Labour Provisions in US Free Trade Agreements: Experiences and Challenges

Abstract

CC: The US has a somewhat unique approach to promoting labour rights through free trade agreements. What has been the AFL-CIO’s experience with these agreements and with the US Trade Representative (USTR)? Lee: This started with the Generalised System of Preferences [GSP], which is our unilateral benefits programme for developing countries. Congress in the 1980s inserted language around internationally recognised workers’ rights as one of the many conditions for developing countries to be eligible for GSP for lower tariffs on certain products. The idea was tying access to the US market to adherence to internationally recognised workers’ rights and conditions of work. NAFTA [the North American Free Trade Agreement] was the first time in the context of a bilateral or regional trade agreement, that we tried to go another step, to say that countries that voluntarily enter into a trade agreement with the US should also be willing to make commitments with respect to workers’ rights. NAFTA was a very ambitious, intrusive concept of trade agreement where things like intellectual property rights, financial services, and investment rules were all considered fair game. And that opened up the idea for us to say shouldn’t we be able to also protect basic labour and environmental standards, to try to have some sort of counterweight to the corporate benefits and privileges that the big business lobby in the US was insisting be included. So in some ways it was a defensive mechanism, but it also allowed us to talk about workers’ rights, in a way that – in our view – was not protectionist but was a way of making a partnership with unions and workers in developing countries and our trading partners. The NAFTA labour and environmental side agreements were disappointing on a number of fronts. But it was a foot in the door and since that time, almost twenty-five years ago, we have progressively tried to use each national debate around a new trade agreement to move the ball forward. We had forward progress with the Jordan agreement at the end of the Clinton administration, which did include enforceable core ILO labour standards in the core text, subject to the same dispute settlement in principle as the other commitments in the agreement. It had its weaknesses, but that was a major step forward… But then we had eight years of back-sliding during the George W. Bush administration, where the commitments were weakened and watered down, in CAFTA [the Central America FTA]1, Chile, Singapore, Australia, Bahrain, Morocco, Oman. At the very end of the Bush administration in May 2007, the Democrats took a majority in the House of Representatives and used their bargaining power to insist that in the last batch of trade agreements in the Bush years – Korea, Colombia, Panama and Peru – that much stronger labour and environment provisions be included. CC: The US-Guatemala complaint under CAFTA is the only labour case to progress to arbitration as yet. What lessons can be learned from the case? Drake: We filed that with six Guatemalan unions in 2008, so the agreement actually goes back to the Bush administration. And the CAFTA standard was essentially ‘enforce your own laws’. It gave a nod to the ILO Declaration but that was specifically unenforceable. The complaint was accepted fairly timely, it was actually accepted by the Bush administration the day before Obama’s inauguration and then it sat and sat and sat for years. Finally in 2015 they actually went to Dispute Settlement. And now it has been nearly two years since the panel heard it. We understand that there is a decision out there and that the US government and the Guatemalan government have responded to it and we’re waiting for publication. But assuming that the US would win – which I think is questionable now given this long delay – the strongest penalty that could result is a fine paid by the government of Guatemala, which is essentially a fine paid to itself, because the fine then goes into a fund which is then used to remedy the problem of failing to effectively enforce its laws. So when you say it’s enforceable by sanctions, well, that’s an awful...