The Bush administration is quietly carrying on a major new trade negotiation with Central America that could show -- contrary to the notion that globalization hurts workers -- how international trade deals can increase respect for labor rights. But the Bush team must get the right formula into its briefing books.
This week the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua have been conducting the sixth of nine negotiating rounds for a U.S.-Central America Free Trade Agreement (CAFTA). The United States has already proposed labor rights provisions for CAFTA similar to those in the U.S free trade agreements with Chile and Singapore. But those are the wrong models.
The Chile and Singapore agreements require only that countries enforce their existing labor laws, even if those laws are too weak to protect workers' human rights and punish abusers. In Central America that simply won't work.
Take El Salvador. In February, while conducting investigations for Human Rights Watch, I found rampant abuse of workers' human rights, largely due to weak laws and a government with little interest in enforcing --much less improving -- them. Union leaders and members are illegally fired with no right to reinstatement. Employers share lists of "troublemakers," making it difficult, if not impossible, for workers who stand up for their rights to find jobs. And children as young as 10 cut sugar cane under hazardous conditions, while labor ministry officials regard them as "parents' helpers" and look the other way. Even current and former labor ministry officials, speaking anonymously for fear of reprisals, acknowledged to me the ministry's systematic failure to follow mandatory inspection procedures, reluctance to report harmful child labor in agriculture, indifference to and complicity in anti-union conduct, and obstruction of union registration.
To account for these and other serious labor rights abuses in the region, the United States should negotiate provisions in CAFTA that address two fundamental questions: What would motivate Central American countries with weak labor laws and even weaker enforcement mechanisms to start upholding international standards? And what would motivate them to continue to do so?
The answer to the first question should be based on the U.S.-Cambodia textile agreement, touted by U.S. Trade Representative Robert Zoellick as "an excellent example of the way trade agreements lead to economic growth and promote a greater respect for workers' rights." The agreement allows the United States to raise limits on its Cambodian textile imports if working conditions in that sector "substantially comply" with local labor laws and international standards.
A similar approach to U.S. market access under CAFTA should be adopted. The United States ought to grant tariff reductions only if it determines, in annual reviews, that the Central American countries' labor laws have been amended to comply with international standards and that they are effectively enforced. The reviews should be conducted, and the reductions granted, sector by sector. And the International Labor Organization should have a key monitoring role, as it does with the U.S.-Cambodia agreement.
This approach creates an incentive -- a carrot, not a stick -- to encourage respect for workers' human rights, granting tariff reductions commensurate with the speed at which countries improve labor conditions. It turns the "race to the bottom" on its head, as five Central American countries strive for high labor standards to gain greater access to U.S. markets. It avoids the broad-brush approach of sanctioning a country for the ills of one sector, because problem sectors are denied tariff reductions while better-performing sectors enjoy them.
But what prevents Central American countries from reverting to their old laws -- or even weakening them -- when tariffs are fully eliminated? Nothing, under the CAFTA labor rights provisions that the United States proposed in May. To prevent such backsliding, CAFTA should also require that domestic labor laws continue to meet international standards and not later be lowered to attract trade or investment. Violations of these requirements should carry the same penalties as CAFTA's commercial provisions, including possible fines and sanctions.
What if CAFTA fails to include these provisions? Central American countries will have no incentive to improve their deficient labor laws. They will enjoy ever-greater tariff benefits, while labor rights abuses persist. And the Bush administration will have lost an opportunity to demonstrate how free trade can benefit workers.
