Linking international commerce to human rights and labor rights concerns has become a critical issue in trade bargaining and trade policy debates. Bringing the Uruguay Round of negotiations for a new General Agreement on Tariffs and Trade (GATT) to a close in 1994, ministers of the 123 GATT member countries approved a declaration that worker rights must be on the agenda of the new World Trade Organization (WTO) set up to enforce GATT rules.

Leaders of several developing countries have criticized a worker rights-trade linkage as a protectionist ploy to close markets to their exports. They also charged advocates of a trade-linked "social clause" with a form of "cultural imperialism" seeking to impose "Western" notions of human rights and labor rights, and Western models of labor management relations, on non-Western societies, governments, and enterprises.

The Clinton administration was torn for months by a policy struggle over China's most-favored-nation (MFN) trade status after the President demanded human rights and labor rights reforms as a condition for maintaining MFN. Pressed by U.S. multinational companies seeking billions of dollars in Chinese business, the President dropped his demands in May 1994 despite Chinese government intransigence on human rights. Similar corporate pressure has staved off U.S. sanctions for human rights and labor rights violations in Indonesia, Malaysia, and other authoritarian countries with large-scale U.S. investments. At the same time, hoping to appear responsive to human rights concerns, several corporations and U.S. government officials announced plans for a "code of conduct" for businesses operating in countries with authoritarian regimes.

Some human rights and labor rights advocates in Mexico, the United States, and Canada, along with their environmental counterparts, challenged the terms of the North American Free Trade Agreement for failing to address sufficiently their concerns. In response, the Clinton administration obtained supplemental agreements covering labor rights and environmental protection, creating new arenas for advocacy in those areas. NAFTA was approved and took effect January 1, 1994.

In July 1994 the U.S. Congress approved a labor rights clause in a bill authorizing funding for the Inter-American Development Bank, the World Bank, and the International Monetary Fund. The amendment obligates U.S. representatives to multilateral lending institutions to ensure respect for international labor rights as a condition of approval for countries seeking development loans. The first instance of labor rights linkage to international lending programs, this amendment adds to an array of U.S. worker rights clauses in statutes governing the Generalized System of Preferences, the Overseas Private Investment Corporation, Section 301 of the Trade Act, the Caribbean Basin Initiative, and Agency for International Development trade promotion programs. . .