Updated December 18, 2020
Worker Rights Provisions in Free Trade Agreements (FTAs)
Overview
found that U.S. law and practices are at least partially
Worker rights are a prominent issue in U.S. FTA
inconsistent with five of the core conventions: right to
negotiations. Some stakeholders believe worker rights
organize/ collective bargaining; freedom of association;
provisions are necessary to protect U.S. workers from
forced labor; minimum age; and equal remuneration. For
perceived unfair competition and to raise labor standards
example, U.S. laws on prison labor may conflict with the
abroad. Others believe these rights are more appropriately
forced labor convention.
addressed at the International Labor Organization (ILO) or
The 1998 ILO Declaration Principles
through cooperative efforts and capacity building. Since
Freedom of association and the effective recognition to
1988, Congress has included worker rights as a principal
the right to col ective bargaining.
negotiating objective in Trade Promotion Authority (TPA)
Elimination of all forms of forced or compulsory labor.
legislation. The United States has been in the forefront of
Effective abolition of child labor and minimum age of
using FTAs to promote core internationally recognized
work.
worker rights. Labor provisions have evolved significantly
Elimination of discrimination in respect of employment or
occupation.
since the North American Free Trade Agreement (NAFTA),
moving from side agreements to integral chapters within
FTA texts, with more provisions subject to enforcement.
Labor Provisions in U.S. FTAs
The conclusion of NAFTA renegotiations resulted in the
Worker rights provisions in U.S. FTAs, first included in
U.S.-Mexico-Canada Agreement (USMCA), which
NAFTA in 1994, have evolved significantly, from
replaces NAFTA and has a new labor chapter and
requirements for parties to enforce their own labor laws,
enforcement mechanism. It entered into force in July 2020.
and to strive not to waive or derogate from its laws as an
encouragement to trade, to commitments to adopt, maintain,
International Labor Organization
and enforce laws that incorporate core ILO principles.
Most FTAs with provisions on worker rights refer to
Other provisions address labor cooperation and capacity
commitments made in the ILO. The ILO is the primary
building. “Internationally recognized worker rights” were
multilateral organization responsible for promoting labor
based on language in the U.S. Generalized System of
standards through international conventions and principles.
Preferences (GSP) statute and largely track the ILO
A specialized agency of the United Nations, the ILO is
Declaration, but also refer to “acceptable conditions”
composed of representatives from government, business
regarding minimum wages, hours of work, and
and labor organizations. It promotes labor rights through
occupational safety and health. Recent U.S. FTAs reflect
assessment of country standards, monitoring, and technical
the negotiating objectives under TPA statutes. These
assistance. The ILO has complaint procedures, but limited
objectives have become more comprehensive over time.
enforcement authority. The World Trade Organization
NAFTA. The original NAFTA did not include labor
(WTO) does not address worker rights, as members were
provisions, leading President Clinton to negotiate a side
unable to reach consensus on the issue and defer to the ILO.
agreement, called the North American Agreement on Labor
What are the ILO conventions?
Cooperation (NAALC). It contained 11 “guiding
principles” on worker rights in matters affecting trade,
The ILO has adopted more than 190 multilateral
conventions or protocols; eight are considered to be “core
technical assistance and capacity building provisions, and a
labor standards.” The 1998 Declaration on the
separate dispute settlement arrangement, along with a labor
Fundamental Principles and Rights at Work incorporates
cooperation mechanism. Full dispute procedures applied to
core principles from these eight conventions, to be adhered
failure to enforce a country’s laws regarding: child labor,
to by all countries whether or not they are signatories to the
minimum wage, and occupational safety and health. Other
underlying conventions. The United States has endorsed
issues, such as freedom of association and the right to
these principles, incorporating them in recent FTAs as
organize were limited to ministerial consultations, which
enforceable provisions. It has ratified only two of the core
resulted in some bilateral and trilateral cooperation.
ILO conventions: abolition of forced labor, and prohibition
Jordan. The U.S.-Jordan FTA (2001) contains labor
and elimination of the worst forms of child labor. As a
provisions that were incorporated into the agreement itself.
result, U.S. FTAs do not include commitments to enforce
These provisions also became a template for future FTAs
the conventions themselves.
and negotiating objectives in the 2002 TPA authorization.
While the provisions are enforceable, both countries
Are any U.S. laws in conflict with ILO conventions?
committed to resolve disputes outside of dispute settlement.
The U.S. Tripartite Advisory Panel on International Labor
Standards of the President’s Committee on the ILO has
https://crsreports.congress.gov
Worker Rights Provisions in Free Trade Agreements (FTAs)
Trade Promotion Authority of 2002. Seven U.S. FTAs
which Colombia committed to specific actions prior to
were negotiated under TPA-2002. These agreements went
congressional consideration of the U.S.-Colombia FTA. A
beyond the scope of the Jordan FTA, but included one
USMCA annex commits Mexico to enact labor reforms
enforceable labor provision: a party shall not fail to
related to collective bargaining that had been underway
effectively enforce its labor laws “in a manner affecting
since 2017. Mexico passed the legislation in May 2019 and
trade.” “Labor laws” were defined as worker rights as in the
is in the implementation phase. In addition, separate from
GSP statute. Dispute procedures placed limits on monetary
the labor chapter, the auto rules of origin have certain wage
penalties, unlike those for commercial disputes. The FTAs
requirements for the first time in a U.S. FTA.
also included: commitments not to derogate from labor laws
Some stakeholders and Members also pushed strongly for
to encourage trade; provisions for cooperation and capacity
strengthening labor enforcement. A new rapid-response
building; and creation of a labor affairs council.
mechanism in USMCA provides for an independent panel
Figure 1. Evolution of Labor Commitments
investigation of covered facilities if suspected of denying
workers the right of free association and collective
bargaining. Other notable changes to overall dispute
settlement procedures include preventing a party from
blocking the formation of a dispute panel, and presuming
that failure to comply with the main labor commitments is
“in a manner affecting trade or investment,” unless a party
demonstrates otherwise. For more detail, see CRS In Focus
IF11308, USMCA: Labor Provisions.
Labor Disputes under U.S. FTAs
In coordination with USTR, the Department of Labor
(DOL) is responsible for reviewing complaints on alleged
violations of enforceable labor commitments in U.S. FTAs.
In the past decade, the DOL has issued reviews for eight
complaints. One, involving Guatemala, proceeded past
Source: CRS.
consultations to formal dispute settlement. In December
2017, an arbitral panel ruled against the United States. It
TPA-2015. In effect through July 1, 2021, TPA-2015
found while Guatemala had failed to effectively enforce
enhanced the negotiating objectives on labor, with guidance
certain labor laws, the evidence did not prove it was both
from a May 2007 bipartisan agreement, which laid out new
“sustained or recurring” and “in a manner affecting trade.”
congressional objectives for FTAs. TPA-2015 called for:
U.S. stakeholders have contested the outcome. Other
including the same dispute settlement mechanisms and
concerns include procedural delays in processing
penalties for labor as for other FTA chapters;
complaints and compliance issues more broadly. The AFL-
requiring the maintenance in laws and practice of
CIO has stated plans to bring future complaints under the
principles stated in the ILO Declaration;
USMCA rapid-response mechanism. For more, see CRS In
Focus IF10972, Labor Enforcement Issues in U.S. FTAs.
prohibiting the diminution of labor standards to attract
trade and investment; and
Issues for Congress
limiting prosecutorial and enforcement discretion, as
In considering future potential TPA legislation (the current
grounds for defending a failure to enforce labor laws.
reauthorization expires in July 2021) or trade negotiations,
USMCA. The most recent U.S. FTA includes several new
Congress may wish to examine the application of worker
features on labor, in addition to core provisions from TPA.
rights provisions in FTAs. This debate could include
Some observers view USMCA as a possible template for
the effectiveness of FTAs as a vehicle for improving
future FTAs. Provisions include
worker rights and labor standards in other countries;
“adopt and maintain” statutes and regulations governing
the extent to which FTA partners are complying with
acceptable conditions of work;
labor obligations and whworkplace;
extension of the principle of nonderogation of rights to
establishment of a “cooperative labor dialogue,” aether
export processing zones (EPZs);
dispute settlement provisions have been applied
prohibiting imports produced by forced labor;
effectively;
commitments on violence against workers, migrant
whether USMCA labor provisions serve as a new
worker protections, and discrimination in the
template for future U.S. FTAs;
s an alternative to formal labor consultations.
the effectiveness of FTAs in providing technical
assistance and trade capacity building; and
Throughout the negotiations, there were calls by some
the role of businesses in promoting U.S. labor practices
Members of Congress for additional obligations for Mexico
abroad and conducting supply chain due diligence.
to address concerns over worker rights protections. Some
advocated for a specific labor plan for Mexico, such as the
Cathleen D. Cimino-Isaacs, Analyst in International Trade
Obama Administration’s Colombia labor action plan in
and Finance
https://crsreports.congress.gov
Worker Rights Provisions in Free Trade Agreements (FTAs)
IF10046
M. Angeles Villarreal, Specialist in International Trade
and Finance
Disclaimer
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congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
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https://crsreports.congress.gov | IF10046 · VERSION 21 · UPDATED