Free Trade Agreements and Fundamental Rights

1. Free Trade Agreements and Fundamental Rights Behind the Border or a New Frontier? Decent Work and Fair Globalisation Turin, September 2005 John Ritchotte, ILO Geneva

2. FTAs and FPRs Will focus mainly on US-led FTAs, for reasons to be explained later Point of Departure � NAFTA/NAALC 1993 Brief detour - Singapore 1996 WTO Ministerial US � Vietnam Bilateral Trade Agreement 1999 Seattle WTO Ministerial Meeting 1999 US � Jordan FTA 2000 Brief detour � Singapore FTA 2003 Morocco FTA � 2004 A Comparison with the EU Closing thoughts on CAFTA, possible roles for ILO

3. Some Background NAFTA first trade agreement with �Labour Side Agreement�, formally the North American Agreement on Labor Cooperation (NAALC) Largely negotiated under President Bush, signed by President Clinton. Pressure by domestic groups to include labour clause in the agreement.

4. NAALC � Some highlights Establishes procedures, institutions, obligations, and cooperation on labour matters. Extensive cooperation on labour matters envisioned Enforcement of each Party�s labour laws should be fair, transparent, contain due process, etc. Complex multi/step �complaints� procedures, covering the following laws:

5. NAALC � Labour laws covered freedom of association and protection of the right to organize; the right to bargain collectively; the right to strike; prohibition of forced labor; labor protections for children and young persons; minimum employment standards, such as minimum wages and overtime pay, covering wage earners, including those not covered by collective agreements;

6. NAALC � Labour laws covered (cont.) elimination of employment discrimination on the basis of grounds such as race, religion, age, sex, or other grounds as determined by each Party's domestic laws; equal pay for men and women; prevention of occupational injuries and illnesses; compensation in cases of occupational injuries and illnesses; protection of migrant workers

7. NAALC Provisions �Persistent pattern of failure � to enforce� child labour, minimum wage or OSH laws can lead to �sanctions� (monetary penalties and snap-back tariffs) Parties shall seek to establish cooperative arrangements with the ILO to enable the Council and Parties to draw on the expertise and experience of the ILO for purposes of implementing Article 24(1). (The Evaluation Committee of Experts) NAALC mechanism still used, though not as heavily as before

8. Brief detour - Singapore First WTO Singapore Ministerial 1996. Ministerial Declaration reaffirms commitment to principles underlying CLS, and that countries comparative trade advantage should not be called into question. One of precursors to ILO Declaration on FPRs

9. FTAs and FPRs US Government statement at the adoption of ILO Declaration on FPRs in 1998 made clear that would continue to pursue trade � labour linkages Seattle WTO Ministerial meeting in September 1999. Failure at Seattle helped push USG towards pursuing bilateral agreements

10. US/Vietnam BTA - 1999 Normalized trade relations, extended MFN to Vietnam. Not an FTA. An �MOU� (not agreement) on cooperation and dialogue established through exchange of letters. Topics for cooperation include: ILS, skills training, employment services, social safety nets, OSH, labour inspection, HIV/AIDS, etc

11. US-Vietnam BTA In an Annex to the MOU, specific TC projects are discussed, inter alia, programs with the ILO: on labor law reform and improvements in the IR system, child labor and trafficking, and HIV/AIDS

12. US/Jordan FTA First FTA since NAFTA - signed in June 2000 Labour chapter written into the trade agreement (Article 6) Established the pattern for the FTAs to follow Common elements include:

13. US FTAs: Common labour clauses �Parties reaffirm their obligations as members of the ILO and their commitment under the ILO Declaration on FPRs. Parties shall strive to ensure that such labour principles and the internationally recognized labour rights set forth in Para X [defined in slide # 17] are recognized and protected by domestic law�

14. US FTAs: Common labour clauses Inappropriate to encourage trade (and investment) by relaxing domestic labour laws. Strive to ensure that it does not waive or otherwise derogate from such laws as an encouragement for trade with the other Party (or to attract investment from any Party)

15. US FTAs: Common labour clauses Recognizes the right of each Party to establish its own domestic labour standards, and to adopt or modify accordingly its laws and regulations. Each Party shall strive to ensure that its laws provide for labour standards consistent with the internationally recognized labour rights set forth in Para X

16. US FTAs: Common labour clauses Each Party shall not fail to enforce its labour laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties. Each Party retains the right to exercise discretion with respect to enforcement of its laws

17. US FTAs: Common labour clauses [Para X] For purposes of this Article, �labour laws� means statutes and regulations that are directly related to the following internationally recognized labour rights: right of association right to organize and bargain collectively Prohibition on the use of any form of forced or compulsory labour Minimum age for the employment of children Acceptable conditions of work with respect to minimum wages, hours of work, and OSH

18. US FTAs: Jordan Tension between national sovereignty and oversight of labour rights (US Senate reaction) Deals with FPRs, not standards Poorly defined content of FPRs Limited to �traditional� US trade-labour issues. Discrimination, and other NAALC items, drop out. No specific follow-up for labour: Joint Committee examines range of matters in the FTA

19. Brief detour: US Singapore FTA Only FTA that makes reference to Paragraph 5 of the ILO Declaration.

20. US Morocco FTA All FTAs after Jordan (Singapore, Panama, Bahrain, Australia, Chile, CAFTA, etc.) contain more detailed in the clauses on enforcement and oversight of labour. All have labour written into the FTAs. Morocco signed in June 2004. Shows the evolution of USG�s approach to labour matters

21. US/Morocco FTA Same common opening Paragraphs Same definition of �labour laws� Includes wording on weakening law to attract and retain investment Access to fair, impartial and transparent tribunals Final decisions of these judicial processes are in writing, provide basis for decisions, open to the public, etc Public awareness and education on labour law

22. US-Morocco FTA - Setting up Institutions Contact point established within Ministry, which will provide for submission, receipt, and consideration of public communications on matters related to labour chapter Communications, decisions should be made public Extensive bilateral collaboration on a range of labour matters

23. US Morocco FTA: Disputes over labour law enforcement A separate dispute procedure exists for labour and environmental clauses A multi-step process, including establishment of a three-person panel to review dispute Option for monetary penalty of up to $15 million per year

24. EU and US GSP, EU FTAs In past several years, US has withdrawn or threatened to withdraw GSP from Pakistan, Bangladesh, Swaziland, several Central American countries, for not upholding commitments on labour matters. Most recently, it has agreed to receive petition against Uganda. EU has suspended GSP for Myanmar, and carried out a review of Sri Lanka. New GSP Plus may be an improvement. In review of EU FTAs, cannot find any serious treatment of labour matters

25. Issues for Discussion Not the content of standards that are open for interpretation, but the content of the FPRs. Deals only with the �formal� economy, tradeable sectors Makes trade, foreign affairs, finance ministries focus on labour issues In first report under the Declaration, US admitted that its law and practice may not live up fully to FA/CB principle.