through detailed case studies, highlights the role of trade unions and gradual political change in facilitating norm diffusion and incorporating such provisions into agreements like NAFTA and the Chile-Canada FTA.
Regardless of their origins, existing scholarship recognises that these provisions can potentially lead to meaningful change. India, which has historically opposed labour clauses in trade agreements, has now begun incorporating them into its recent FTAs with the United Kingdom and the EFTA, a development that can be seen as an instance of the norm diffusion that Laura Macdonald highlighted. This paper examines the nature of these labour provisions and considers whether they indicate a substantive shift by analysing their likely effectiveness in light of India’s domestic policies on the issues they address. It aims to contribute to the existing literature by offering a purely labour-focused analysis of these agreements, rather than studying the trade effects of these provisions.
II. Labour Provisions in India’s Trade Agreements
Before analysing the nature of labour provisions in India’s recently concluded FTAs, it is useful to understand what constitutes a labour provision in such agreements. According to the International Labour Organisation, labour provisions broadly refer to principles or rules that address labour relations, working conditions, terms of employment, or other related matters. They may also include frameworks that promote compliance with these standards through cooperation, dialogue, or monitoring, along with mechanisms to ensure that such standards, whether set in national law or within the agreement itself, are followed.
These provisions primarily aim to prevent a “race to the bottom,” where countries, particularly developing ones, lower labour standards significantly to attract investment, often resulting in serious violations of internationally recognised labour rights. India, like much of the Global South, historically opposed the inclusion of labour provisions in trade agreements because of concerns about protectionism, and as a result, excluded them from its earlier FTAs. This approach has started to change. The two most recent trade agreements, one with the EFTA and one with the United Kingdom, both contain dedicated chapters on labour.
It is important to note that labour provisions differ significantly in form and content. A key distinction, for the purposes of this paper, lies between “promotional” and “conditional” labour provisions.” These differ in terms of the application of the norms contained in the agreement. Conditional provisions allow for economic sanctions in cases of violations, while promotional provisions rely on cooperation and dialogue without the possibility of sanctions or incentives. US trade agreements tend to follow the conditional model, focusing on enforceable compliance, whereas EU agreements rely more on dialogue and cooperative approaches. Even South-South agreements have started incorporating these promotional provisions.
Both the Trade and Sustainable Development (TSD) chapter of the India–EFTA agreement, and the India–UK Free Trade Agreement, fall within this promotional category. Their emphasis on consultation, cooperation, and dialogue to address labour issues is clear in Article 11.13 of the India–EFTA agreement, and Article 20.9 of the India–UK agreement. Furthermore, Article 20.16 of the UK agreement, and Article 11.11 of the EFTA agreement explicitly exclude the application of dispute settlement provisions to matters arising under the labour chapter. Although the wording and scope of obligations vary between the two agreements, provisions on the abolition of forced and child labour [India- UK CETA, 2025, art.20.3; India- EFTA TEPA, art. 11.6(b)], the elimination of discrimination [India- UK CETA, 2025, art.20.6; India- EFTA TEPA, 2024, art. 11.6(d)], and references to ILO declarations such as the “ILO Declaration on Fundamental Principles and Rights at Work” and the “ILO Declaration on Social Justice for a Fair Globalization” [India- UK CETA, 2025, art.20.2. India- EFTA TEPA, 2024, art. 11.1 (1)] are common to both.
The classification offered by Ivana Damjanovic and others, which groups labour provisions in EU trade agreements into non-derogation obligations, international obligations, and aspirational provisions, is also relevant in the Indian context. Both of India’s recent agreements reflect these categories. Non-derogation clauses, for instance, require that “the Parties shall not waive or otherwise derogate from their respective labour laws in a manner that weakens or reduces the protection afforded by those laws in order to encourage trade or investment” [India- UK CETA, 2025, art.20.3(7)]. Similarly, they commit to not failing, “through a sustained or recurring course of action or inaction”, to effectively enforce their labour and environmental laws in ways that affect trade between the parties [India- EFTA TEPA, 2024, art. 11.2(2)]. International obligations are reiterated through the recognition of ILO declarations.
Moreover, the “obligations” included in these agreements can largely be described as aspirational. This is not only because there is no mechanism to ensure compliance but also because of the language used in drafting them, though the degree of aspirational language varies. Both agreements place strong emphasis on the parties’ “right to determine their own levels of protection”, can be seen as a furtherance of this aspirational nature. The ILO notes that the choice of verbs used in these provisions plays a crucial role in shaping how “soft” or “hard” these obligations are. The frequent use of abstract verbs such as “recognise”, “commit”, and “affirm” in the India–EFTA agreement suggests that these provisions function more as political statements and expressions of intent. By contrast, the relatively higher use of “shall” in the India–UK agreement indicates slightly “harder” obligations, though they remain aspirational. The India–UK agreement also articulates these commitments in a more detailed manner than the EFTA agreement.
However, this should not lead to the conclusion that these chapters are ineffective in strengthening labour protections. As the following sections will show, it is broader contextual factors, rather than strict enforceability alone, that should shape how these provisions add value and advance labour rights.
III. Do Labour Provisions in Trade Agreements Work?
Many trade unions and civil society groups have consistently pushed for the inclusion of labour provisions in trade agreements. The primary aim behind this demand is to make the process of globalised and liberalised trade more “socially sustainable.” With this objective in mind, an important question arises about how such trade arrangements can improve labour protection or help prevent a “global race to the bottom.”
Several studies have attempted to assess the impact of these provisions on actual labour standards. Most conclude that trade agreements have had little or no significant effect in improving them. A 2019 study by Martinez-Zarzoso et al. reflects a similar trend, though it notes that minimum wage indicators may support better labour conditions. The study still emphasises that the agreements themselves cannot be said to directly promote improved labour standards. More recent research, however, shows that the inclusion of such provisions at least reduces legal violations of labour rights. One of the most important findings of this study is that domestic governance and regulatory quality play a major role in determining outcomes, and that the effectiveness of labour market policies depends heavily on institutional factors.
This idea has been supported by scholars and it has been asserted that the actions taken by states in their domestic legal framework needs to match the rhetoric in these international agreements. Myant, for instance, points out that the US has ratified only fourteen ILO conventions, including just two of its core conventions, and how it includes ILO Conventions on freedom of association and collective bargaining, in its agreements without actually ratifying them. This disconnect between rhetoric and practice undermines its moral authority and helps explain why labour provisions often fail to produce meaningful results. Continued labour exploitation in favour of business interests can be traced back to this gap.
For India, the example of Chile is particularly instructive. With political change and active government advocacy, Chile became a strong supporter of labour provisions and concluded trade agreements with countries like China and Singapore that included them. The Chilean experience shows that labour provisions in trade agreements can act as an additional factor encouraging governments to adopt ILO frameworks when they aim to improve working conditions. These provisions, however, are most effective when they reinforce an existing domestic trend toward strengthening labour protections. Aligning domestic policies, at least at the level of legislation, with commitments made in trade agreements is therefore crucial. A striking example of this dynamic is Mexico, where pressure from trade agreements led to constitutional reforms to secure freedom of association and ensure impartiality in labour boards.
Although some have argued that stronger enforcement and the threat of sanctions could improve effectiveness, that approach is not ideal for India for several reasons, which will be discussed in the next section. The central claim is that labour provisions in India’s FTAs will have real value only when they are accompanied by domestic reforms that align with the obligations contained in these agreements. As discussed in Part II, this alignment has not yet been achieved.
IV. Conclusion
Part I has traced India’s shift from its historical opposition to the inclusion of labour clauses in trade agreements to the incorporation of promotional labour provisions in its recent agreements with the United Kingdom and the EFTA. It has shown that these provisions prioritise dialogue and cooperation over binding enforcement mechanisms, and that their effectiveness depends less on their formal legal design than on the degree of alignment between international commitments and domestic governance frameworks.
Part II builds on this analysis by examining India’s continued resistance to binding, sanction-based labour obligations and by assessing the gap between its international commitments and domestic legal practice, particularly with respect to the non-ratification of core ILO Conventions on freedom of association and collective bargaining and the limitations of recent labour law reforms.
PART II
I. Introduction
From the 1996 WTO Ministerial Conference to the recent signing of India-UK CETA, India-EFTA TEPA and non-participation in the trade pillar of the IPEF, Part I[MOU1] unearthed the shift in India’s historical opposition to trade-labour linkage. However, this shift remains tempered by careful negotiation, as these agreements do not impose binding obligations and are instead promotional in nature[MOU2] . Developing countries such as India have consistently feared that such clauses impinge on their sovereignty and reflect ‘political imperialism’. In fact, Professor Bhagwati argues that such linkage is fundamentally protectionist, motivated less by a genuine desire of developed countries to improve labour conditions abroad and more by an intention to shield their workers from foreign competition and raise rivals’ costs.
Against this backdrop, scholars recommend against imposition of sanctions and instead suggest the use of soft, promotional language rather than binding or conditional terms. They also discourage the application of dispute settlement and enforcement mechanisms, as even that can create binding obligations. This is evident from the EU-Korea FTA, where even in the absence of sanctions, the expert panel under the dispute settlement process was able to press South Korea to adjust its domestic laws. Accordingly, while India’s reluctance to commit to such binding obligations under trade agreements is understandable, it is essential to ruminate over its position and future goals with respect to internationally recognised standards.
II. Reflections on India’s position on ILO Standards in light of the Recent Trade Agreements
A. Labour Obligations under India’s Recent Trade Agreements
The majority of provisions in both the agreements highlight India’s existing obligations. For instance, they reaffirm India’s commitment to effectively implement in its laws and regulations, and practices thereunder, in its territory, the fundamental ILO Conventions that it has ratified [India- UK CETA, 2025, art.20.3(6); India- EFTA TEPA, 2024, art. 11.2(2)]. Similarly, they underscore obligations to eliminate forced labour, [India- UK CETA, 2025, art.20.5; India- EFTA TEPA, 2024, art. 11.6(1)(b)] child labour, [India- EFTA TEPA, 2024, art. 11.6(1)(c); India- UK CETA, 2025, art.20.5] and discrimination in respect of employment and occupation [India- UK CETA, 2025, art.20.6; India- EFTA TEPA, 2024, art. 11.6(1)(d)].
The EFTA TEPA further reiterates the commitment of all ILO members to respect, promote and realise, in good faith, the fundamental principles and rights at work embodied in the fundamental ILO Conventions. [India- EFTA TEPA, 2024, art. 11.6(1)] This extends even to the three fundamental Conventions not yet ratified by India, namely, ILO Convention No. 87 on freedom of association, ILO Convention No. 98 on right to collective bargaining and ILO Convention No. 155 on safe and healthy working environment. According to the ILO Declaration on Fundamental Principles and Rights at Work, even members that have not ratified these Conventions are expected to give effect to the underlying principles. Accordingly, this provision merely reiterates a minimum international commitment, especially since EFTA TEPA neither imposes any sanctions nor establishes any panel to monitor compliance. Instead, it only provides for ‘Consultations’ to arrive at a mutually agreed solution [India- EFTA TEPA, 2024, art. 11.13].
B. India’s historical resistance to ratifying ILO Conventions 87 and 98
The reference to the three unratified conventions in these trade agreements is interesting given the country’s long-standing reservations regarding their ratification. Successive governments have advanced a range of reasons for withholding ratification. For instance, in 1954, during discussions on Convention No. 98 at the ILO, India argued that its ratification without ratification of Convention No. 87 may not be proper. It further expressed concern regarding the scope of Article 6 of Convention No. 98, which excludes ‘public servants’ engaged in the administration of the State from the scope of the Convention. Since India has historically restricted freedom of association and collective bargaining rights for government employees, it feared that the narrow exception under Article 6 would not sufficiently cover public employees working in commercial or industrial undertakings owned by the State. By 1959, India further clarified its stance by stating that while government servants were free to organise themselves, they were required to comply with conditions for recognition. Accordingly, it feared the implication of ratification on Trade Unions Act, 1926 and the Central Civil Services Rules, 1955, which prescribed such conditions. In fact, it tried to attach pre-conditions for ratification such as explicitly excluding civil servants other than industrial employees in government undertakings, along with the armed forces, from the scope of the Convention and affirming that Convention No. 87 did not extend to the right to strike. Kamala Sankaran notes that the government got the consent of trade unions and employers to agree with its views. Worker delegates, in particular, believed that implementation was more important than immediate ratification and hoped that the government will make constant endeavour towards achieving the labour standards laid down in the Conventions with a view to their eventual ratification.
Further, while non-government employees do not enjoy a fundamental right to strike, government employees are expressly prohibited from even going on strike. In 2003, the SC in Rangarajan v. Government of Tamil Nadu, held that government employees have no legal, statutory, moral, or equitable right to strike, emphasising that in a democratic welfare state, employees are expected to seek redress for their grievances through established procedures. To reinforce this prohibition, the government has frequently invoked the Essential Services Maintenance Act and its state counterparts to ban strikes, with ‘essential services’ defined more broadly than the ‘public utility services’ under the Industrial Disputes Act.
In fact, recently in 2021, the government also enacted the Essential Defence Services Act for a year to handle the proposed indefinite strike of the defence civilian employees of ordnance factories against corporatisation. The Centre of Indian Trade Unions and the All India Trade Union Congress complained to the Committee on Freedom of Association (‘CFA’) of the ILO, alleging a violation of the workers’ right to freedom of association as the Act prohibited all types of industrial actions in defence production organisations and provided for dismissal and imposition of excessive penalties in case of infringement. The CFA observed that the definition was excessively broad and may encompass the production of goods and defence equipment not immediately needed for the defence of the country but intended, for example, for export. It further noted even where an important sector of the country is brought to a standstill, restrictions should be limited to ensuring a minimum level of service. Additionally, it stressed that the authority to declare a strike illegal should vest in an impartial body, such as a judicial authority, rather than the government itself. These views have been repeatedly stated by various ILO supervisory bodies in the context of India. This disparity between the domestic legal framework and the international labour standards embodied in Conventions 87 and 98 underscores the government’s reluctance to ratify them. As Kamara Sankaran observes, in the absence of a system of regular review of Indian law along the lines suggested by ILO bodies, there can be no systematic narrowing of the gap between Indian law and ILO standards.
C. The Persistent Gap between India’s labour law framework and ILO Standards
The authors therefore argue that while India’s evolving stance is appreciated and its hesitation to channel labour law reforms through enforcement mechanisms under trade agreements is understandable, its reluctance to ratify these fundamental Conventions is not grounded in wholly legitimate reasons. India should continually strive to align its laws and practices with internationally recognised fair and equitable standards. The framing of the new Labour Codes presented such an opportunity, but it was ultimately missed.
For instance, while India commits to respect and promote a safe and healthy environment under the EFTA TEPA, its latest Code on Occupational Safety and Health and Working Conditions, 2020 leaves out several sectors from its ambit and even dilutes the existing safeguards such as leaving the constitution of Safety Committees to government’s discretion [The Factories Act, 1948, §41G; Occupational Safety and Health and Working Conditions, 2020, §22]. Similarly, the Industrial Relations Code, 2020 moves in the opposite direction by substantially weakening the right to strike. Under the earlier legal regime, a 14-day prior notice was required only in public utility services, whereas the new Code makes this mandatory for all establishments [Industrial Disputes Act, 1947, §§22, 23; Industrial Relations Code, 2020, §62]. It also expands the periods during which strikes are prohibited by extending conciliation and tribunal-related bans to all sectors, not just public utilities [Industrial Disputes Act, 1947, §§22, 23; Industrial Relations Code, 2020, §62]. In addition, the Code introduces harsher penalties, including heavy fines and imprisonment, for workers who participate in or support so-called ‘illegal’ strikes and even treats mass casual leave as a strike [Industrial Disputes Act, 1947, §§ 2(q), 26; Industrial Relations Code, 2020, §§2(zk), 86(13)]. These changes further distance India’s labour regime from the international standards it purports to hold and severely restrict the room for collective action.
III. The Way Forward
Eduardo Faleiro once quoted with approval Justice Krishna Iyer’s observation on the need for labour legislation to keep pace “in a world setting where ILO norms are advancing, and India needs updating”. India’s reluctance to adopt conditional, sanction-based labour provisions or to immediately ratify many core ILO conventions stems from understandable concerns. However, as India’s approach to labour clauses in trade agreements has shifted, with promotional provisions now included in its FTAs, it becomes essential to complement these commitments with efforts at the domestic level. The analysis above supports the view that domestic policies and enforcement must align with the international obligations India has undertaken through these agreements. The inclusion of TSD and labour provisions, often perceived as primarily serving business interests, has in fact been driven by legitimate social concerns about the consequences of unregulated free trade. It is therefore necessary for states signing such agreements to actively work towards ensuring that these provisions play a meaningful role in improving labour standards and reducing rights violations. As the discussion above makes clear, their effectiveness depends on authorities taking a proactive approach, strengthening domestic law and ensuring that these commitments are translated from mere words on paper into tangible improvements in the everyday lives of workers.
Radhika Gupta is a third-year undergraduate student pursuing a B.A. LL.B. (Hons.) degree at National University of Juridical Sciences, Kolkata, India.
NUALS Law Journal 