To those outside the trade world, it might seem like a foregone conclusion that the Trump Administration’s renegotiation of NAFTA would contain provisions hostile to, rather than supportive of, organized labor. However, trade has been the anomaly in this Administration. As we have pointed out before, the President has consistently borrowed Democratic talking points on trade. The NAFTA labor chapter is no exception.
That said, the Administration’s trade record on labor is mixed. Below is a summary of the provisions, and the issues. A fuller discussion can be found here.
The chapter is generally consistent with the standard applicable to U.S. agreements since 2007. Parties have to implement core labor standards; parties are prohibited from rolling back their laws in a manner affecting trade or investment; and the obligations are enforceable using the same dispute settlement mechanism as other chapters in the agreement. There are concerns about the effectiveness of the Agreement’s dispute settlement mechanism in general, but that issue will be tackled in a future blog.
There are also new provisions, some of which are groundbreaking.
- Prohibition on imports made in whole or in part with forced labor. This provision is similar to a U.S. law that was strengthened in 2016. In essence, it means that importers need to know their entire supply chain.
- Addressing violence against workers. Parties must address violence, and threats of violence, against workers. Violence and the threat of it are critical mechanisms used to thwart worker efforts to exercise core labor rights.
- Addressing gender discrimination in the workplace. In other agreements, Canada has included language requiring parties to prohibit gender discrimination in the workplace. However, these provisions have not been enforceable. Because the United States insists that labor obligations be fully enforceable, including this provision in NAFTA 2.0 transforms it from advisory to real.
- Including migrant workers. The chapter requires migrant workers to be protected by national labor laws – whether the migrants themselves are nationals, or not.
Although these provisions are important, they also include some unnecessarily weak language, which diminishes their potency.
What’s Not Good
There are also some issues.
- Enforceability. Unlike other chapters, labor (and environment) chapters are only enforceable if the breach occurs in a manner affecting trade or investment. This conditionality does not exist in other chapters, even where the provisions don’t necessarily involve a cross-border transaction.
- Lack of enforcement. Even if a chapter contains impeccable provisions, their value is diminished if they are not enforced. The Administration has not only failed to pursue labor disputes even as to pending complaints, but it allowed Colombia into the OECD despite the existence of such a complaint. The Obama Administration had refused to allow Colombia into the OECD until its outstanding labor issues were addressed.
- Where’s the prohibition on racial discrimination? The gender discrimination provisions are important, but there is no reason not to extend it to racial discrimination.
Annex on Mexican Labor Issues
There is an annex specific to Mexico, which has had longstanding issues with labor. The disciplines in the Annex are very good. However, as noted above, there are concerns about the political will to enforce these provisions. Moreover, in TPP the United States had negotiated a side letter with Vietnam that allowed the United States to suspend benefits if Vietnam did not comply with its labor commitments. No similar mechanism is included here (although there is a reference to the potential for delaying the Agreement’s entry into force).