Proposed international trade rule: No tariffs on child labor free products

The United Nations has made the elimination of all of forms child labor by 2025 one of its Sustainable Development Goals (SDGs) (Target 8.7). However given the current situation that 1 in 10 of the world’s children provide child labor (ILO, 2017), it is extremely difficult to achieve this target.

As one way to dramatically decrease child labor, we can redesign economic motivators by creating a world in which companies see costs rise or sales fall the more they use child labor. Therefore, trade agreements can be one of the primary tools to help realize such a world.

Deloitte would like to propose establishing a child labor-free zone certification system which recognizes areas that have built structures to deter child labor as Child Labor Free Zones (CLFZs), and to develop trade rules in which products from CLFZs do not incur tariffs. Building a system where companies earn more profits by not using child labor, encourages companies to preferentially source child labor free products, and greatly accelerates the elimination of child labor.

This is a sufficiently feasible proposal as rules in which tariffs are eliminated on certain products that are considered “good” already exist, for example, IT and pharmaceutical products (e.g. the Information Technology Agreement, which went into effect in 1997). A child labor-free zone certification system was established in March 2020 in Ghana under Ghana’s Ministry of Employment and Labor Relations.

Instead of relying on systems in individual countries, Deloitte would like to propose the use of international trade rules in which child labor free products do not incur tariffs in order to dramatically reduce child labor.

Contents of the proposed framework for a trade agreement on child labor free products

Features of this trade agreement

(1) Quality assurance via a certification system

Establish a certification system for Child Labor Free Zones. Accredited certification bodies certify areas in accordance with uniform standards.

(2) Procedures in line with free trade mechanisms

In order to be eligible for tariff elimination, companies certify that their products use materials from CLFZs during import and export. Establish customs procedures based on the Rules of Origin in free trade agreements.

(3) Fraud prevention system

Establish mechanisms that give the authority to conduct verifications and punish fraud (such mechanisms are typically included in Preferential tariff system of trade agreement) as a means of exercising control over business operators who attempt to manipulate information to receive tariff benefits, even when CLFPs are not involved.

(4) Promotes economic cooperation with developing countries

By signing this agreement, signatory countries declare they will engage in economic cooperation to eliminate child labor in developing countries. A dual macro/micro approach of using trade agreements to change companies’ actions (macro) together with accelerating child labor prevention efforts on a grassroots level (micro) would effect robust change in developing countries.

Achieving SDGs requires a bold approach that goes above and beyond existing rules and transforms social structures.

We hope to generate free and open global discussions on using our proposed trade agreement as one way of solving child labor. We would love to enlist the knowledge, experience, and enthusiasm of you the reader. We look forward to your feedback about the trade agreement.