Worker Rights Provisions in Free Trade Agreements (FTAs)

Worker Rights Provisions in Free Trade Agreements (FTAs)

April 1, 2014
Worker Rights Provisions in Free Trade Agreements (FTAs)
Overview
association/right to organize; right to organize/collective
bargaining; forced labor; minimum age; and equal
The issue of worker rights has become prominent in the
remuneration. For example, U.S. laws on prison labor may
negotiation of U.S. FTAs. Some stakeholders believe that
conflict with the forced labor convention, and equal pay for
worker rights provisions are necessary to protect U.S. labor
equal work statutes may conflict with the equal
from perceived unfair competition and to raise standards in
remuneration convention.
other countries. Others believe that worker rights are more
appropriately addressed at the International Labor
Organization (ILO) or through cooperative efforts and
The 1998 ILO Declaration Principles
capacity building on worker rights. Since 1988, Congress

has included worker rights as a principal negotiating
• Freedom of association and the effective
objective in Trade Promotion Authority (TPA) (previously
recognition to the right to collective
known as fast-track) legislation. The United States has been
bargaining;
in the forefront of using trade agreements to promote core
internationally-recognized worker rights. Worker rights
• Elimination of all forms of forced or
provisions in FTAs have evolved significantly since the
compulsory labor;
North American Free Trade Agreement (NAFTA), moving
• Effective abolition of child labor and the
from side agreements to integral chapters within FTA texts,
minimum age of work; and
along with cooperation and enforcement provisions.
• Elimination of discrimination in respect
The International Labor Organization
of employment or occupation.
The ILO is the primary multilateral organization
responsible for promoting labor standards through
international conventions and principles. A specialized
Labor Provisions in U.S. FTAs
agency of the United Nations, it has a tripartite structure
composed of representatives from government, business
Worker rights provisions in U.S. trade agreements since
and labor organizations. The ILO promotes labor rights
NAFTA have evolved significantly. For example, they have
through assessment of country standards and technical
evolved from limited enforceability of internationally-
assistance, but it has no real enforcement authority. The
recognized worker rights to expanded enforcement of core
World Trade Organization does not address worker rights.
ILO principles, among other provisions. These include
provisions on labor cooperation and capacity building.
What are the ILO conventions?
Internationally-recognized worker rights were based on
language in the Generalized System of Preferences
The ILO has adopted 194 multilateral conventions or
authorization and largely tracks the 1998 Declaration
protocols, eight of which are considered to be core labor
(above), but also contains language on acceptable
standards. The 1998 Declaration on the Fundamental
conditions with respect to minimum wages, hours of work,
Principles and Rights at Work incorporates core labor
and occupational safety and health.
principles, to be adhered to by all countries regardless of
whether they are signatories to the underlying eight ILO
The first U.S. bilateral FTAs with Israel (1985) and Canada
conventions from which the principles are drawn. The
(1988) did not contain provisions on worker rights. The
United States has endorsed these principles and has in
worker rights provisions in subsequent U.S. FTAs reflect
recent FTAs incorporated them as enforceable provisions.
the U.S. trade negotiating objectives of the respective trade
However, the United States has ratified only two of the
promotion authority (TPA) statutes under which an
relevant ILO conventions: abolition of forced labor and
agreement is negotiated. Each grant of TPA has set out
non-discrimination in employment.
principal trade negotiating objectives on a wide range of
issues, including labor. These objectives have become more
Are any U.S. laws in conflict with ILO conventions?
comprehensive and numerous over time.
The U.S. Tripartite Advisory Panel on International Labor
Side Agreements. The North American Free Trade
Standards of the President’s Committee on the ILO has
Agreement (NAFTA) originally was not negotiated with
found that U.S. law is at least partially inconsistent with
worker rights provisions—aside from preambular
five of the eight core conventions of the ILO: freedom of
language—despite the elevation of labor as a principal
negotiating objective in the 1988 fast-track authority.
www.crs.gov | 7-5700

Worker Rights Provisions in Free Trade Agreements (FTAs)
However, President Clinton, fulfilling a campaign promise,
• Limit prosecutorial and enforcement discretion,
negotiated side agreements on worker rights to an already
i.e., countries cannot defend the failure to enforce
completed NAFTA agreement. The North American
their labor laws based on resource limitations or
Agreement on Labor Cooperation contained 11 “guiding
enforcement priorities.
principles” on worker rights in matters affecting trade,
technical assistance, and capacity building provisions, and a
The May 10th provisions are reflected in the Bipartisan
separate dispute settlement arrangement. However, dispute
Comprehensive Trade Promotion Authority renewal
settlement was available only for failure to enforce each
legislation (H.R. 3830/S. 1900) that was introduced in both
country’s own laws with regard to three of these principles:
chambers of Congress on January 9, 2014. These provisions
child labor, minimum wage, and occupational safety and
reportedly form the basis of the U.S. proposal for the labor
health.
chapter of the proposed Trans-Pacific Partnership (TPP).
Jordan. The U.S. FTA with Jordan (2001) contained labor
Other Country Approaches. Labor provisions appear in
provisions that went beyond NAFTA and were incorporated
the sustainable development chapters of European Union
into the agreement itself. These provisions also became a
trade and economic partnership agreements, although they
template for future FTAs and the negotiating objectives on
tend to be more consultative than enforceable. Canadian
labor in the 2002 TPA authorization. The provisions were
FTAs have used side-letters on labor cooperation, which do
fully enforceable under the dispute settlement provisions of
not provide for dispute settlement resolution. Among
the agreement. However, prior to congressional approval,
ASEAN-FTAs countries, only its FTA with Australia
the two parties exchanged letters committing each to
contains worker rights provisions.
resolve disputes in all chapters without recourse to dispute
settlement.
Issues for Congress
Trade Promotion Authority of 2002. Under the TPA of
In considering future TPA legislation or future trade
2002, seven FTAs were negotiated by the George W. Bush
agreement negotiations, Congress may wish to examine the
administration. Like Jordan, the provisions were
use and application of worker rights provisions in FTAs.
incorporated into the agreement itself. These agreements
This debate could include inquiry into:
also went beyond the Jordan FTA in terms of scope, but
they included only one enforceable provision: a party shall
• The effectiveness of FTAs, as well as the ILO, as a
not fail to effectively enforce its labor laws “in a manner
vehicle for improving worker rights in other
affecting trade between the parties.” “Labor laws” were
countries;
defined as the U.S. list of internationally-recognized worker
rights as contained in the GSP statute. Procedures for labor
• The relationship between the 1998 ILO
disputes placed limits on monetary penalties, whereas those
Declaration and related ILO conventions;
for commercial disputes did not. Suspension of benefits
was a last recourse option for both types of disputes. These
• The consideration of the May 10th agreement
FTAs also included a number of other provisions that are
provisions as a floor or ceiling in future U.S. trade
not enforceable under the FTA’s dispute settlement
negotiating objectives;
procedures. These included: (a) commitments not to
derogate from one’s own labor laws as an encouragement
• The ability of the United States to achieve
for trade; and (b) extensive provisions for cooperation and
negotiating objectives on worker rights among
capacity building, and the creation of a labor affairs
widely divergent countries in regional FTAs, such
council.
as the TPP;
May 10, 2007 Agreement. Following the transfer of
• The effectiveness of the Labor Affairs Councils in
control of the House after the 2006 elections, members of
FTAs to provide technical assistance and trade
the majority sought changes in the labor, environmental,
capacity building programs, and to resolve or
intellectual property rights, investment, government
prevent disputes without recourse to dispute
procurement provisions of the four pending FTAs at the
settlement;
time: Columbia, Panama, Peru, South Korea. A bipartisan
agreement between the Bush administration and the House
• The role of U.S. business community in promoting
leadership, building on the 2002 TPA negotiating
U.S. labor practices abroad; and/or
objectives, was reached on May 10, 2007. Concerning
worker rights, the agreement called for countries to:
• The extent to which the dispute settlement
provisions have been applied to worker rights
• Adopt the same dispute settlement mechanisms
issues.
and penalties as other chapters in the FTA;

• Maintain in their laws and practices the principles
Mary Jane Bolle, mjbolle@crs.loc.gov, 7-7753
stated in the ILO Declaration;
Ian F. Fergusson, ifergusson@crs.loc.gov, 7-4997
•

Prohibit the diminution of labor standards to
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attract trade and investment; and

www.crs.gov | 7-5700

Document Outline

Overview

The issue of worker rights has become prominent in the negotiation of U.S. FTAs. Some stakeholders believe that worker rights provisions are necessary to protect U.S. labor from perceived unfair competition and to raise standards in other countries. O...

The International Labor Organization

Labor Provisions in U.S. FTAs

Worker rights provisions in U.S. trade agreements since NAFTA have evolved significantly. For example, they have evolved from limited enforceability of internationally-recognized worker rights to expanded enforcement of core ILO principles, among othe...

The May 10th provisions are reflected in the Bipartisan Comprehensive Trade Promotion Authority renewal legislation (H.R. 3830/S. 1900) that was introduced in both chambers of Congress on January 9, 2014. These provisions reportedly form the basis of ...

Issues for Congress

In considering future TPA legislation or future trade agreement negotiations, Congress may wish to examine the use and application of worker rights provisions in FTAs. This debate could include inquiry into:

 The effectiveness of FTAs, as well as the ILO, as a vehicle for improving worker rights in other countries;

 The relationship between the 1998 ILO Declaration and related ILO conventions;

 The consideration of the May 10th agreement provisions as a floor or ceiling in future U.S. trade negotiating objectives;

 The ability of the United States to achieve negotiating objectives on worker rights among widely divergent countries in regional FTAs, such as the TPP;

 The effectiveness of the Labor Affairs Councils in FTAs to provide technical assistance and trade capacity building programs, and to resolve or prevent disputes without recourse to dispute settlement;

 The role of U.S. business community in promoting U.S. labor practices abroad; and/or

 The extent to which the dispute settlement provisions have been applied to worker rights issues.

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