Based on an evaluation of 18 labor clauses in 264 RTAs from 187 countries, using an extended gravity model, it is found that the strengthening of labor standards in RTAs significantly suppresses GVC participation between contracting parties, with a greater effect on forward participation and stronger impact on GVC participation between developed and developing countries. The suppression effect is mainly observed in manufacturing GVC participation, while the opposite effect is observed in the service industry. Except for the establishment of labor supervision institutions, other labor clauses had a suppressive effect on GVC participation. The impact mechanism of labor standards in RTAs on GVC participation includes cost and productivity effects, with the former having a suppressive effect and the latter having a promotional effect. China should establish a proactive stance on labor standards in RTAs, gradually improving labor standards while minimizing the potential losses through RTA differentiation strategies.