TPP: Labor Provisions

TPP: Labor Provisions

August 16, 2016
TPP: Labor Provisions
Overview
settlement procedure. Seven subsequent U.S. FTAs
The Trans-Pacific Partnership (TPP) is a proposed free
included similar provisions in the main text of the
trade agreement (FTA) among the United States and 11
agreements. More recent agreements have stronger
Asia-Pacific countries that would reduce and eliminate
provisions and incorporate core internationally recognized
tariff and non-tariff barriers on goods, services, and
labor principles consistent with the ILO Declaration on
agriculture, and establish trade rules and disciplines that
Fundamental Principles and Rights at Work (1998) (ILO
expand on commitments at the World Trade Organization
Declaration).
(WTO). Commitments address new “21st Century” issues,
such as digital trade and state-owned enterprises. Labor
TPP Labor Chapter
provisions in FTAs have evolved since the North American
The TPP contains similar worker rights provisions as those
Free Trade Agreement (NAFTA), which was the first U.S.
in the four most recent FTAs negotiated by the United
FTA that addressed worker rights in a side agreement
States. These provisions are enforceable under the same
committing the parties to enforce their own labor laws and
dispute settlement procedures that apply to other provisions
to resolve disputes. The most recent U.S. FTAs with Peru,
of the FTA, and violations are subject to the same potential
Colombia, Panama, and South Korea incorporate stronger
trade sanctions. TPP parties agreed
language by which parties must adopt, maintain, and
enforce core labor principles of the International Labor
 to adopt and maintain laws and practices consistent with
Organization (ILO). The TPP includes similar provisions as
the ILO Declaration;
these agreements, in addition to three labor consistency
 to adopt and maintain laws and practices governing
plans with specific commitments in regard to worker rights
acceptable conditions of work with respect to minimum
for Brunei, Malaysia, and Vietnam.
wages, hours of work, and occupational safety and
health;
The scope and depth of provisions on worker rights are
 not to waive or derogate from labor laws and practices
some of the more controversial issues surrounding the TPP.
mentioned above in a manner affecting trade or
TPP proponents contend that FTAs are important policy
investment; and
tools that help raise labor standards by supporting economic
growth and worker rights among countries with varying
 to effectively enforce their labor laws through a
levels of development. They argue that FTAs influence
sustained or recurring course of action.
foreign governments to respect workers’ rights, protect
Beyond these labor rights obligations, the TPP contains
children, eliminate forced labor, and improve working
additional language stating that each party shall discourage,
conditions. Opponents of TPP, such as labor unions and
through initiatives it considers appropriate, the importation
civil rights groups, are concerned that failure to promote
of goods produced in full or in part by forced labor,
and implement these rights could adversely affect working
including child labor. For the first time in a U.S. FTA, the
conditions and wages in other countries, as well as promote
parties also explicitly agreed to protect against degradation
the transfer of U.S. jobs overseas.
of fundamental worker rights or working conditions in free
trade zones or export processing zones. Parties also
ILO Declaration on Fundamental Principles and
committed to encourage businesses to voluntarily adopt
Rights at Work (1998)
corporate social responsibility initiatives on labor issues. If

a party believes that another TPP country is not meeting its

Freedom of association and the effective recognition of the
right to col ective bargaining;
labor commitments, the agreement establishes a means for
the public to raise concerns with TPP governments through

Elimination of all forms of compulsory or forced labor;
various commitments on transparency and procedural

Effective abolition of child labor; and
guarantees. The agreement also provides for a mechanism

Elimination of discrimination in respect of employment and
for cooperation and coordination, including opportunities
occupation.
for stakeholder input in identifying areas of cooperation.
The TPP allows each party to retain its own discretion in
allocation of enforcement and prosecutorial resources and
Labor Provisions in U.S. FTAs
does not empower a party’s authorities to undertake labor
Worker rights provisions in U.S. trade agreements have
law enforcement activities in another country.
evolved over time. The North American Agreement on
Labor Cooperation (NAALC), a legally binding parallel
The agreement establishes a labor dialogue mechanism that
agreement to NAFTA signed by the United States, Canada,
may be used to resolve labor issues expeditiously and to
and Mexico, contains commitments for countries to enforce
help parties mutually agree on a course of action. The
their own labor laws, a consultation mechanism for
mechanism could include action plans with specific and
addressing labor disputes, and a special labor dispute
verifiable steps such as labor inspection, investigation, or
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TPP: Labor Provisions
compliance action. Actions may also include cooperative or
Vietnam
capacity-building programs. Regardless of whether a party
The Vietnam implementation plan includes commitments
uses labor dialogue provisions, the TPP dispute settlement
for legal, regulatory, and institutional changes for the
provisions would remain available to TPP parties.
protection of all fundamental labor rights, particularly in
regard to union activity. Currently, Vietnamese workers
To establish a violation of a labor rights obligation, a party
have the right to join a labor union, but that union must
must demonstrate that another party has failed to adopt, or
become a member of the Vietnam General Confederation of
maintain a related statute, regulation or practice in a manner
Labor (VGCL), which is heavily influenced by the
affecting trade or investment between the parties. TPP
Vietnamese Communist Party. In addition, Vietnamese
dispute settlement procedures include the option for
workers have limited rights for forming trade unions and
consultation, arbitration, and the availability of trade
organizing strikes. The plan commits Vietnam to enact laws
sanctions. Penalties include monetary compensation or a
to permit workers to form an independent grassroots labor
suspension of benefits.
union without prior government authorization. Such unions
must register with the government and have the right to
Labor Consistency Plans
elect their own representatives, adopt constitution and rules,
The United States negotiated separate labor consistency
organize their administration, and organize and lead strikes.
agreements with Brunei, Malaysia, and Vietnam, countries
The Vietnamese government is to ensure that unions are
of concern in terms of labor protection. The plans include
able to administer their affairs with autonomy. Vietnam
commitments for specific legal, regulatory, and institutional
also committed to other actions in areas such as forced
reforms. The plans are part of the TPP agreement and
labor and employment discrimination.
subject to labor consultations and dispute settlement
provisions. Most commitments must be met before the
Five years after the agreement’s entry into force, the United
agreement enters into force. Each plan creates a bilateral
States is to review Vietnam’s commitments to protect the
review mechanism to allow for review and assessment of
right to form or join labor unions. The plan includes
each plan’s implementation over periods of up to 10 years.
procedures in the event the United States finds that Vietnam
The TPP is the first U.S. FTA that contains labor action
failed to comply with its commitments. If the two countries
plans as part of the agreement.
fail to agree on whether Vietnam’s commitments have been
met, the United States may withhold or suspend any tariff
Brunei
reductions scheduled to come into effect thereafter.
The Brunei implementation plan commits Brunei to legal,
Vietnam would have recourse to TPP dispute settlement.
regulatory, and institutional reforms for the protection of all
fundamental worker rights, particularly in regard to union
Issues for Congress
activity. Workers in Brunei are currently denied the right to
Proponents contend that a TPP would help poorer countries
strike, and the government has a record for not recognizing
build their capacity to support labor protections, enhance
trade unions. The plan commits Brunei to undertake further
economic growth, and support high-paying U.S. jobs,
reform of its trade union act to limit government discretion
particularly in the high-tech and electronics sectors. Labor
to register or cancel a union’s registration, establish
groups are concerned that TPP labor provisions are weak
protection for union activity, allow for international
and that the agreement would encourage businesses to
affiliation, provide procedures for collective bargaining and
move U.S. jobs to other countries. Some Members of
strikes, and strengthen protection against child labor and
Congress are particularly concerned about whether
forced labor. Brunei also committed to implementing a
countries such as Brunei, Malaysia, or Mexico would be
minimum wage for the first time and to ensure protection
able to meet TPP labor obligations or make significant
against employment discrimination.
reforms to their labor laws and practices. The Obama
Administration asserts that the TPP includes the strongest
Malaysia
labor standards of any existing U.S. FTA and that it would
The Malaysia implementation plan commits Malaysia to
allow the United States to “write the rules of the road in the
significant legal, regulatory, and institutional reforms in
21st century” in the Asia-Pacific region. Congress may take
regard to worker rights, in particular in the areas of forced
an interest in oversight of the agreement’s implementation.
labor and human trafficking. Malaysia currently places
significant restrictions on the freedom of association,
For more information, see CRS Report R44489, The Trans-
thereby limiting workers’ ability to form unions and on the
Pacific Partnership (TPP): Key Provisions and Issues for
right to strike. In addition, Malaysia’s record on human
Congress, coordinated by Ian F. Fergusson and Brock R.
trafficking is a problem of particular concern to some
Williams, and CRS Report R41550, U.S.-Vietnam
policymakers. Malaysia specifically agreed to amend its
Economic and Trade Relations: Issues for the 114th
trade union law to reduce government discretion regarding
Congress, by Michael F. Martin.
the formation, registration, suspension, cancellation, and
internal administration of trade unions; remove restrictions
M. Angeles Villarreal, Specialist in International Trade
on the right of collective bargaining and the right to strike;
and Finance
provide protections to foreign workers; and implement a
Ian F. Fergusson, Specialist in International Trade and
law to protect and empower trafficking victims. Other
Finance
commitments include increasing labor inspections and
implementing labor inspection training programs.
IF10452
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TPP: Labor Provisions

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