Updated March 10, 2023
Worker Rights Provisions in Free Trade Agreements (FTAs)
Overview
provisions. It has ratified two of the core ILO conventions:
Worker rights have generally been a prominent issue in
abolition of forced labor, and prohibition and elimination of
U.S. FTA negotiations. Some stakeholders believe worker
the worst forms of child labor. As a result, U.S. FTAs do
rights provisions are key to protect U.S. workers from
not include commitments to abide by and enforce the
perceived unfair competition and to raise labor standards
conventions themselves. The U.S. Tripartite Advisory Panel
abroad. Others believe such rights are more appropriately
on International Labor Standards of the President’s
addressed at the International Labor Organization (ILO) or
Committee on the ILO has found that U.S. law and
through cooperative efforts and capacity building. Since
practices are at least partially inconsistent with five of the
1988, Congress has included worker rights as a principal
core conventions. For example, U.S. laws on prison labor
negotiating objective in Trade Promotion Authority (TPA)
may conflict with the forced labor convention.
legislation. The United States has been in the forefront of
Labor Provisions in U.S. FTAs
using FTAs to promote core internationally recognized
Worker rights provisions in U.S. FTAs, first included in the
worker rights. Labor provisions have evolved significantly
1994 NAFTA, have evolved significantly, from
since the 1994 North American Free Trade Agreement
requirements for parties to enforce their own labor laws,
(NAFTA), moving from side agreements to integral
and to strive not to waive or derogate from its laws as an
chapters within FTA texts, with more provisions subject to
encouragement to trade, to commitments to adopt, maintain,
enforcement. Most recently, the renegotiation of NAFTA
and enforce laws that incorporate core ILO principles.
resulted in the U.S.-Mexico-Canada Agreement (USMCA),
Other FTA provisions address labor cooperation, capacity
which entered into forced in 2020 and set new precedents
building, and dispute settlement. U.S. FTA use of the term
within its labor chapter and labor enforcement mechanism.
“internationally recognized worker rights” is based on
International Labor Organization
language in the U.S. Generalized System of Preferences
Most U.S. and other FTAs with provisions on worker rights
(GSP) statute and largely tracks the ILO Declaration, but
refer to commitments made in the ILO, the primary
also diverges, e.g., referring 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 have
A specialized agency of the United Nations, the ILO is
reflected the negotiating objectives under TPA statutes.
composed of representatives from government, business
These objectives have evolved and generally become more
and labor organizations. It promotes labor rights through
comprehensive over time.
assessment of country standards, monitoring, and technical
assistance. While the ILO has complaint procedures, it has
NAFTA. The North American Agreement on Labor
limited enforcement authority. World Trade Organization
Cooperation (NAALC), a side agreement to NAFTA,
contained 11 “guiding principles” on worker rights in
(WTO) rules do not address trade-related labor standards,
as WTO members were unable to reach consensus on the
matters affecting trade, technical assistance and capacity
issue and deferred to the ILO on such matters.
building provisions, and a separate dispute settlement
process, along with a labor cooperation mechanism. Full
The ILO has adopted more than 190 multilateral
dispute procedures applied to failure to enforce a country’s
conventions or protocols; eight are deemed “core labor
laws regarding child labor, minimum wage, and
standards.” The Declaration on the Fundamental Principles
occupational safety and health. Other issues, such as the
and Rights at Work, adopted in 1998 and amended in 2022,
right to organize were limited to ministerial consultations.
incorporates core principles from these eight fundamental
conventions, to be adhered to by all countries whether or
Jordan. The U.S.-Jordan FTA (2001) contains labor
not they are signatories to the underlying conventions.
provisions that were incorporated into the agreement itself.
These provisions became a template for future FTAs and
The ILO Declaration Principles and Rights
negotiating objectives in the 2002 TPA authorization.
Freedom of association and the effective recognition of
While the provisions are enforceable, both countries
the right to col ective bargaining;
committed to resolve disputes outside of dispute settlement.
Elimination of all forms of forced or compulsory labor;
Effective abolition of child labor;
TPA-2002. Seven U.S. FTAs were negotiated under TPA-
Elimination of discrimination in respect of employment
2002. These agreements went beyond the scope of the
and occupation; and
Jordan FTA, but included one enforceable labor provision:
Safe and healthy working environment.
a party shall not fail to effectively enforce its labor laws “in
a manner affecting trade.” “Labor laws” were defined as
The United States has endorsed these principles,
rights similar to the GSP statute. Dispute procedures placed
incorporating them in recent FTAs as enforceable
limits on monetary penalties, unlike those for commercial
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Worker Rights Provisions in Free Trade Agreements (FTAs)
disputes. The FTAs also included commitments not to
changes to overall dispute settlement procedures include
derogate from labor laws to encourage trade; provisions for
preventing a party from blocking the formation of a dispute
cooperation and capacity building to improve labor
panel, and a presumption that failure to comply with labor
standards; and creation of a labor affairs council.
commitments is “in a manner affecting trade or investment”
Figure 1. Evolution of Labor Commitments in FTAs
unless a party demonstrates otherwise. For more, see CRS
In Focus IF11308, USMCA: Labor Provisions.
Labor Disputes under U.S. FTAs
The Department of Labor, in coordination with USTR, is
responsible for reviewing complaints on alleged violations
of enforceable labor commitments in U.S. FTAs. One
dispute, involving Guatemala, proceeded past consultations
through the entire dispute settlement procedure. In 2017, an
arbitral panel ruled against the United States. It found while
Guatemala had failed to effectively enforce certain labor
laws, the evidence did not prove it was “sustained or
recurring” and “in a manner affecting trade.” U.S.
stakeholders contested the outcome, which spurred some
reforms in USMCA. Other concerns of stakeholders have
included procedural delays in processing labor complaints
and compliance issues of trading partners. See CRS In
Source: CRS.
Focus IF10972, Labor Enforcement Issues in U.S. FTAs.
TPA-2015. TPA-2015, which expired in 2021, enhanced
Biden Administration Trade Initiatives
the negotiating objectives on labor, with guidance from a
The Biden Administration is not pursuing comprehensive
May 2007 bipartisan agreement, which laid out new
FTAs, and instead is negotiating trade initiatives with more
congressional objectives for FTAs. TPA-2015 called for
targeted agendas, including in the Indo-Pacific and in the
including the same dispute settlement mechanisms and
Americas. The U.S.-led Indo-Pacific Economic Framework
penalties for labor as for other FTA chapters;
for Prosperity (IPEF), involving 13 partners, includes a
“trade pillar” with
labor as a core component. The
requiring the maintenance in laws and practice of
Administration framed IPEF’s inclusion of labor issues as
principles stated in the ILO Declaration;
helping to “promote inclusive economic prosperity” and
prohibiting the diminution of labor standards to attract
part of a “broader strategy to make trade a race to the top.”
trade and investment; and
The September 2022 IPEF ministerial statement on trade
limiting prosecutorial and enforcement discretion, as
lays out potential labor provisions that largely reflect recent
grounds for defending a failure to enforce labor laws.
U.S. FTAs. Key questions include whether IPEF will reflect
USMCA. The most recent U.S. FTA includes several new
or build on USMCA approaches, in particular the rapid-
features on labor in addition to core provisions from TPA.
response labor mechanism, and potentially involve any
Some observers view USMCA as a possible template for
country-specific provisions on worker rights.
future U.S. FTAs. Provisions include, for example
Issues for Congress
extension of the principle of nonderogation of rights to
In considering ongoing and future U.S. trade negotiations,
export processing zones (EPZs);
as well as objectives in potential TPA legislation, Congress
prohibiting imports produced by forced labor, and
may wish to examine the application of worker rights
cooperation over identifying such goods;
provisions in U.S. FTAs. This debate could include
commitments on violence against workers, migrant
the effectiveness of FTAs as a vehicle for improving
worker protections, and workplace discrimination; and
worker rights and labor standards in other countries;
alternatives to formal labor consultations.
the extent to which FTA partners are complying with
labor obligations and whether dispute settlement
Some Members of Congress called for additional USMCA
provisions have been applied effectively;
obligations for Mexico to address persistent concerns over
whether USMCA labor provisions serve as a new
worker rights protections. A labor chapter annex commits
template for future U.S. trade agreements, or whether
Mexico to enact reforms related to collective bargaining
new initiatives like IPEF may present a new model;
that had been underway since 2017. In addition, separate
from the labor chapter, USMCA auto rules of origin have
the effectiveness of FTAs in providing technical
certain wage requirements for the first time in a U.S. FTA.
assistance and trade capacity building; and
Strengthening labor enforcement was also a major priority
the role of businesses in promoting U.S. labor practices
for some Members. A new rapid-response mechanism in
abroad and conducting supply chain due diligence.
USMCA provides for an independent panel investigation of
Cathleen D. Cimino-Isaacs, Analyst in International Trade
covered facilities if suspected of denying workers the right
of free association and collective bargaining. Several
and Finance
disputes have been resolved under the mechanism. Other
M. Angeles Villarreal, Specialist in International Trade
and Finance
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Worker Rights Provisions in Free Trade Agreements (FTAs)
IF10046
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https://crsreports.congress.gov | IF10046 · VERSION 24 · UPDATED