Labor And Trade: Prioritize The Workers

We need to avoid a global race to the bottom in labor standards.

By Mandeep S. Minhas

onOctober 23, 2020 at 1:12 PMFebruary 19, 2023 at 9:43 AM

In 1947, the United States, Canada, and the United Kingdom led 20 other countries to negotiate the General Agreement on Tariffs and Trade (GATT). The agreement strove to promote economic stability and regulate international trade between member states but did not address labor standards. The GATT’s successor, the World Trade Organization (WTO), also fails to establish labor standards while urging states to conduct trade with a view toward raising standards of living and ensuring full employment.

The WTO’s lack of definitive labor standards led to advocacy for a stronger link between trade and labor rights. As a result, a majority of free trade agreements (FTAs) now include labor provisions.

In 1992, the United States, Canada, and Mexico signed the North American Agreement on Labor Cooperation (NAALC) as an accessory agreement to the North American Free Trade Agreement (NAFTA). The NAALC provides for the freedom of association, the right to strike, protection of migrant workers, and several other labor rights. Following the NAALC, in 2000, the United States entered into an FTA with Jordan that included labor standards within the actual agreement. The United States has continued to sign FTAs that include labor provisions with countries across the world, such as Chile, Singapore, Australia, Morocco, Bahrain, and Oman.

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From Pilot and Above The Law

In practice, however, the labor provisions perpetuate a disappointing narrative. In 2008, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and six Guatemalan worker organizations complained to the U.S. Office of Trade and Labor Affairs that the Guatemalan government violated its obligation under the Dominican-Republic Central American FTA (CAFTA). The workers filed the complaint under CAFTA’s Enforcement of Labor Laws provision. The complaint claimed that the Guatemalan government failed to ensure the right to freedom of association by barring labor inspectors from accessing factories and did not compensate unfair dismissals by enforcing domestic court judgments. According to the complaint, the Guatemalan government did not even investigate the murder of union leaders.

An arbitral panel considered the labor dispute and found that Guatemala did fail to enforce its labor laws. The unions were right! Guatemala violated its own labor laws. But the panel concluded that Guatemala did not gain a competitive advantage with its labor violations and, therefore, did not breach the FTA.

The dispute between the unions and Guatemala is just one example of inadequate labor provisions. To remedy FTAs we must put labor rights at the center and invite representatives from labor groups to join trade advisory committees. Does anyone believe that labor groups would have consented to a process that required a panel to first determine that a labor violation was “affecting trade or investment” in order to conclude that their had been a violation of the FTA?

In addition, as Senator Elizabeth Warren has proposed, that we establish a set of standards that countries must meet as a precondition for any trade agreement with the United States, one of the standards would require every trading partner to recognize and enforce core labor rights of the International Labor Organization. Warren also argues that we should replace the weak process of urging governments to enforce labor provisions with independent commissions that monitor violations, respond to complaints, and investigate complaints.