Updated August 23, 2019
Labor Enforcement Issues in U.S. FTAs
Background
dispute procedures, including an arbitral panel and
Labor provisions in free trade agreements (FTAs)—both in
limited monetary penalties, applies to allegations
the U.S. and globally—were first included in the North
involving: a “persistent pattern of failure” to enforce
American Agreement on Labor Cooperation (NAALC), the
“occupational safety and health, child labor or minimum
side agreement to the 1994 North American Free Trade
wage technical labor standards,” where the matter is
Agreement (NAFTA). Since then provisions have evolved
trade-related and covered by mutually recognized labor
from commitments not just to enforce a country’s own
laws. Other issues, such as freedom of association and
domestic labor laws, but also to adopt and enforce core
right to organize are limited to ministerial consultations.
principles of the International Labor Organization (ILO).
Dominican Republic-Central America FTA
As mandated by Congress through trade promotion
(CAFTA-DR) and U.S.-Bahrain FTA labor chapters
authority (TPA), recent U.S. FTAs also subject labor
include one provision subject to enforcement—a party
chapters to the same dispute settlement procedures as all
“shall not fail to effectively enforce its labor laws,
other obligations. Some Members view strong worker rights
through a sustained or recurring course of action or
provisions in U.S. FTAs as an important issue and they
inaction, in a manner affecting trade.” Procedures
have raised concerns over FTA partner compliance with
related to labor disputes may include limits on monetary
labor commitments and the U.S. record of enforcement.
penalties. Creation of a labor cooperation mechanism, in
These issues were part of the debate over the Trans-Pacific
addition to a capacity building mechanism and labor
Partnership (TPP) and in the NAFTA renegotiation, signed
affairs council in the case of CAFTA-DR, were intended
in 2018 as the U.S.-Mexico-Canada Agreement (USMCA).
to oversee review and implementation of the labor
obligations. CAFTA-DR was the first U.S. FTA to
Labor standards are not part of World Trade Organization
include measures in support of labor capacity building.
(WTO) rules; in 1996, members reaffirmed the ILO as the
competent body to deal with labor issues, while denouncing
U.S.-Peru, U.S.-Colombia FTA and USMCA labor
the “use of labor standards for protectionist purposes.”
chapters reflect provisions required by the “May 10th
Limited progress at the WTO led several countries to
Agreement,” a 2007 bipartisan deal between
include labor commitments in FTAs. The United States and
congressional leadership and the Bush Administration.
others also include worker rights as eligibility criteria for
The agreement called for: (1) an additional enforceable
developing countries to receive unilateral trade preferences.
commitment that FTA parties adopt and maintain core
labor principles of the 1998 ILO Declaration; and (2) the
U.S. FTAs have set precedents both in terms of the scope
same dispute settlement procedures and remedies,
and enforceability of labor provisions. An ILO report found
including recourse to trade sanctions, for FTA labor
as of 2016, 77 out of 267 FTAs globally included labor
provisions as applied to other obligations. A party
provisions, compared to 21 in 2005. Unlike U.S. practice,
alleging violation of the provision on ILO commitments
the majority of agreements do not subject labor provisions
must demonstrate that failure to adopt or maintain ILO
to dispute settlement. Most provide a framework for
principles has been “in a manner affecting trade or
dialogue, capacity building, and monitoring, rather than link
investment.” USMCA, which revised the NAALC, also
violations to economic consequences, such as trade
reflects updated negotiating objectives on labor within
sanctions. In cases where dispute settlement is applicable,
TPA-2015 and covers new commitments. For Colombia,
such mechanisms have been rarely invoked; countries
a labor action plan was also negotiated, requiring that
largely aim to solve disputes via cooperative consultations.
certain commitments be met prior to FTA ratification.
Enforcement Mechanisms in U.S. FTAs
Summary of U.S. Labor Disputes
Complaints over U.S. FTA partners’ compliance with labor
The Office of Trade and Labor Affairs (OTLA) within the
commitments have been brought under five FTAs. Among
U.S. Department of Labor receives and reviews complaints
these agreements, provisions subject to dispute resolution
(termed “submissions”) of alleged violations of FTA labor
procedures, and remedies may differ:
commitments. The DOL consults and coordinates with the
NAALC contains 11 “principles” on worker rights,
U.S. Trade Representative (USTR) and State Department
subject to separate dispute settlement procedures from
on labor enforcement. Per OTLA, a submission must “raise
the main NAFTA. NAALC aims to settle complaints
issues relevant to the labor provisions in the NAALC or
regarding labor enforcement primarily via dialogue and
FTA and illustrate a country’s failure to comply with its
consultations, through the national administrative
obligations.” If the submission is accepted, OTLA does a
offices and at the ministerial level. If consultations are
review and issues a public report on its findings, with
unable to resolve a complaint, certain issues can be
recommendations to the FTA partner. OTLA may also
referred to other mechanisms. The full spectrum of
recommend further actions, including that the U.S. request
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link to page 2 Labor Enforcement Issues in U.S. FTAs
bilateral consultations—if these are unsuccessful, dispute
the most effective approaches to improve compliance are
settlement may be invoked in certain cases.
widely debated issues. In a 2014 review, the Government

Accountability Office concluded that U.S. FTA partners
Under NAALC, OTLA received more than 20 submissions.
had taken several steps to improve worker rights pursuant
It has accepted and issued reviews for 13, with one under
to FTA obligations; at the same time, concerns were raised
review; all involved Mexico (Table 1). Among U.S. FTAs
over gaps in protections, attributed to lack of enforcement
with labor chapters, the OTLA has issued seven reviews
capacity and limited public awareness of petition processes.
involving six countries. The Guatemala dispute involved
Other observers point to the success of FTAs in creating
the first formal consultations requested by the United
new avenues for cooperation on trade-related labor issues.
States, although submissions under other U.S. FTAs have
More broadly, some question whether FTAs are appropriate
resulted in ministerial or informal consultations. It is also
or the most effective vehicles for addressing the cross-
the only case to have proceeded through dispute settlement.
cutting issue of worker rights. Most experts agree technical
assistance and capacity building are critical tools. Among
Table 1. Labor submissions reviewed by OTLA
U.S. agencies providing trade capacity building, an
Country Filed Petitions Status
estimated 20% of funding went to labor issues in FY2017.
Mexico
1994-
13
* 1 case under review;
U.S. Track Record of Enforcement
2015
* 11 reports issued; 8
Some U.S. stakeholders contest the outcome of the dispute
ministerial agreements
with Guatemala and question whether FTA dispute
Guatemala 2008
1
* Panel decision in 2017
provisions require reforms. Critics view the number of
Peru
2010;
2
* Reports issued in 2012
petitions accepted for review, review delays, and only one
2015
and 2016
case processed through dispute settlement, as shortcomings
Bahrain
2011
1
* Consultations in 2014
in U.S. practice. Other experts view the first labor dispute
Dominican 2011
1
* Report issued in 2013
as an important precedent and evidence that trade-related
Republic
labor issues are taken seriously by the U.S. government.
Honduras
2012
1
* Monitoring and action
Labor Chapters in U.S. FTAs
plan adopted in 2015
TPP: A New Template? TPP was widely viewed as
Colombia
2016
1
* Report issued and
setting new precedents for U.S. FTA labor chapters. To
consultations with contact
address concerns over labor standards and enforcement,
points held in 2017
the United States had negotiated three bilateral labor
Source: U.S. Department of Labor.
plans, subject to greater monitoring and dispute
Guatemala Labor Dispute
settlement for the first time. While the United States is
no longer a TPP party, USTR indicated TPP may serve
In April 2008, the AFL-CIO and six Guatemalan labor
as a baseline for future FTAs, including the USMCA.
unions filed a complaint alleging that Guatemala failed to

effectively enforce its labor laws with respect to freedom of
USMCA. Strong labor provisions are seen as a key
association, rights to organize and bargain collectively, and
factor for securing Democratic congressional support for
acceptable conditions of work. The OTLA report in January
the proposed USMCA. USMCA incorporates a labor
2009 raised several concerns and recommendations. The
chapter into the main body of the agreement, which
United States initiated consultations in 2010, amid concerns
reflects key components of TPP and also covers new
Guatemala had “not undertaken effective steps to correct
areas. The chapter includes footnotes clarifying some
systemic failures” in labor law enforcement, and then in late
FTA language that related to the U.S. loss against
2011, requested establishment of an arbitral panel. It was
Guatemala. It has an annex committing Mexico to take
suspended while the two sides negotiated an 18-point labor
legislative actions to protect the right to collective
enforcement plan in April 2013. After Guatemala allegedly
bargaining. Some Members have called for major
failed to implement the plan, the panel resumed in 2014 and
improvements to labor practices in Mexico, as well as
issued its decision in June 2017. It found that, while
stronger enforcement mechanisms. Some advocate fixes
Guatemala failed to enforce certain laws, the evidence did
to USMCA dispute settlement, which effectively allows
not prove it was “sustained or recurring” and “in a manner
a disputing party to block formation of a panel via lack
affecting trade,” and thus did not violate FTA provisions.
of consensus over panelist appointments. USTR is
reportedly working on a supplemental “rapid-response”
Issues for Congress
enforcement plan to address congressional concerns.
The enforcement of labor provisions has been scrutinized
U.S.-Colombia FTA up Next? U.S. and Colombian
by some Members of Congress and labor groups as “slow
officials met in 2018 to review FTA implementation,
and cumbersome,” and relying “on the political will of
with a view to potentially “modernize” the agreement.
governments.” They call for greater monitoring and
Worker rights and unresolved issues from the OTLA
oversight of labor practices. Other analysts argue that the
report were discussed. In August 2019, U.S. officials
debate and scrutiny over labor provisions in FTAs, coupled
met in Colombia to assess labor compliance.
with robust consultative mechanisms, have led to greater
For more, see CRS In Focus IF10046, Worker Rights
cooperation and helped countries to improve standards.
Provisions in Free Trade Agreements (FTAs) and In Focus
U.S. FTA Partner Compliance
IF10645, Dispute Settlement in U.S. Trade Agreements.
The effectiveness of FTAs in raising labor standards, the
Cathleen D. Cimino-Isaacs, Analyst in International Trade
extent to which countries comply with labor provisions, and
and Finance
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Labor Enforcement Issues in U.S. FTAs

IF10972


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