ABSTRACT
Since 1976, the US has used the Generalized System of Preference (GSP) to pursue various political goals, including higher labor standards. But is the conventional wisdom that GSP helps to improve their labor standards empirically accurate? Media coverage and government studies are overwhelmingly positive about the link between trade preferences and worker rights. Much of the academic literature reaches the same conclusion. This chapter takes a second look at the conventional wisdom, offering a demand-side perspective. It examines GSP utilization rates by recipients, at the country-product level, given the level of worker rights and the margin of preference under GSP. The contribution hypothesizes that recipients with stronger worker rights are more likely to use GSP at lower preference margins because they face less risk of suspension. The hypothesis is tested using a new data set, as well as a host of model specifications, and the results find no robust evidence in support of the conventional wisdom. Worker rights stand out in the politics of GSP, yet the chapter suggests GSP is unlikely to promote better labor standards. It demonstrates that exporters can do little about labor standards at the country level and would likely be far more responsive if these standards were assessed at the industry level.
