Last year, the International Labor Organization published a report that found the number of free trade agreements (FTAs) with provisions on worker rights had increased from four in 1995 to 21 a decade later and 58 by June 2013. Last week, I spoke at a conference hosted by the University of Toronto and organized by the International Labor Organization and the governments of Canada and Switzerland to explore whether these provisions are effective. If they are, under what conditions do trade agreements support worker rights and do the institutional design differences across American, European, and Canadian agreements matter?
How are these agreements different?
A key difference between American and European approaches to labor provisions in trade agreements is that US negotiators insist that these provisions must be both binding and subject to a formal dispute settlement process that could eventually end with trade sanctions. EU agreements include worker rights provisions that are nominally binding but explicitly excluded from dispute settlement. The European approach instead relies on transparency, public participation, and stakeholder engagement to address alleged violations. Canada also seeks to negotiate enforceable labor rights, but they opt for side agreements that emphasize the need for cooperation and capacity-building over sanctions and the potential sanctions do not include withdrawal of trade benefits.
Do these design differences really matter?
If the primary objective of the negotiators is actually something other than improving workers’ rights, then the answer is a bit hazy. As I’ve written here, labor rights provisions in US FTAs are first and foremost about getting trade deals through Congress. Emilie Hafner-Burton, in her excellent book on US and European policies in this area, argues similarly that policymakers do not typically embrace these labor protections because they are convinced by the moral and ethical arguments of human rights advocates. Rather, human rights provisions in trade agreements serve a range of political and policy objectives that are important to politicians.
Once an agreement is inked, then what?
Enforcement of FTA labor provisions in the United States has varied over time, particularly with shifts in the political winds. The Republican Party and the business community generally oppose the inclusion of labor provisions in trade agreements as unnecessary or, worse, as protectionist in intent. But they have accepted some form of workers’ rights protection in every US FTA since the North American Free Trade Agreement (NAFTA) in 1993, because it was necessary to gain approval for those agreements. It is not surprising, then, that the administration of President George W. Bush did little to promote the labor provisions included in FTAs during his tenure. The Obama administration has been more willing to investigate allegations of labor violations under various FTAs. But over the two decades since the NAFTA went into effect, only one complaint about potential FTA-related worker rights violations has come close to being subject to dispute settlement. And that case (which began under President Bush and is continuing under President Obama) is currently suspended while the parties monitor Guatemala’s implementation of an “enforcement plan” designed to address problems with freedom of association. You can see the submissions under NAFTA and how they were handled by various administrations on the International Labor Affairs Bureau website here and petitions under more recent FTAs here.
What have we learned?
It is still too early to say whether the threat of sanctions under the Central America-Dominican Republic FTA will materially and sustainably improve protection for worker rights in Guatemala. It is also too early to say whether the EU’s softer law approach will be effective because the agreements incorporating these provisions are relatively recent. But two other US cases suggest that dialogue and cooperation can be effective, at least in cases where all parties are committed to addressing problems. The Bush administration refused to use FTA dispute settlement procedures to formally investigate a complaint about worker rights violations in the Jordanian garment sector. However, through dialogue with the Jordanian government, and financial support from the US Agency for International Development and others, an ILO Better Work program was created to address worker rights and competitiveness in the garments for export sector. And in Peru, a dispute over the union rights of public sector employees was apparently resolved through bilateral talks leading to changes to Peruvian law that clarify the employees’ rights.
What lessons to draw from these and other experiences with labor provisions in FTAs is the subject of ongoing ILO research. My own research leads me to the conclusion that the European Union is right to emphasize dialogue and stakeholder engagement, and in particular to identify mechanisms that can empower workers to protect themselves. But there is also a role for trade sanctions as a last resort to address egregious, trade-related violations of worker rights that a government is unwilling or unable to rectify. I’ll be following the ILO research to see what light they can shed on these questions.