Debates continue to rage as to whether the United States should ratify the United States-Mexico-Canada Agreement (USMCA), also known as NAFTA 2.0. Lost among these debates is an interesting progression from NAFTA 1.0 to 2.0 with respect to labor rights. NAFTA was originally negotiated without any labor provisions, but labor and environmental side agreements were added to facilitate ratification, and NAFTA went into effect in 1994. The labor side agreement specified 11 guiding principles that the three countries commit to promote—including union activity, nondiscrimination, equal pay, minimum wages, and workplace safety—but the emphasis is on cooperation to promote compliance with existing domestic laws. No new laws were required, and when there are disputes, there is a process of public consultation without significant enforcement powers. Violators would be named and shamed, but not sanctioned.
In subsequent U.S. free trade agreements, there has been an evolution towards requirements not only to enforce domestic laws but also to abide by the International Labor Organization’s core labor standards. Moreover, the labor provisions of post-NAFTA U.S. free trade agreements have upgraded the labor provisions from a side agreement to a labor chapter within the free trade agreement. This is now the case for the pending USMCA (NAFTA 2.0). Indeed, Mexico has just enacted labor law reforms to promote independent unions in order to comply with labor standards under NAFTA 2.0.
That labor standards are now included as labor chapters in U.S. free trade agreements rather than as side agreements is significant because it means that alleged violations of labor standards are addressed using the same dispute resolution procedures as trade disputes, and includes the possibility of monetary penalties. Complaints (called “submissions”) alleging a labor violation are submitted to the Office of Trade and Labor Affairs within the U.S. Department of Labor which then investigates. If consultation and dialogue steps fail to address a violation, a panel hearing can be held just as for commercial violations, and a ruling issued. In this respect, U.S. free trade agreements have stronger labor standard requirements than those negotiated among many other countries where dispute resolution is limited to dialogue and cooperation.
This is not to say that concerns with this evolving approach are unwarranted. Only one submission under other U.S. free trade agreements has reached the panel hearing stage. This case alleged that Guatemala failed to effectively enforce its labor laws in violation of the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR). It took nine years for this allegation to work its way through the process, and in spite of a finding that Guatemala failed to effectively enforce its labor laws, the panel ruled that there was not enough of a connection across the violations to find a sustained or recurring course of action or inaction that affected trade. So this is hardly a success story for those concerned with labor rights.
Nevertheless, it’s useful to understand the evolution of labor rights provisions under U.S. free trade agreements. Progress might be slow and imperfect, but there is an interesting trend toward greater consideration of labor rights. And perhaps the most lasting effects do not come from actual rulings, but from the linkages created by the transnational consultation and dispute resolution procedures. Unlike protests against the World Trade Organization (WTO) in which labor is an outsider, the NAFTA side agreement and the more recent labor chapters provide a legitimate mechanism for labor to express and seek resolution of grievances, and also specify procedural rules that require cross-border contact. This provides the basis for unions across different countries to cooperate in repeated, concrete ways, which in turn can create enduring, transnational union relationships. Indeed, led by the Canadian labor movement, NAFTA caused a shift in the attitudes of the Canadian and U.S. labor movements that went from seeing Mexican workers as “foreign workers” who are the problem—attitudes often tinged with racist stereotypes—to seeing them as partners in their struggle. These attitudinal changes go beyond NAFTA—the U.S. labor movement now openly embraces organizing immigrant workers and the AFL-CIO supports comprehensive immigration reform that includes a pathway to citizenship for undocumented workers.
So further evolution in free trade agreements that give legitimacy to the importance of workers' rights and spur transnational labor solidarity might have broader effects than what's actually caused by the specific details of a particular trade agreement's provisions.
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