The dawn of the new decade has been accompanied with the spread of a deadly new virus, an unprecedented coronavirus originating from the Wuhan area of China. What began as a few cases of respiratory illness within Wuhan has now led to 25 deaths across the globe. In addition to the health effects, the impact of this virus extends to the healthcare industry and affects a broader scope of the global economy.
Financial markets around the world have been disrupted by this outbreak, Wuhan being a prominent car manufacturing city and center for economic transport. With the Chinese economy already experiencing fragile conditions, a result of the US-China trade war this outbreak holds the potential to entirely disrupt the international supply chain, specifically within tourism, retail and automotive industries. Furthermore, with the Wuhan virus appearing on the eve of Chinese Lunar New Year, arguably the largest mass annual human migration it holds a direct impact into the Chinese economy. With over 400 million people travelling through China at this time, the event has become a significant opportunity for European luxury brands, with China representing 35% of global income in this sector. However, considering the governmental lockdown of four major cities and almost 20 million people, this calls into question the economic stability that remains.
In an anecdotal sense, the SARS outbreak held similar outcomes, yet in larger proportions as the country’s economy at the time was much smaller yet exponentially growing. The respiratory syndrome virus was responsible for 774 deaths worldwide, with the economic implications becoming long-lasting. In a study conducted by economists Jong-Wha Lee of Korea University and Warwick McKibbin of Australian National University concluded that the “fallout from the disease would continue to dampen activity and marginally depress investment in China and Hong Kong for the next decade”. However, the key component acting as the deciding factor in the impact on global markets depends on how severe and rapidly-growing the disease becomes. The disease has not yet reached the scope of the SARS outbreak, yet the increased interconnectedness of today’s global economy implies that any possibly volatility could have greater impacts, both economically and socially.
This uncertainty is what is perhaps most frightening to investors and corporations. In that sense, it is vital that the Chinese government is entirely forthcoming and transparent with the health data, in order for the potential economic impact to be minimized. Without that information, the real risk might be worse than what has been led on and an act of ignorance can have economic effects of mass proportions.
On January 1st, 2020 a landmark trade agreement, the United States-Mexico-Canada Agreement (USMCA), was enacted, bringing about a new era of collaboration and cooperation. Replacing NAFTA, it reinforces foundational principles while codifying crucial aspects of trade such as international labour laws. To a certain extent this trade deal exemplifies a transition from free trade to regulated trade, providing robust outlines for tariffs on exports and imports in all three nations. In particular the USMCA includes Chapter 23, a new chapter specifically addressing labour laws.
The labour chapter is largely modelled off the Trans-Pacific Partnership (TPP), with scarce yet significant modifications. Similar to the TPP, the USMCA reflects the principles set forth in the ILO Declaration on Fundamental Principles and Rights at Work. In addition, the USMCA alleviate certain standards by creating provisions to address discrimination based on sexual orientation, gender identity, violence against workers and protection for migrant workers.
Nevertheless, considering the historical context, ample human rights treaties still remain largely unfulfilled promises. In many cases corrupt judicial systems typically cause intrinsic human rights to be neglected, allowing for extrajudicial methods used by the police. Labour rights in particular are far more fragile and typically negated in exchange for cheap labor and economic growth. The same principles apply to the USMCA as the enforceability of provisions remains highly problematic. Leaving the means to implement these labour obligations in the hands of national legislation essentially calls for controversy. Although, these strengthened provisions do show hopes for increased cooperation and communication, both effective tools for advancing fundamental labour rights.
It is imperative to note that the USMCA can only codify widely acknowledged set of principles allowing a conversation to begin, however it is by no means enough to ensure that intrinsic human rights are protected in each nation. Bipartisan politics are typically at the source of inaction, meaning that while this treaty is a step in the right direction, enforcing labour standards and tangible action from the interagency committee the USMCA proposes, will be vital in the coming years.