Background Briefing

The Problem

Annex 22-B raises several important workers’ rights concerns, including inadequate labor rights criteria, a flawed process for assessing their fulfillment, and a potential “free rider” problem for North Korea.

Weak Workers’ Rights Criteria

The workers’ rights criteria that Annex 22-B instructs the Committee to consider in determining whether to recommend free trade accord extension to North Korean outward processing zones are not sufficient to ensure respect for labor rights in those zones.  The criteria are vague, weak, and fall far short of the new workers’ rights requirements in the main text of the US-Korea FTA.  As a result, they will allow the parties to permit the violation of zone workers’ basic rights under the agreement. 

The US-Korea FTA labor rights provisions, based on the trade policy template, establish that “[e]ach Party shall adopt and maintain in its statutes and regulations, and practices thereunder, the following rights, as stated in the ILO [International Labour Organization] Declaration on Fundamental Principles and Rights at Work and its Follow-Up (1998) (ILO Declaration)” and that “[n]either Party shall waive or otherwise derogate from, or offer to waive or otherwise derogate from, its statutes or regulations implementing paragraph 1 in a manner affecting trade or investment between the Parties.”6  The accord also requires that the parties shall not fail to effectively enforce their labor laws “through a sustained or recurring course of action or inaction, in a manner affecting trade or investment between the Parties.”7

However, Annex 22-B holds North Korean outward processing zones to a significantly lower standard.  The Committee evaluating a North Korean outward processing zone for potential inclusion under the trade accord must only consider “labor standards and practices, wage practices and business and management practices prevailing in the outward processing zone, with due reference to the situation prevailing elsewhere in the local economy and the relevant international norms.”8 

Annex 22-B does not require that North Korean outward processing zones uphold the “relevant international norms” in their statutes, regulations, and practice.  It also fails to require effective enforcement of the labor laws governing those “norms” or ban derogation of those laws in a manner affecting trade.  Annex 22-B does not even define “relevant international norms” to which the ambiguous “due reference” must be given; they could include all, some, or none of the fundamental workers’ rights articulated in the ILO Declaration. 

Furthermore, by directing the Committee to give “due reference to the situation prevailing elsewhere in the local economy,” Annex 22-B adds a criterion for assessing labor conditions that is not contemplated by the trade policy template nor its implementing language in the US-Korea FTA: conditions throughout the country.  Human Rights Watch rejects this criterion because it introduces a standard for evaluating working conditions other than internationally recognized labor rights and embraces as a valid standard the egregious workers’ rights violations “prevailing elsewhere” in North Korea.

For example, Human Rights Watch wrote in October 2006: 

It is generally accepted that North Korea prohibits organized political opposition or independent civil society. The country has an abysmal human rights record, including arbitrary arrests, pervasive use of torture, lack of due process and fair trials, and executions. There is no freedom of information or freedom of religion. There are no independent trade unions or labor activism. Most North Koreans do not enjoy the freedom to choose their own occupation, because job assignments follow the state’s central economic plan, rather than individual talents or wishes.9

It would be difficult to find a lower rights standard than that prevailing in North Korea.  As a result, labor statutes and regulations governing North Korean outward processing zones and the working conditions in those zones could fall far short of upholding fundamental workers’ rights yet still be superior to the situation in the rest of the country.  Human Rights Watch has found this to be the case, for example, in the Kaesong Industrial Complex (KIC), where working conditions are likely among the best in the country but where workers’ rights are still not adequately protected, as discussed below.  The KIC is the only current potential candidate for North Korean outward-processing-zone designation.

Flawed Review Process

Free and independent labor organizations, civil society, and press are nonexistent in North Korea.  International rights groups and organizations, like Human Rights Watch, are banned from the country.  Therefore, it is highly unlikely that the Committee on Outward Processing Zones on the Korean Peninsula will have reliable, first-hand, independent information about labor conditions in the zones when it applies the weak workers’ rights criteria of Annex 22-B. 

When foreigners, including US government officials, have been granted the requisite permission by North Korean authorities to tour the only operational potential outward processing zone, the KIC, they have been closely guarded and escorted by North Korean officials and, to our knowledge, not permitted to interview workers about working conditions.  As a result, the only available information about workers’ fundamental rights at the KIC is generated by agencies of the North Korean government, which presently demands and receives KIC workers’ salaries, from which it deducts roughly 30 percent, violating the KIC labor law requirement that workers be paid their wages directly and in full.10  With such restrictions and under such circumstances, it is virtually impossible to gain a complete and objective picture of working conditions at the KIC or any other future potential outward processing zone based on this model.

North Korea’s “Free Ride”

The failure of Annex 22-B to establish meaningful workers’ rights requirements for including outward processing zones under the trade accord and a credible process for assessing whether those requirements are met is especially problematic because North Korea is not a party to the US-Korea FTA.  As a third party, North Korea is not obligated to uphold any of the accord’s provisions, including those governing workers’ rights. 

Therefore, the process for assessing whether to extend the accord to North Korean outward processing zones is likely the only opportunity for the United States and Korea to evaluate labor conditions in those zones in the context of the agreement.  Once the North Korean outward processing zones clear the low labor rights hurdle established in Annex 22-B and the trade agreement is amended accordingly, they enjoy a “free ride”—all the rewards of the accord and no continuing workers’ rights-related obligations.  Poor workers’ rights conditions in the zones could continue or even dramatically deteriorate and labor statutes and regulations could be significantly weakened without violating the accord or risking any negative trade-related consequences for the zones.

Permitting any country to enjoy the benefits of a free trade accord with the United States without assuming its corresponding duties is problematic.  When that country has a rights record as dismal as North Korea’s, it is especially troubling, blatantly violating the trade policy template’s underlying principle that the rights of workers producing goods for export under US free trade accords shall be protected.

6 Ibid., art. 19:2.  The accord explains that the five fundamental workers’ rights listed in the ILO Declaration are freedom of association; the effective recognition of the right to collective bargaining; the elimination of all forms of compulsory or forced labor; the effective abolition of child labor and, for purposes of the agreement, a prohibition on the worst forms of child labor; and the elimination of discrimination in respect of employment and occupation. Ibid.

7 Ibid., art. 19:3.

8 Ibid., Annex 22-B, para. 3.

9 Human Rights Watch, “North Korea: Workers’ Rights at the Kaesong Industrial Complex,” October 2006, citing Korea Institute for National Unification, “White Paper on Human Rights in North Korea,” March 2006, pp. 177-184.

10 Human Rights Watch, “North Korea: Workers’ Rights at the Kaesong Industrial Complex,” citing Human Rights Watch telephone interview with a Ministry of Unification official, Seoul, August 23, 2006.  Although the South Korean Occupational Safety and Health Agency conducts workplace health and safety inspections at the KIC, it does not monitor respect for the fundamental workers’ rights articulated in the ILO Declaration.