1. Labor Provisions in U.S. Free Trade Agreements Aaron Rosenberg Director for Labor Affairs Office of the United States Trade Representative July 2007

2. 2 U.S. Free Trade Agreements with Labor Provisions North American Agreement on Labor Cooperation U.S.-Jordan FTA – Article 6 U.S.-Singapore FTA – Chapter Seventeen U.S.-Chile FTA – Chapter Eighteen U.S.-Australia FTA – Chapter Eighteen U.S.-Morocco FTA – Chapter Sixteen U.S.-Central America-Dominican Republic FTA – Chapter Sixteen U.S.-Bahrain FTA – Chapter Fifteen U.S.-Oman FTA – Chapter Sixteen U.S.-Peru TPA – Chapter Seventeen U.S.-Colombia TPA – Chapter Seventeen U.S.-Panama TPA – Chapter Sixteen U.S.-Korea TPA – Chapter Nineteen

3. 3 Why labor obligations should be in trade agreements Social Dimension of Globalization - Assure that all workers share in the benefits of trade liberalization Promote “decent work”/job creation Level field - Help protect workers from unfair competition with workers who are denied fundamental rights Promote respect for worker rights and rights of children consistent with ILO core principles

4. 4 U.S. Policy – Trade Promotion Authority (TPA) Bipartisan Trade Promotion Authority Act of 2002 Overall Trade Negotiating Objectives Principal Trade Negotiating Objectives Promotion of Certain Priorities

5. 5 U.S. Policy – TPA Principal Trade Negotiating Objectives for Labor Ensure that a party to a trade agreement with the United States does not fail to effectively enforce its environmental or labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the United States and that party after entry into force of a trade agreement between those countries Recognize the right to exercise discretion with respect to investigatory and prosecutorial matters and allocation of resources

6. 6 U.S. Policy – Summary Have good labor laws consistent with international standards Effectively enforce those laws Do not weaken or reduce those laws as an encouragement for trade or investment Assist countries to strengthen capacity

7. 7 New Bipartisan Template Enforceable reciprocal obligation for the countries to adopt and maintain in their laws and practice the five basic internationally- recognized labor principles, as stated in the ILO Declaration on Fundamental Principles and Rights at Work Freedom of association; The effective recognition of the right to collective bargaining; The elimination of all forms of forced or compulsory labor; The effective abolition of child labor and a prohibition on the worst forms of child labor; and The elimination of discrimination in respect of employment and occupation.

8. 8 New Bipartisan Template The obligation refers only to the ILO Declaration on Fundamental Principles and Rights at Work Enforceable obligation to effectively enforce labor laws; five basic internationally-recognized labor rights, plus acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health Setting of standards and minimum wages not subject to obligations of the Chapter. Obligation pertains to enforcing the level of the minimum wage(s) established by the Party

9. 9 Dispute Settlement Provisions Public Communications (Submissions) Consultations Labor Affairs Council/Subcommittee on Labor Affairs Free Trade Commission/Joint Committee Arbitral Panel Loss of trade benefits or monetary assessment

10. 10 Dispute Settlement Provisions Labor obligations are subject to the same dispute settlement procedures and remedies as commercial obligations Focus on solving problems and remediation Multiple layers of consultations (formal and informal)

11. 11 Dispute Settlement Provisions Failure to effectively enforce labor laws requires demonstration of a sustained or recurring course of action or inaction A violation of the fundamental labor rights or effective enforcement of labor laws must occur in a manner affecting trade or investment between the parties Only a government can invoke dispute settlement against the other government for a labor violation under an FTA Available remedies are trade sanctions and fines, based on amount of trade injury As with commercial provisions, panel decisions are not self- executing

12. 12 Dispute Settlement Provisions Submissions may be made to the Party’s contact point The contact point for the United States is the Department of Labor’s Office of Trade and Labor Affairs A Federal Register Notice (Vol. 21, No. 245, 76691, dated December 21, 2006) explains the procedures and requirements for a submission

13. 13 Dispute Settlement Provisions If a submission is accepted, procedures begin with informal government to government consultations Labor Affairs Council (Labor Ministry officials) Minimum period for informal consultations is 60 days If no resolution, process moves to formal Ministerial-level (Trade Ministers) consultations Minimum period for formal consultations is 30 days

14. 14 Dispute Settlement Provisions If no resolution, arbitral panel may be formed from independent experts (including with labor expertise) Panel proceedings 120-180 days If panel finds violation, disputing Parties attempt to find a resolution If no resolution within 45 days, complaining party may impose trade sanctions Country may also choose to pay fine based on the amount of trade injury Complaining Party retains the fine

15. 15 U.S. FTA Labor Chapters Article 1 – Statement of Shared Commitment Article 2 – Application and Enforcement of Labor Laws Article 3 – Procedural Guarantees and Public Awareness Article 4 – Institutional Arrangements Article 5 – Labor Cooperation Article 6 – Labor Consultations Article 7 – Definitions Annex – Labor Cooperation Mechanism

16. 16 What the FTA Labor Provisions do not do Do not create or impose harmonized labor standards on the countries Review processes do not replace existing domestic institutions No supranational body with authority to enforce labor law Contact Points are not empowered to adjudicate individual rights Do not provide private rights of action against Governments or private entities Do not act as a barrier to trade

17. 17 U.S. Approach Three track approach to labor issues in U.S. FTAs: Negotiate a fully TPA-consistent labor text Engage with our FTA partners to analyze labor laws and practices to ensure that the obligations in the Labor Chapter are meaningful: Consistency with international standards Encourage consultations with ILO Commitment to enact reforms – subject to consultation provisions Enactment of legislation/implementation of regulations Ensure longer-term technical capacity to effectively enforce labor laws

18. 18 U.S. Approach - Results Labor reforms by partners consistent with international standards Processes place labor issues on the agenda of high-level government officials Increased transparency and public scrutiny – useful tools for addressing labor issues of mutual concern Improved international and domestic dialogue on labor issues Cooperative efforts to address workers’ rights (bilateral and multilateral)

19. 19 U.S. Approach - Challenges Trade mechanism to achieve continued economic growth, while improving the living standards and working conditions of all workers Balancing recognition of national sovereignty with provisions authorizing oversight of labor law enforcement Government commitment to engage in dialogue and cooperation to promote the agreed to labor rights and principles Monitoring enforcement of labor law and progress Involving Social Partners