Order Code RS20968
Updated May 27, 2003
CRS Report for Congress
Received through the CRS Web
Jordan-U.S. Free Trade Agreement:
Labor Issues
Mary Jane Bolle
Specialist in International Trade
Foreign Affairs, Defense, and Trade Division
Summary
The U.S.-Jordan Free Trade Agreement (FTA), implemented as P.L. 107-43,
which went into effect December 17, 2001, breaks new ground by including multiple
worker rights provisions in the body of a U.S. trade agreement, rather than as a side
agreement, for the first time. For this reason, it adds some controversy to the
congressional debate over whether worker rights provisions should be included in future
trade agreements. Some observers eye this configuration of worker rights protections
as a model for future trade agreements; others view it as a one-time occurrence justified
only because Jordan has a strong tradition of labor protections; still others oppose the
inclusion of labor provisions in trade agreements under any circumstances. This report
will be updated as events warrant.
This report examines the labor provisions of the U.S.-Jordan Free Trade Agreement
(FTA) and compares them with those of the North American Free Trade Agreement
(NAFTA). It also looks briefly at the larger issues of including worker rights provisions
in trade agreements, and summarizes the positions of major stakeholders in the ongoing
debate on including labor provisions in trade agreements.
The U.S.-Jordan FTA was signed by then-President Bill Clinton and King Abdullah
II on October 24, 2000, submitted to Congress as H.R. 2603 and S. 643 on January 6,
2001, approved by the Government of Jordan on July 15, implemented as P.L. 107-43 on
September 28, and went into effect on December 17, 2001. It provides for a 10-year
transitional period during which duties on almost all goods traded between the countries
(except tobacco and related products) will be totally phased out.1
The trade effects of the U.S.-Jordan FTA are expected to be small, but growing. In
2001, the United States imported $229 million worth of commodities (about 0.02% of all
U.S. imports) from Jordan, up more than 200% from 2000, and ranking it 95th among
1 See U.S.-Jordan Free Trade Agreement, by Mary Jane Bolle, CRS Report RL30652.
Congressional Research Service ˜ The Library of Congress

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countries from which the United States imports goods. In return, the United States
exported $339 million (less than 0.05% of all U.S. exports) worth of goods to Jordan,
which placed it 74th among countries to which the United States exports goods.
Major Provisions of the Agreement
Labor issues over the agreement revolved around two sets of provisions: labor
provisions and dispute settlement provisions. The labor provisions of the U.S.-Jordan
FTA, located in the body of the agreement, are relatively straightforward, occupy one
page of text, and require three things. First, they require: (a) that each country enforce its
own labor laws in manners affecting trade; and (b) that those laws reflect both
“internationally recognized worker rights” as defined by the U.S. Trade Act of 1974, as
amended, and “core labor standards” as defined by the International Labor Organization.
Second, the provisions require that the Parties to the agreement not “waive” or “derogate
from” their own labor laws as an encouragement for trade with the other Party. Third,
they provide that each Party will be considered in compliance with the agreement where
any deviation from the requirements reflects a “reasonable exercise of . . . discretion” or
“results from a bona fide decision regarding the allocation of resources.”
The dispute settlement procedures, slightly longer than the labor provisions, occupy
one and one-half pages of text. They provide for resolution of disputes that arise over:
(a) interpretation of the agreement; (b) alleged failure of a Party to carry out its obligations
under the agreement; and (c) measures taken by a Party that allegedly severely distort the
balance of trade benefits or substantially undermine the fundamental objectives of the
agreement.
Pursuing a dispute through the complete resolution procedure provided for in the
agreement would take 270 days, or about nine months. Any dispute would move up the
ladder for consideration first through consultations between “contact points.” These
would be followed with consideration by a Joint Committee, and further consideration by
a Dispute Settlement Panel. The Panel is required to present a report containing its
findings of fact and its determinations, which will be non-binding. If the dispute is still
not resolved within 30 days after the Joint Committee presents its report, the affected
Party will be entitled to take “any appropriate and commensurate measure.”
Issues with the Labor Provisions
Supporters, including many Democrats, argued that the labor provisions did not
break much new ground. Conceptually, the U.S.-Jordan provisions are similar to those
in the NAFTA labor side agreement, in that in both agreements, each country must (a)
enforce its own worker rights laws; while over the long term (b) strive toward adopting
a complete body of worker rights principles; and (c) not waive or derogate from its own
labor laws as an encouragement for trade. (Provisions of the two agreements are
compared in Table 1.)
Opponents, including many Republicans, saw the labor provisions as breaking
considerable new ground because they were located in the body of the agreement, where
they would be subject to dispute settlement procedures and possibly sanctions. Moreover,
the dispute resolution procedure entitled either party to take “any appropriate and

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commensurate measure” if the dispute resolution procedure on the included labor
provisions fails – and that would appear to include sanctions.
The Call for a Memorandum of Understanding. As a compromise measure,
some observers suggested that the United States and Jordan exchange side letters or
memoranda of understanding agreeing that any “appropriate and commensurate measure”
does not mean sanctions, but leaving open what else the words might mean.2 Such letters
were actually exchanged by the ambassador of Jordan and U.S. Trade Representative
Robert Zoellick on July 23, 2001. These identical letters pledged to resolve any
differences that might arise between the two countries under the agreement, without
recourse to formal dispute settlement procedures. They also specified that each
government “would not expect or intend to apply the Agreement’s dispute settlement
enforcement procedures ... in a manner that results in blocking trade.” In House floor
debate, the agreement to not use sanctions was viewed alternately as: (1) part of “a
cooperative structure ... to help secure compliance without recourse to ... traditional trade
sanctions that are the letter of the agreement” (Thomas); and (2) “a step backwards for
future constructive action on trade” (Levin).
The exchange of letters paved the way for House and Senate approval of the trade
agreement. The House approved H.R. 2603 by a voice vote on July 31, 2001. The Senate
approved H.R. 2603 by a voice vote on September 24. The Government of Jordan had
already approved it on July 15. It became law as P.L. 107-43 on September 28, 2001.
During the Senate debate, Senator Phil Gramm warned that he will oppose any effort to
turn the U.S.-Jordan FTA into a model for how future trade agreements should deal with
worker rights (and environmental protection issues). He argued that they should not be
part of trade deals. Conversely, Senate Finance Committee Chairman Max Baucus
indicated he hoped the U.S.-Jordan FTA would set a precedent for how future trade
agreements would address issues like labor and the environment. He also refuted a
statement made by Senator Graham that the provisions would undermine U.S. sovereignty
or prevent lawmakers from enacting and enforcing U.S. labor and environmental laws.
If Congress had not been able to resolve the issue of sanctions with the exchange of
memoranda of understanding or similar documents, it would have had several other
options other than to approve the agreement as negotiated. It could have (a) approved the
agreement with conditions, and in effect required the President to renegotiate it; (b)
amended any implementing legislation; or (c) as under the fast-track procedure, simply
disapproved the agreement and the implementing legislation containing the language of
the agreement as introduced.
The Larger Debate About Including Worker Rights Provisions in
Trade Agreements
The labor provisions of the U.S.-Jordan FTA and reaction to them can also be
viewed in the context of the larger ongoing debate in Congress about the linkage of
worker rights and trade.
2 Jordan Opposes Reopening FTA, but Would Accept Side Letter, Inside U.S. Trade, April 13,
2001.

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The most recent debate has been ongoing since 1994, when presidential “fast-track”
authority to negotiate new trade agreements, contained in the Omnibus Trade and
Negotiating Act (OCTA) of 1988 (P.L. 100-418), expired. The OCTA included as a
principal negotiating objective of the United States in trade agreements “to promote
worker rights.” Under that authority, NAFTA was negotiated with its labor side
agreement. The issue of debate in recent years has been which of three courses to follow
– whether to include in new fast-track authority: (a) more limited presidential authority
to include labor provisions than in the expired legislation; (b) similar authority; or (c)
broader authority.
After fast-track renewal efforts spanning parts of nine years, Congress finally
included language that is arguably more limited in some aspects, but which also includes
more detailed requirements. P.L. 107-210, signed August 6, 2002, finally renewed
presidential fast-track authority (or trade promotion authority – TPA, as it is more recently
being called). The renewed authority to negotiate trade agreements on an expedited basis
(without amendment and with limited debate) includes numerous labor provisions as both
overall negotiating objectives, and principal negotiating objectives:
Overall negotiating objectives (typically advisory in nature) reiterate the two
concepts included in the expired 1988 authority: (1) to promote respect for worker rights
(but specifying that it shall be done in the international Labor Organization, which has
virtually no enforcement powers – a limitation not included in the expired legislation);
and (2) to ensure that domestic labor laws are not weakened as an encouragement for
trade.
The principal negotiating objectives on “labor and the environment” (typically
enforceable) include three goals new to fast-track language, but somewhat reflective of
both NAFTA and Jordan trade agreements, and also of previous attempts to renew fast-
track authority. These are: (1) to strengthen the capacity of U.S. trading partners to
promote respect for worker rights; (2) to ensure that a party does not fail to enforce its
own labor laws in a manner affecting trade; and (3) to ensure that labor policies do not
unjustifiably discriminate against U.S. exports or serve as disguised barriers to trade.
With the passage of new trade promotion authority in August of 2002, the debate
now has shifted once more, and the new focus is on monitoring the kinds of labor
provisions that will be negotiated as part of new trade agreements currently in negotiation.
Stakeholders. Stakeholders are watching to see how provisions of the new trade
promotion authority law will become translated into trade agreements, to the extent that
negotiators attempt to and are able to include them in future trade agreements.
Stakeholders against actually including labor provisions in the body of trade
agreements argue that (1) such provisions impede the flow of free trade and are not
needed; (2) any labor and environment provisions could put U.S. companies at serious
disadvantage vis-a-vis their competitors in the World Trade Organization; (3) the U.S.-
Jordan language should be a “one time” occurrence rather than a precedent; and (4) that
potential violations of core labor standards should be pursued multilaterally through the
International Labor Organization (ILO) rather than through trade agreements. The ILO,
part of the United Nations, was established in 1919 to promote worker rights. As

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mentioned, it has no direct enforcement powers, working instead through technical
assistance and moral suasion.
Stakeholders in favor of including labor provisions in the body of trade agreements
argue in favor of using the U.S.-Jordan FTA labor provisions as a model for other trade
agreements. The AFL-CIO asserts that an even more elaborate mechanism than is
included in the U.S.-Jordan FTA is needed (a) to ensure that foreign labor laws are
brought up to international standards on a clear timetable, and (b) to prevent the use of
trade and investment agreements as business tools to force down wages and working
conditions in the United States and abroad.
Conclusion
The U.S.-Jordan FTA continues and arguably advances the linkage of worker rights
provisions and trade beyond that contained in the NAFTA labor side agreement. It does
this: (a) by including the worker rights provisions in the body of the agreement, and (b)
by raising the possibility of “sanctions” in that either country may take “any appropriate
and commensurate measure” if the dispute procedures do not lead to resolution – even
though letters exchanged by U.S. and Jordan governments have pledged not to exercise
those sanctions with regards to potential labor violations. The Jordan agreement’s
influence was also felt in the reauthorization of TPA language which would continue to
permit new trade agreements to include provisions similar to those in the Jordan
agreement in the body of the agreement.
Table 1. Comparison of Key Provisions of U.S.-Jordan
Free Trade Agreement and NAFTA
U.S.-Jordan Free Trade
Provision
NAFTA (P.L. 103-182)
Agreement, Article 6
Where are labor
In body of the agreement
In labor side agreement
provisions?
Definition of
“Internationally Recognized
“Internationally Recognized Worker
worker rights
Worker Rights” from Trade Act of
Rights” from Trade Act of 1974 (at
1974: (P.L. 93-618 as amended by
left) plus the following additions:
Sec. 503 of P.L. 98-573):
f) the right to strike
a) right of association;
g) minimum employment standards
b) right to organize and bargain
relating to overtime pay;
collectively
h) elimination of employment
c) prohibition of forced or
discrimination;
compulsory labor;
i) equal pay for men and women;
d) minimum age for employment of
j) compensation in cases of
children;
occupational injuries and illnesses;
e) acceptable conditions re: minimum
k) protection of migrant workers.
wages, hours; and occupational safety
and health.
“Core Labor Standards” from the
International Labor Organization
(ILO).
a) freedom of association;

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U.S.-Jordan Free Trade
Provision
NAFTA (P.L. 103-182)
Agreement, Article 6
b) right to organize and bargain
collectively;
c) prohibition on the use of forced
labor;
d) prohibition of exploitative child
labor;
e) prohibition of employment
discrimination
Basic labor
a) All countries must enforce their
All countries must enforce own labor
requirements
own labor laws and standards in
laws and standards in trade-related
trade-related situations.
situations and shall strive toward the
entire list of worker rights.
b) Each Party shall strive to “not
No comparable provision
waive or otherwise derogate from” its
laws as an encouragement for trade.
Which worker
All of them.
Only three standards out of 11 (for child
rights are subject
labor, minimum wages, and
to dispute
occupational safety and health) are
resolution?
enforceable through dispute settlement
and ultimately sanctions.
No similar provision
Dispute resolution may be undertaken
only for failure to enforce one’s own
worker rights laws and regulations, and
if alleged failure to enforce is trade-
related and covered by mutually
recognized labor laws.
Enforcement
Each country shall designate an office
Trade ministers (the Ministerial
body and dispute
to serve as a contact point on the
Council) meet occasionally, supported
resolution
agreement.
by a 15-member Secretariat to resolve
procedure
issues with consultation and persuasion.
Any issue not resolved through
In each country a National
consultation within 60 days may be
Administrative Office (NAO) oversees
referred to
the law; Then an: Evaluation
a Joint Committee, and, if still not
Committee of Experts (ECE) and
resolved within 90 days, to a Dispute
subsequently an Arbitral Panel (AP)
Settlement Panel chosen by the
are appointed as needed to debate cases.
parties.
Ultimate
If the issue is still not resolved in 30
The AP may issue a monetary
penalties
days, after the panel reports, the
assessment; and if this is not paid, issue
affected party may take any
sanctions. Maximum penalties:
appropriate and commensurate
suspension of NAFTA benefits to the
measure.
amount of the monetary penalty (which
may be no greater than NAFTA benefits
from tariff reductions) for one year.

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