Updated November 13, 2018
Worker Rights Provisions in Free Trade Agreements (FTAs)
Overview
age; and equal remuneration. For example, U.S. laws on
Worker rights have become a prominent issue in U.S. FTA
prison labor may conflict with the forced labor convention.
negotiations. Some stakeholders believe worker rights
The 1998 ILO Declaration Principles
provisions are necessary to protect U.S. workers from
Freedom of association and the effective recognition to
perceived unfair competition and to raise labor standards
the right to collective bargaining.
abroad. Others believe these rights are more appropriately
Elimination of all forms of forced or compulsory labor.
addressed at the International Labor Organization (ILO) or
Effective abolition of child labor and minimum age of
through cooperative efforts and capacity building. Since
work.
1988, Congress has included worker rights as a principal
Elimination of discrimination in respect of employment or
negotiating objective in Trade Promotion Authority (TPA)
occupation.
legislation. The United States has been in the forefront of
using FTAs to promote core internationally-recognized
Labor Provisions in U.S. FTAs
worker rights. Labor provisions have evolved significantly
Worker rights provisions in U.S. FTAs, first included in
since the North American Free Trade Agreement (NAFTA),
NAFTA in 1994, have evolved significantly, from
moving from side agreements to integral chapters within
requirements for parties to enforce their own labor laws,
FTA texts, with more provisions subject to enforcement
and to strive not to waive or derogate from its laws as an
mechanisms. The renegotiation of NAFTA, completed in
encouragement to trade, to commitments to adopt, maintain,
September 2018, led to the new proposed U.S.-Mexico-
and enforce laws that incorporate core ILO principles.
Canada Agreement and a revised labor chapter.
Other provisions address labor cooperation and capacity
International Labor Organization
building. “Internationally-recognized worker rights” were
based on language in the U.S. Generalized System of
Most FTAs with provisions on worker rights refer to
Preferences (GSP) statute and largely track the ILO
commitments made in the ILO. The ILO is the primary
Declaration, but also refer to “acceptable conditions”
multilateral organization responsible for promoting labor
regarding minimum wages, hours of work, and
standards through international conventions and principles.
occupational safety and health. Recent U.S. FTAs reflect
A specialized agency of the United Nations, the ILO is
the negotiating objectives under TPA statutes. These
composed of representatives from government, business
objectives have become more comprehensive over time.
and labor organizations. It promotes labor rights through
assessment of country standards and technical assistance,
NAFTA. The original NAFTA text did not include labor
but has no real enforcement authority. The World Trade
provisions, causing considerable debate among
Organization (WTO) does not address worker rights, as
stakeholders. After his election, President Clinton
members were unable to reach consensus on the issue.
negotiated a side agreement to an already concluded, but
not yet in effect, NAFTA, called the North American
What are the ILO conventions?
Agreement on Labor Cooperation. It contained 11 “guiding
The ILO has adopted 194 multilateral conventions or
principles” on worker rights in matters affecting trade,
protocols; eight are considered to be “core labor standards.”
technical assistance, and capacity building provisions, and a
The 1998 Declaration on the Fundamental Principles and
separate dispute settlement arrangement, along with a labor
Rights at Work incorporates core principles from these eight
cooperation mechanism. The full spectrum of dispute
conventions, to be adhered to by all countries whether or
procedures, including monetary penalties, applies to failure
not they are signatories to the underlying conventions. The
to enforce a country’s laws regarding three principles: child
United States has endorsed these principles, incorporating
labor, minimum wage, and occupational safety and health.
them in recent FTAs as enforceable provisions. It has
Other issues, such as freedom of association and the right to
ratified only two of the relevant ILO conventions:
organize are limited to ministerial consultations.
elimination of forced labor and abolition of the worst forms
Jordan. The U.S.-Jordan FTA (2001) contained labor
of child labor. As a result, U.S. FTAs do not include
provisions that were incorporated into the agreement itself.
commitments to enforce the conventions themselves.
These provisions also became a template for future FTAs
Are any U.S. laws in conflict with ILO conventions?
and negotiating objectives in the 2002 TPA authorization.
The U.S. Tripartite Advisory Panel on International Labor
While the provisions are enforceable, both countries
Standards of the President’s Committee on the ILO has
committed to resolve disputes outside of dispute settlement.
found that U.S. law is at least partially inconsistent with
Trade Promotion Authority of 2002. Seven U.S. FTAs
five of the core conventions: freedom of association; right
were negotiated under TPA-2002. These agreements went
to organize/collective bargaining; forced labor; minimum
beyond the scope of the Jordan FTA, but included one
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Worker Rights Provisions in Free Trade Agreements (FTAs)
enforceable labor provision: a party shall not fail to
congressional consideration of the U.S.-Colombia FTA,
effectively enforce its labor laws “in a manner affecting
which some viewed as ground-breaking in terms of helping
trade.” “Labor laws” were defined as worker rights as in the
to raise standards; Colombia was required to complete
GSP statute. Dispute procedures placed limits on monetary
numerous commitments in the plan before the FTA was
penalties, unlike those for commercial disputes. The FTAs
approved by Congress. In early 2018, TPP countries signed
also included: commitments not to derogate from labor laws
a new deal without the United States; the original labor
to encourage trade; provisions for cooperation and capacity
chapter remains intact, but not the U.S. side labor plans.
building; and creation of a labor affairs council.
U.S.-Mexico-Canada Agreement (USMCA): In August
Figure 1. Evolution of Labor Commitments
2017, talks began with Canada and Mexico to renegotiate
and modernize NAFTA. The TPP reportedly served as the
template for the U.S. proposed labor text. The proposed
USMCA would revise labor provisions that reflect key
components of TPP. It would also include new
commitments related to violence against workers, migrant
worker protections, and sex-based discrimination. An annex
would commit Mexico to take specific legislative actions to
ensure the effective recognition of the right to collective
bargaining. In addition, separate from the labor chapter, the
auto rules of origin have certain wage requirements for the
first time in an FTA. Throughout the negotiations, there had
been calls for additional obligations for Mexico to address
persistent concerns over certain labor practices. Some
stakeholders and Members of Congress call for
strengthening enforcement mechanisms in particular.
Source: CRS.
Labor Disputes under U.S. FTAs
The Department of Labor (DOL) is responsible for
TPA-2015. TPA-2015, in effect through July 1, 2021,
reviewing complaints on alleged violations of enforceable
enhanced the negotiating objectives on labor, with guidance
labor commitments in U.S. FTAs. In the past decade, the
from a May 2007 bipartisan agreement, which laid out new
DOL has issued reviews for seven complaints. One,
congressional objectives for FTAs. TPA-2015 called for:
involving Guatemala, has proceeded past consultations to
formal dispute settlement. In December 2017, an arbitral
including the same dispute settlement mechanisms and
panel ruled against the U.S. It found while Guatemala had
penalties for labor as for other FTA chapters;
failed to effectively enforce certain labor laws, the evidence
requiring the maintenance in laws and practice of
did not prove it was both “sustained or recurring” and “in a
principles stated in the ILO Declaration;
manner affecting trade.” U.S. stakeholders have contested
prohibiting the diminution of labor standards to attract
the outcome. Other concerns include procedural delays in
trade and investment; and
processing complaints and compliance issues more broadly.
limiting prosecutorial and enforcement discretion, as
Issues for Congress
grounds for defending a failure to enforce labor laws.
In considering future TPA legislation or trade negotiations,
Trans-Pacific Partnership (TPP). In January 2017, the
Congress may wish to examine the application of worker
United States withdrew from the proposed TPP, an FTA
rights provisions in FTAs. This debate could include:
with 11 other countries in the Asia-Pacific. TPP included
The effectiveness of FTAs as a vehicle for improving
several new features on labor in addition to core provisions
worker rights in other countries;
from TPA-2015. USTR indicated TPP could serve as a
The extent to which U.S. FTA partners are complying
baseline for new trade negotiations. Provisions included:
with labor obligations and whether dispute settlement
“adopt and maintain” statutes and regulations governing
provisions have been applied effectively;
acceptable conditions of work;
The effectiveness of labor councils in FTAs in providing
extension of the principle of non-derogation of rights to
technical assistance and trade capacity building; and
export processing zones;
discouragement of imports produced by forced labor;
The role of the business community in promoting U.S.
labor practices abroad.
establishment of a “cooperative labor dialogue” as an
alternative to formal labor consultation.
Cathleen D. Cimino-Isaacs, Analyst in International Trade
Under TPP, the United States also negotiated bilateral labor
and Finance
consistency plans with Vietnam, Malaysia, and Brunei,
M. Angeles Villarreal, Specialist in International Trade
requiring specific legal and institutional reforms to improve
and Finance
labor standards. The Obama Administration previously
IF10046
negotiated a labor action plan with Colombia in advance of
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Worker Rights Provisions in Free Trade Agreements (FTAs)
Disclaimer
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https://crsreports.congress.gov | IF10046 · VERSION 16 · UPDATED