Updated November 13, 2018
Labor Enforcement Issues in U.S. FTAs
Background
issues can be referred to other mechanisms. The full
Labor provisions in free trade agreements (FTAs)—both in
spectrum of dispute procedures, including an arbitral
the U.S. and globally—were first included in the North
panel and limited monetary penalties, applies to
American Agreement on Labor Cooperation (NAALC), the
allegations involving three of the 11 principles: a
side agreement to the 1994 North American Free Trade
“persistent pattern of failure” to enforce “occupational
Agreement (NAFTA). Since then provisions have evolved
safety and health, child labor or minimum wage
from commitments not just to enforce a country’s own
technical labor standards,” where the matter is trade-
domestic labor laws, but also to adopt and enforce core
related and covered by mutually recognized labor laws.
labor principles of the International Labor Organization
Other issues, such as freedom of association and the
(ILO). As mandated by Congress through trade promotion
right to organize are limited to ministerial consultations.
authority (TPA), recent U.S. FTAs also subject labor
Dominican Republic-Central America FTA
chapters to the same dispute settlement procedures as all
(CAFTA-DR) and U.S.-Bahrain FTA labor chapters
other obligations. Some Members view strong worker rights
include one provision subject to enforcement—a party
provisions in U.S. FTAs as an important issue and they
“shall not fail to effectively enforce its labor laws,
have raised concerns over FTA partner compliance with
through a sustained or recurring course of action or
labor commitments and the U.S. record of enforcement.
inaction, in a manner affecting trade.” Procedures
These issues were a part of the debate over the Trans-
related to labor disputes may include limits on monetary
Pacific Partnership (TPP) and in the NAFTA renegotiation,
penalties. Creation of a labor cooperation mechanism, in
completed in September 2018 as the U.S.-Mexico-Canada
addition to a capacity building mechanism and labor
Agreement (USMCA).
affairs council in the case of CAFTA-DR, were intended
to oversee review and implementation of the labor
Labor standards are not part of World Trade Organization
obligations. CAFTA-DR was the first U.S. FTA to
(WTO) rules; in 1996, members reaffirmed the ILO as the
include measures in support of labor capacity building.
competent body to deal with labor issues, while denouncing
the “use of labor standards for protectionist purposes.”
U.S.-Peru, U.S.-Colombia FTA and USMCA labor
Limited progress at the WTO led several countries to
chapters reflect provisions required by the “May 10th
include labor commitments in FTAs. The United States and
Agreement,” a 2007 bipartisan deal between
others also include worker rights as eligibility criteria for
congressional leadership and the Bush Administration.
developing countries to receive unilateral trade preferences.
The agreement called for: (1) an additional enforceable
commitment that FTA parties adopt and maintain core
U.S. FTAs have set precedents both in terms of the scope
labor principles of the 1998 ILO Declaration; and (2) the
and enforceability of labor provisions. An ILO report found
same dispute settlement procedures and remedies,
as of 2016, 77 out of 267 FTAs globally included labor
including recourse to trade sanctions, for FTA labor
provisions, compared to 21 in 2005. Unlike U.S. practice,
provisions as applied to other obligations. A party
the majority of agreements do not subject labor provisions
alleging violation of the provision on ILO commitments
to dispute settlement. Most provide a framework for
must demonstrate that failure to adopt or maintain ILO
dialogue, capacity building, and monitoring, rather than link
principles has been “in a manner affecting trade or
violations to economic consequences, such as trade
investment.” The USMCA, which revised the NAALC,
sanctions. In cases where dispute settlement is applicable,
also reflects updated negotiating objectives on labor
such mechanisms have been rarely invoked; countries
within TPA-2015. For Colombia, a labor action plan
largely aim to solve disputes via cooperative consultations.
was also negotiated with commitments that were
required to be met prior to FTA ratification.
Enforcement Mechanisms in U.S. FTAs
Complaints over U.S. FTA partners’ compliance with labor
Summary of U.S. Labor Disputes
commitments have been brought under five FTAs. Among
The Office of Trade and Labor Affairs (OTLA) within the
these agreements, the provisions subject to dispute
U.S. Department of Labor (DOL) receives and reviews
resolution, procedures, and remedies may differ:
complaints (termed “submissions”) of alleged violations of
NAALC contains 11 “principles” on worker rights,
FTA labor commitments. The DOL consults and
subject to separate dispute settlement procedures from
coordinates with the U.S. Trade Representative (USTR) and
the main NAFTA text. NAALC aims to settle
State Department on labor enforcement issues. Per OTLA,
complaints regarding labor enforcement primarily via
allegations in a labor submission must “raise issues relevant
dialogue and consultations, through the national
to the labor provisions in the NAALC or FTA and illustrate
administrative offices and at the ministerial level. If
a country’s failure to comply with its obligations.” If the
consultations are unable to resolve a complaint, certain
submission is accepted, OTLA undertakes a review and
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link to page 2 Labor Enforcement Issues in U.S. FTAs
issues a public report on its findings, with recommendations
with robust consultative mechanisms, have led to greater
to the FTA partner to address concerns. OTLA may also
cooperation and helped countries to improve standards.
recommend further actions, including that the U.S. request
bilateral consultations—if these are unsuccessful, dispute
U.S. FTA Partner Compliance
settlement may be invoked in certain cases.
The effectiveness of FTAs in raising labor standards, the

extent to which countries comply with labor provisions, and
Under NAALC, OTLA received more than 20 submissions.
the most effective approaches to improve compliance are
It has accepted and issued reviews for 13, with one under
widely debated issues. In a 2014 review, the Government
review; all involved Mexico (Table 1). Among U.S. FTAs
Accountability Office concluded that U.S. FTA partners
with labor chapters, the OTLA has issued seven reviews
had taken several steps to improve worker rights pursuant
involving six countries. The Guatemala dispute involved
to FTA obligations; at the same time, concerns were raised
the first formal consultations requested by the United
over gaps in protections, attributed to lack of enforcement
States, although submissions under other U.S. FTAs have
capacity and limited public awareness of petition processes.
resulted in ministerial or informal consultations. It is also
Other observers point to the success of FTAs in creating
the only case to have proceeded through dispute settlement.
new avenues for cooperation on trade-related labor issues.
More broadly, some question whether FTAs are appropriate
Table 1. Labor submissions reviewed by OTLA
or the most effective vehicles for addressing the cross-
Country Filed Petitions Status
cutting issue of worker rights. Most experts agree technical
Mexico
1994-
13
* 1 case under review;
assistance and capacity building are critical tools. Among
2015
* 11 reports issued; 8
U.S. agencies providing trade capacity building, an
ministerial agreements
estimated 40% of funding went to labor issues in FY2016.
Guatemala 2008
1
* Panel decision in 2017
U.S. Track Record of Enforcement
Some U.S. stakeholders contest the outcome of the dispute
Peru
2010;
2
* Reports issued in 2012
with Guatemala and question whether FTA dispute
2015
and 2016
provisions require reforms. Critics view the number of
Bahrain
2011
1
* Consultations in 2014
petitions accepted for review, review delays, and only one
Dominican 2011
1
* Report issued in 2013
case processed through dispute settlement, as shortcomings
Republic
in U.S. practice. Other experts view the first labor dispute
Honduras
2012
1
* Monitoring and action
as an important precedent and evidence that trade-related
plan adopted in 2015
labor issues are taken seriously by the U.S. government.
Colombia
2016
1
* Report issued and
Labor Chapters in U.S. FTAs
consultations with contact
TPP: A New Template? TPP was widely viewed as
points held in 2017
Source: U.S. Department of Labor.
setting new precedents for U.S. FTA labor chapters.
Notably, to address concerns over labor standards and
Guatemala Labor Dispute
enforcement, the United States had negotiated three
bilateral labor plans, subject to greater monitoring and
In April 2008, the AFL-CIO and six Guatemalan labor
dispute settlement for the first time. While the United
unions filed a complaint alleging that Guatemala failed to
States is no longer a TPP party, USTR indicated TPP
effectively enforce its labor laws with respect to freedom of
may serve as a baseline for proposals in future FTAs,
association, rights to organize and bargain collectively, and
including the NAFTA renegotiation or USMCA.
acceptable conditions of work. The OTLA report in January
2009 raised several concerns and recommendations. The
USMCA. Strong labor provisions are seen as a key
United States initiated consultations in 2010, amid concerns
factor for securing Democratic congressional support for
Guatemala had “not undertaken effective steps to correct
the proposed USMCA. Some Members called for major
systemic failures” in labor law enforcement. In August
improvements to certain labor practices in Mexico, as
2011, the United States requested establishment of an
well as stronger enforcement. USMCA incorporates a
arbitral panel. It was suspended while the two sides
labor chapter into the main body of the agreement,
negotiated an 18-point labor enforcement plan in April
which reflects key components of TPP and also covers
2013. After Guatemala allegedly failed to implement the
new areas. The chapter includes footnotes clarifying
plan, the panel resumed in 2014 and issued its decision in
some FTA language that related to the U.S. loss against
June 2017. It found that, while Guatemala failed to enforce
Guatemala. It also has an annex committing Mexico to
certain laws, the evidence did not prove it was “sustained or
take legislative actions to protect the right to collective
recurring” and “in a manner affecting trade,” and thus did
bargaining.
not violate FTA provisions.
U.S.-Colombia FTA up Next? U.S. and Colombian
Issues for Congress
trade officials met recently to review implementation of
the FTA, with a view to potentially “modernize” the
The enforcement of labor provisions has been scrutinized
agreement. Worker rights and unresolved issues from
by some Members of Congress and labor groups as “slow
the OTLA report were discussed.
and cumbersome,” and relying “on the political will of
governments.” They call for greater monitoring and
For more info, see CRS In Focus IF10046, Worker Rights
oversight of labor practices. Other analysts argue that the
Provisions in Free Trade Agreements (FTAs) and In Focus
debate and scrutiny over labor provisions in FTAs, coupled
IF10645, Dispute Settlement in U.S. Trade Agreements.
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Labor Enforcement Issues in U.S. FTAs

IF10972
Cathleen D. Cimino-Isaacs, Analyst in International Trade
and Finance


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