A Way Forward for Workers' Rights in US Free Trade Accords

Summary

The new US administration that comes into office in January 2009 will be responsible for implementing labor provisions in existing US free trade agreements and face the challenge of restructuring the accords and the larger US trade agenda to better protect workers' rights. This report examines the current US approach to workers' rights in trade agreements, identifying serious deficiencies, and proposes specific steps the new administration should take to address the shortcomings.

This report's analysis and recommendations focus primarily on how the United States can better ensure that its free trade accords guarantee respect for workers' rights in the territory of its trading partners. We recognize, however, that to create a US free trade regime rooted in respect for workers' rights, all parties to US bilateral and regional accords must press their trading partners to uphold such rights. Only then will the goal of greater labor rights protection in all trading partners, including in the United States, be achieved.

Human Rights Watch takes no position on free trade per seor the recent proliferation of US bilateral accords, but we believe that trade agreements provide important leverage and opportunities to promote workers' rights. While there has been some recent progress in US policy, including improvements based on the May 2007 trade policy template, the United States still fails to effectively utilize the powerful tool of trade accords. Human Rights Watch believes that significant, bold changes are needed that not only strengthen substantive labor provisions but improve state compliance and facilitate enforcement.

US free trade accords should clearly and unambiguously require parties to uphold core workers' rights in their domestic laws. These are universally recognized rights identified in the International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work and defined in the relevant ILO conventions. Parties to trade agreements should be required to effectively enforce such laws as well as laws governing acceptable conditions of work in all sectors involving trade and investment between the parties. Trade accords should also include provisions imposing penalties on companies and employers implicated in labor abuses.

Compliance with US trade agreements' labor requirements should be a priority from the beginning of trade negotiations, rather than, as is too often the case at present, near the end of negotiations or after they have concluded. At the first round of talks, the United States should clearly outline for each potential trading partner the areas in which its domestic labor regime falls short of trade accords' workers' rights provisions and offer necessary assistance to remedy the deficiencies. The negotiations should not conclude until compliance is achieved.

Of course, robust workers' rights provisions and early intervention to facilitate compliance are unlikely to lead to long-term improvements if the provisions are not implemented effectively. And historically, the enforcement of US free trade agreements' labor rights requirements has been terrible. In the 14 years since the first trade agreement with such provisions went into effect, not one labor-rights-related complaint under any agreement-eight are currently in force-has advanced beyond ministerial-level consultations between the parties. To ensure more effective enforcement, complaint and dispute settlement processes must be greatly depoliticized and the broad enforcement discretion enjoyed by states significantly reduced.

To these ends, clear requirements should be imposed for the initial review and investigation of each complaint alleging violation of an agreement's workers' rights provisions. State-to-state consultations should automatically follow if the initial review identifies workers' rights deficiencies; such consultations should be geared toward reaching an effective plan to remedy the failings. And until an action plan to address these labor shortcomings is established and fully implemented, the labor complaint should automatically proceed through the complaint process to initiation of formal dispute settlement procedures, the convening of an arbitral panel, and, ultimately, determination of whether an accord violation has occurred and imposition of appropriate fines or sanctions.

Trade agreement complaint and dispute settlement processes should be further improved to ensure more systematic, credible, and objective enforcement of workers' rights guaranteed by the accords. Such processes are complex, with often rigorous complaint submission criteria, and they must be more widely accessible to groups with first-hand knowledge of abuses. These processes historically have been underutilized, and mechanisms should be established to assist potential complainants, including an entity modeled on the US Department of Commerce's Trade Compliance Center (TCC), whose assistance in commerce-related cases can be accessed with a simple email, fax, or phone call. Programs should also be developed to boost awareness in the United States and abroad of trade accords' labor rights provisions and enforcement processes. In addition, the processes should be more transparent and allow for more regular public participation; organizations making allegations of labor abuse and the private employers and companies implicated should enjoy an opportunity to be heard.

Even the most accessible and transparent complaint and dispute settlement processes, however, are likely to address only a fraction of the violations, given the limited number of organizations tracking such issues. To prevent this outcome, the United States should engage in proactive monitoring, including by conducting inspections in its trading partners and initiating complaint and enforcement processes if problems are identified.

Human Rights Watch believes that implementation of these recommendations, elaborated in greater detail below, would represent an important step toward ensuring respect for the rights of workers producing goods and rendering services under US free trade accords. Without such changes, we fear that the United States will continue a strategy that purports to protect such workers' rights but fails to do so in practice.

Background: The 2007 Trade Policy Template and Shortcomings in Prior Trade Accords

The United States has concluded 13 free trade agreements with workers' rights provisions at this writing. Ten have been ratified, and eight are currently in force.[1]Four agreements-with Peru, Panama, Colombia, and Korea-include labor provisions based on the May 2007 trade policy template, a conceptual agreement that outlines a range of changes to be incorporated into pending and future US free trade accords.[2]

Shortcomings in Trade Accords Prior to the 2007 Trade Policy Template

The nine free trade agreements with labor rights requirements concluded prior to the May 2007 template suffer from serious shortcomings. These include:

·The agreements only require that countries effectively enforce certain existing domestic labor laws, regardless of whether they meet international standards. There are no penalties, such as fines or trade benefit suspension, for parties whose laws fail to uphold workers' rights.[3]

·The accords lack enforceable provisions requiring parties to implement existing domestic laws governing employment discrimination, including any bans on sexual harassment, mandatory pregnancy testing, and racial bias. And only one, the North American Free Trade Agreement (NAFTA), even encourages parties to do so. The rest are silent on the issue.[4]

·The agreements, except the US-Jordan Free Trade Agreement, lack "enforcement parity" for workers' rights, which would provide the same dispute settlement processes and penalties, including fines and sanctions, for the enforcement of labor and commercial obligations. And the US-Jordan accord's enforcement parity was effectively eliminated by the Bush administration when it sent a side letter to the government of Jordan in 2001 stating that the United States did not intend to invoke the agreement's dispute settlement process in labor-related cases.[5] In all such agreements, save the US-Jordan accord, the mechanisms established for enforcing labor rights provisions are different from and inferior to those in place for commercial requirements. For example, the accords cap the fine amounts that can be imposed for workers' rights violations and reduce the punitive impact of those fines by channeling them back into, rather than out of, offending countries.[6] In contrast, fines imposed for commercial violations are calculated based on the financial harm the violations caused, regardless of how great, and unless other arrangements are made, are paid directly to the aggrieved party.[7] NAFTA underscores this enforcement disparity by including its workers' rights protections in a side accord, rather than in the main text of the agreement.

·With the exception of NAFTA, each accord contains a gaping loophole that allows parties to selectively apply labor laws or slash resources for their enforcement and still be in compliance with the accord's requirement that parties effectively enforce their labor laws. Specifically, the agreements state that a violation has not occurred as long as "a course of action or inaction" regarding labor law enforcement "reflects a reasonable exercise of ... discretion, or results from a bona fidedecision regarding the allocation of resources."[8]

Improvements in Trade Accords Under the 2007 Trade Policy Template

The four accords based on the new trade policy template address many of these prior agreements' shortcomings. For example, these four accords:

·Require parties to effectively enforce laws governing all fundamental workers' rights, including bans on employment discrimination, as well as laws establishing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health;[9]

·Establish enforcement parity for labor and commercial provisions, making the same dispute settlement mechanisms available to enforce all terms of the accords;

·Eliminate the language in prior accords that permits parties to cite "a reasonable exercise of ... discretion" or "a bona fidedecision regarding the allocation of resources" as acceptable justification for poor labor law enforcement,[10] providing instead that "[a] decision a Party makes on the distribution of enforcement resources shall not be a reason for not complying with the provisions of this [labor] Chapter";[11] and

·Require parties to "adopt and maintain" in domestic law and practice the core workers' rights "as stated" in the ILO Declaration on Fundamental Principles and Rights at Work,[12] though the requirement is muddied and potentially significantly weakened by a confusing footnote in each agreement, discussed below.

Human Rights Watch believes that these baseline provisions should be included in all future US free trade accords. Every effort should also be made to renegotiate past accords, beginning with NAFTA, to ensure that they, too, incorporate these labor rights protections.[13]

While the May 2007 template-based provisions represent an important step forward, they are still insufficient to guarantee workers' rights in the context of trade. In what follows, we detail the elements that a new framework for protecting workers' rights in US free trade accords should include.

Improving Workers' Rights Protections

Protecting Core Workers' Rights in Domestic Laws

Human Rights Watch believes that all parties to US trade accords should at least be required to effectively protect the four core workers' rights identified in the ILO Declaration on Fundamental Principles and Rights at Work in their domestic laws. If those laws fall short of international standards, even their diligent application will not ensure that workers can fully and freely exercise their basic rights.

At first glance, the four template-based free trade agreements include just such a requirement. However, a footnote muddies this seemingly straightforward provision, stating that the requirement that each party "adopt and maintain in its statues and regulations, and practices thereunder, the ... rights, as stated in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-Up" refers "only to the ILO Declaration."[14]

The ILO Declaration obliges all ILO members "to respect, to promote and to realize, in good faith" the ambiguous and much debated "principles concerning the fundamental rights," as opposed to the more clearly articulated "fundamental rights" specifically defined in the relevant ILO core conventions and their interpretative jurisprudence.[15] While protecting "rights" entails abiding by ILO conventions, and the main text of the template-based agreements clearly requires just such compliance from all parties, the meaning of respecting the "principles" derived from the conventions is much less clear.[16] Although a relationship exists between the nebulous "principles" and the more well-defined "rights," the relationship is unresolved and it is not clear the extent to which respecting the "principles" means adhering to ILO conventions. Instead, it is a question that will have to be answered when an arbitral panel, facing a complaint alleging failure to "adopt and maintain" core workers' rights in domestic laws, first is called on to interpret this new template-based provision.[17] Until then, the precise scope of the obligation to incorporate core workers' rights into domestic labor laws will remain unclear.

Recommendation

Require Laws that Protect Core Workers' Rights

The confusion from the above-described footnote should be eliminated. Instead, the clear language of the main text of the four template-based free trade accords should be included in all US trade agreements, without any qualification. Each US trade accord party should categorically be required to "adopt and maintain in its statues and regulations, and practices thereunder, the ... rights as stated in the ILO Declaration"-not the "principles concerning the fundamental rights," but the rights themselves as listed in the Declaration and defined in the ILO core conventions.

Protecting Workers in All Trade- and Investment-Related Sectors

Human Rights Watch believes that the workers' rights protections in US free trade agreements should, at a minimum, extend to all workers in sectors related to trade and investment between the parties, since those are the workers most directly affected by the accords.[18] On their face, the four template-based agreements seem to suggest such coverage, expanding on language in most prior accords that included only trade-related sectors. These four agreements establish that parties violate the accords when, "in a manner affecting trade or investment between the Parties," they fail to adopt and maintain core workers' rights in their domestic labor laws, waive or derogate from those laws or offer to do so, or fail to effectively enforce them.[19]

The concept of "affecting trade or investment between the Parties" is unclear, however, and it is important that a new administration ensure that interpretation of the provision does not unduly limit the scope of the accords' workers' rights protections. The phrase, for example, could be narrowly construed to require a showing that a country's breach of an agreement's labor provisions led directly to lower labor costs, causing: 1) correspondingly cheaper goods, making it more difficult for producers in other trading partners to compete; or 2) increased foreign direct investment.

Such a showing, of course, would be difficult and often impossible to make. For example, it might require empirical evidence that sexual harassment of young female factory workers, facilitated by lax enforcement of anti-discrimination laws, led to more cheaply produced goods. Or it might require proof that retaliatory dismissals of union leaders and thwarted organizing drives, perpetuated by inadequate protection of the right to freedom of association, resulted in increased foreign direct investment by investors seeking a union-free environment.[20] Requiring such showings would minimize rights violations by shifting the focus to technical, often unanswerable questions of causality. In such cases, the scope of the accords' labor rights provisions would be significantly reduced and their impact greatly undermined.

Recommendation

Ensure that Labor Rights Provisions Apply to All Trade- or Investment-Related Sectors Following the example of NAFTA, which allows for an arbitral panel to be convened to address any "trade-related" failure to enforce certain labor standards,[21] all US free trade accords should clarify that an agreement violation occurs, at a minimum, whenever workers' rights provisions are breached in "sectors related to trade or investment between the Parties."

Accounting for Corporate Responsibility

Human Rights Watch believes that all US free trade accords should recognize that private actors such as corporations can be and often are complicit in labor abuses and ensure that such actors are held accountable for workers' rights violations. Presently, US trade accords provide solely for penalties against states.

US free trade agreements, with the exception of the US-Jordan accord, currently give at least a nod to corporate complicity in labor rights violations, but they fail to address the culpability of corporations and employers with any degree of specificity. With the exception of NAFTA, existing accords suggest but do not require that states "first seek to" suspend trade benefits in the same sector or sectors at issue in the labor complaint in question, thereby penalizing the industry most responsible for the violations.[22] NAFTA demands that "a complaining Party shall first seek to suspend benefits in the same sector or sectors" at issue.[23] These agreements, however, including NAFTA, allow states to sidestep these provisions, stating that if a complaining state finds such same-sector suspension not "practicable" or "effective," it may choose to suspend benefits in other sectors. In such cases, the punitive and deterrent effects on the employers and corporations that actually violated workers' rights would be negated.[24]

Furthermore, US trade accords provide a violating state with the option of paying an annual fine instead of suspending trade benefits. But the agreements do not suggest, much less provide a mechanism for, recouping some or all of that fine from the sector or sectors where the labor rights violations at issue occurred. Thus, if a state opts to pay a fine, employers and corporations enjoy impunity under the accords for their complicity in workers' rights violations.

Recommendations

Require Arbitral Panel Reports and Action Plans to Address Private-Public Complicity

US free trade agreements should require that an arbitral panel's report propose both concrete recommendations to a violating government and to each private employer and corporation directly or indirectly implicated in any rights abuses identified. Recommendations to employers and corporations should include specific provisions for compensation to the workers whose rights have been violated. Similarly, any resolution reached by the parties to address the rights violations confirmed in the arbitral panel's report should include remedial measures to be taken by the implicated employers and corporations, including direct payments, other appropriate redress for the affected workers, and measures to prevent future violations.

Suspend Benefits for Corporate Violators of Workers' Rights

US free trade accords should provide that if a penalty-whether fine or sanction-is imposed on a violating state, the private exporters implicated in the violation lose trade agreement benefits unless they adopt and implement all relevant arbitral panel recommendations. Such exporters should be deprived of trade agreement benefits:

1)in whole, if the arbitral panel confirms that the exporters participated directly in the abuses at issue by violating their employees' rights or by failing to protect the rights of workers employed on their worksites;

2)in part, if the arbitral panel confirms that the exporters participated indirectly in the abuses at issue by sourcing from the third-party suppliers or producers directly implicated in the violations. In such cases, the exporters should lose benefits in proportion to the percentage of their exports to the complaining party sourced from the violating facilities.

Improving Compliance in US Trading Partners

 All parties to US free trade agreements should make compliance with workers' rights provisions a priority from the start of trade talks. To facilitate such compliance, the United States should raise workers'-rights-related concerns with its potential trading partners at the beginning of trade negotiations and make clear that it will not conclude an agreement until such concerns are satisfactorily addressed.

In contrast to commercial concerns, which the United States customarily identifies near the beginning of trade accord negotiations and pressures a potential trading partner to rectify before talks wrap up, workers'-rights-related deficiencies are often not raised until the last stages of negotiations or, worse, until after they have concluded. Even the "meaningful labor rights report" that the now-expired Trade Act of 2002 required the executive branch to prepare on each potential US trading partner's labor laws and practices was drafted in every case after the trade accord had been concluded and only shortly before the accord was submitted to the US Congress for approval.[25]

The measures needed to bring a country's labor laws and practice into compliance with the workers' rights provisions contained in US trade agreements are frequently complicated and politically fraught, and they can take years to complete-often the full two to three years that many trade negotiations last.[26] A last-minute approach to identifying labor-rights-related deficiencies, therefore, can lead to imperfect and incomplete solutions, as potential US trading partners scramble to remedy their failings before their accords are sent to a demanding and, at times, hostile US Congress. For example, Peru issued piecemeal, controversial labor-related executive decrees on the eve of congressional consideration of the US-Peru agreement, in lieu of more effective and comprehensive but time-intensive labor law reforms. Similarly, in the case of the pending US-Colombia accord, instead of working closely with Colombia on its workers' rights problems from the start of trade talks in November 2003, the US government is now seeking to identify quick and easy fixes as the debate over the accord rages, rather than long-term, sophisticated solutions that Colombia's entrenched and complex problems demand.

Recommendations

Require that a Redefined "Meaningful Labor Rights Report" be Produced Before Trade Talks Start

The US Department of Labor should be required to prepare a truly "meaningful labor rights report," one that is submitted to the US trade negotiating team and relevant committees of the US Congress before any trade talks start, is sufficiently succinct to be useful, and is redefined to focus on the areas in which a potential trading partner's labor laws and enforcement fall short of what will be required in the free trade agreement under negotiation.[27] The report should also set forth recommendations for improvement and establish clear benchmarks that a potential trading partner must meet before being deemed in full compliance.

Identify Labor Problems at the Start of Trade Negotiations and Demand Solutions

US trade negotiating teams should communicate to any potential US free trading partner at the start of trade negotiations the findings, recommendations, and benchmarks set forth in the redefined "meaningful labor rights report" prepared for that country and demand that the recommendations be fulfilled and the benchmarks met before negotiations are finalized. This approach would loosely follow the example of Trade and Investment Framework Agreements, which the United States often negotiates with countries to "address[ ] specific [commercial] trade problems" and "creat[e] momentum for liberalization that in some cases can lead to a Free Trade Agreement."[28]

Facilitate Compliance

The United States should assist trading partners by providing technical assistance and needed capacity building, including financial assistance, both during trade talks and after agreements are in force to facilitate compliance with recommendations and benchmarks on effective labor law enforcement.[29] To ensure that such assistance is effectively and appropriately utilized, the US Congress should explicitly grant the US Department of Labor multi-year spending authority to distribute needed aid but make each disbursement of aid contingent upon regular demonstrations by the receiving parties of measurable workers'-rights-related improvements.

Improving Enforcement

The record of enforcement of US free trade agreements' labor rights provisions has been abysmal. In the 14 years since US free trade accords began including workers' rights protections, no labor-rights-related complaint has progressed past ministerial-level consultations between the parties. And of the 34 cases filed under NAFTA, only 14 even made it that far.[30] As a result, no complaint has led to an in-depth, independent, expert investigation of the claims. And no case has resulted in the initiation of the dispute settlement process or the convening of an arbitral panel to determine whether violations occurred and whether the imposition of fines or benefit suspension was warranted.

The lack of US government mechanisms to promote such enforcement contributes to this egregious failure. While the US Department of Commerce and International Trade Commission (ITC) have programs to assist US entities seeking to file commerce-related complaints, no parallel assistance is available for potential labor complainants. And although the US Department of Agriculture Food Safety and Inspection Service sends inspectors abroad annually to audit compliance with US meat-, poultry-, and egg-related regulations, no similar foreign monitoring occurs to audit compliance with trade accords' workers' rights provisions.

In this section, we examine the inadequacy of the tools currently available to US government officials to promote enforcement of US free trade agreements' labor protections, identify other key factors that have contributed to the glaring enforcement failure, and offer recommendations for improvement.

Depoliticizing Labor Rights Enforcement Mechanisms

Two interrelated factors are chiefly responsible for ineffective enforcement of US trade accords' workers' rights provisions: the excessive discretion granted parties in determining the fate of complaints alleging labor rights violations; and the extreme politicization of labor rights complaint and dispute settlement processes. These shortcomings can render workers' rights provisions virtually impotent even in the face of egregious violations.

In the United States, the Department of Labor's Office of Trade and Labor Affairs (OTLA) is responsible for receiving submissions alleging noncompliance with US trade agreements' labor provisions. However, OTLA regulations ambiguously instruct the office to "conduct further examination of the submission as may be appropriate" and issue a report that includes "any findings and recommendations."[31] The regulations fail to require OTLA to follow a specific investigative methodologyand fail to demand that findings and recommendations be made on every issue raised in a complaint.[32]

OTLA regulations also provide that once OTLA completes its review of a labor complaint and issues a report, the office may only make nonbinding recommendations tothe US Secretary of Labor regarding whether cooperative consultations with the accused party are appropriate;[33] whether a council of the parties' labor ministers or a committee of experts, in the case of NAFTA, should be convened in the event that the initial cooperative consultations fail;[34] and whether the formal dispute settlement process should be initiated in the event that no resolution is reached through the council or expert committee.[35] Under the regulations, the United States enjoys complete discretion in making these decisions-though the specific US agency to which these decisions fall is left unclear-and can ignore any relevant OTLA recommendations on the matter.[36]

Such broad discretion is rooted, in part, in the language of US free trade accords, which gives states significant freedom to decide whether to invoke labor rights complaint and dispute settlement systems. For example, agreements establish that a party: "may request" cooperative labor consultations with another party regarding issues arising under the agreement; "may request" that a labor council or committee of experts, in the case of NAFTA, be convened if the first cooperative consultations fail; and, if the matter still remains unresolved, "may" invoke the formal dispute settlement process.[37] The trade agreements further extend a party's enforcement discretion to the formal dispute settlement process itself, providing that if additional consultations held under the dispute process also fail, a party "may request ... the establishment of an arbitral panel" to assess if accord violations occurred and to potentially determine an appropriate fine or sanction.[38]

Furthermore, governments also have significant discretion over the content of certain key stages in the complaint and dispute settlement processes. For example, once the United States decides that cooperative labor consultations with an accused party are appropriate, there is no requirement that the consultations lead to the resolution of or even address the key shortcomings or recommendations identified in an OTLA report.[39] In addition, all trade accords since NAFTA with the exception of the US-Jordan agreement explicitly allow a party to initiate formal dispute settlement procedures as soon as 60 days after a party's request for the initial cooperative consultations but do not establish a deadline for when such cooperative consultations must be concluded. Nor do they establish a deadline for fulfillment of implementation agreements resulting from these consultations. This has led to years of delay in some cases.

Human Rights Watch understands that such enforcement discretion is not unique to labor rights provisions of trade agreements. Similar discretion is also a standard element of state-to-state enforcement of commercial provisions in bilateral and regional US trade accords and in multilateral trade instruments, such as the World Trade Organization's Dispute Settlement Understanding. Furthermore, Human Rights Watch recognizes that such discretion has opened the door for overburdened US government agencies responsible for administering trade agreements' commercial provisions to increasingly de-prioritize enforcement of such provisions,[40] resulting in fewer commercial enforcement actions per year despite an ever-growing number of trade accords.[41] US industries and members of the US Congress have taken notice,[42] including Senator Max Baucus, who sponsored the Trade Enforcement Act of 2007, designed in part to "significantly bolster enforcement of our trade agreements abroad."[43]

Human Rights Watch takes no position on the negative impact of broad state discretion on the application of commercial requirements. Nor do we have views on the measures that may be appropriate to remedy any such enforcement shortcomings, including whether our labor-related recommendations below should be adapted to the commercial context. Our focus, instead, is on addressing the devastating consequences that virtually unfettered state enforcement discretion has had on the application of US trade accords' labor rights requirements.

The tendency to de-prioritize enforcement-an often unpleasant, acrimonious process-evidenced in the commercial setting has been further exacerbated in the labor rights context by the unwillingness of the United States and its trading partners to strain diplomatic relations over workers' rights concerns. Historically, non-labor-related considerations-geopolitical, strategic, and others-have taken priority even in the face of egregious abuses.

As a result, the decisions regarding labor rights enforcement have had little to do with actual levels of compliance with US trade agreements and very much to do with political expediency. This trend must be reversed; observance of and adherence to fundamental human rights should not depend on accord parties' political whims.

Recommendations

Strengthen OTLA Regulations on Complaint Reviews

OTLA regulations should be amended to require that, for every complaint accepted for review, OTLA:

1)produce a report that must at least include specific findings and detailed analyses on all of the issues raised in the submission;[44]

2)in each report, provide concrete recommendations to address every allegation confirmed by the OTLA investigation, including specific recommendations for each private employer and corporation directly or indirectly implicated. Such recommendations should include direct payments and other appropriate compensation for the workers suffering the violations and steps to prevent future abuses;

3)during in-country investigations, conduct meetings with national and regional labor ministry and inspectorate offices; consult with local civil society organizations, including trade unions, most familiar with the issues; and perform site visits to each employer specifically named in the complaint. During each site visit, OTLA should conduct anonymous worker and worker representative interviews, meet with managers, tour and observe the workplace, and collect and review relevant documents. The United States should encourage and facilitate the development of similar regulations for its trading partners' national "contact points,"[45] also charged with receiving submissions alleging violation of US accords' workers' rights requirements.

Clarify the Secretary of Labor's Lead Role in Complaint and Dispute Settlement Processes

OTLA regulations should be amended to clarify that each decision on whether to move a US labor submission to the subsequent stage of an accord's complaint or dispute settlement process lies with the US Secretary of Labor, as head of the US agency most experienced on labor-related matters and as the designated "contact point with other Parties" on such matters.[46] Such a clarification would recognize that US free trade accords establish a key role for labor ministries in the administration of workers' rights provisions and that labor-related expertise is critical to ensure effective implementation of these provisions.

Make Progression Through the Complaint Process Mandatory Until Satisfactory Resolution

US free trade agreements should greatly reduce the broad discretion parties have during the labor rights complaint process prior to initiation of formal dispute settlement procedures by requiring that: 1) a party request and initiate cooperative consultations upon the recommendation of its national contact point, such as OTLA, or upon any finding by that contact point of labor-rights-related shortcomings in another party; and 2) if cooperative consultations fail to produce a mutually satisfactory resolution of the matter, a party must proceed to the subsequent stage of the complaint process by convening a council of the parties' labor ministers or a committee of experts, in the case of NAFTA.

Base Consultations on Facts and Gear them Toward Results

US free trade agreements should significantly reduce parties' discretion in framing and managing cooperative consultations. The procedures for implementation of final arbitral panel reports, established in all US trade accords from NAFTA to the present, with the exception of the US-Jordan agreement, provide a useful model. US trade accords should require that initial cooperative consultations, any subsequent deliberations of a labor council or committee of experts, and any further consultations under the formal dispute settlement process be focused on reaching "a mutually satisfactory action plan,"[47] which "shall conform with the determinations and recommendations" set forth by the relevant national contact point,[48] such as OTLA, in its examination of the labor allegations at issue.[49] Until these changes are made in US free trade accords, the US Department of Labor should issue regulations requiring that all such US-initiated consultations and labor council and committee of experts deliberations meet these requirements.

Make Initiation of Formal Dispute Settlement and Arbitral Panel Procedures Mandatory

US free trade accords should significantly reduce parties' discretion in the initiation of formal dispute settlement procedures and arbitral panels. US free trade accords should establish that a labor complaint shall be considered satisfactorily resolved only after full and expeditious implementation of an "action plan," based closely on national contact point recommendations or on the recommendations of an arbitral panel report, if one is produced. US trade agreements should require parties to invoke formal dispute settlement procedures if: 1) 60 days after the initiation of cooperative consultations such a "mutually satisfactory action plan" has not been developed;[50] or 2) 180 days after a "mutually satisfactory action plan" has been established a party is not "fully implementing" the plan.[51] Similarly, US trade agreements should require parties to convene an arbitral panel if: 1) 60 days after the launch of the formal dispute settlement process, such a "mutually satisfactory action plan" has still not been finalized; or 2) 180 days after a "mutually satisfactory action plan" has been established under the dispute settlement process, a party is not "fully implementing" the plan. In each case, the relevant national contact point should conduct a follow-up investigation to verify implementation of the action plan, consulting closely with the group or groups that submitted the labor complaint at issue.

Provide for Independent Investigation of Complaints if OTLA Reviews Fall Short

At this writing, no labor complaint review process has been concluded under the December 2006 regulations that transferred responsibility for labor provision enforcement from the Office of Trade Agreement Implementation (OTAI) to the newly established Office of Trade and Labor Affairs. Nor has any complaint review process been concluded involving any US trade accord besides NAFTA.[52] As a result, it is too soon to assess whether the investigative methodology that OTLA will adopt and the final reports that OTLA will produce under the new regulations and under the more recent trade agreements, with more robust labor provisions, will yield objective findings and recommendations on all matters raised in the submissions.

If OTLA fails to achieve such standards, Human Rights Watch believes that more dramatic changes will be necessary to ensure that the labor rights complaint process under US free trade accords is truly impartial from the very beginning. Under such circumstances, OTLA should immediately turn over any labor complaint that meets its submission criteria to an independent team of experts, "with experience in labor law or its enforcement,"[53] to investigate the complaint and fulfill the other complaint-related responsibilities previously charged to OTLA.[54]

Ensuring Transparency and Public Participation in Labor Rights Enforcement

Human Rights Watch believes that all phases of the labor complaint and dispute settlement processes should be open and transparent. Government officials should facilitate public participation during initial investigations into labor submissions, cooperative consultations, labor council or committee of expert proceedings, and arbitral panel deliberations. The contributions of civil society groups most familiar with the workers' rights abuses alleged should be an integral component of any analysis of alleged trade agreement violations. And private corporations and employers accused of labor abuses should have an opportunity to respond to claims against them, particularly if they may face potential penalties under the accords.

Existing labor complaint and dispute settlement procedures established in US trade accords do not mandate that parties facilitate such public participation and transparency. For example, NAFTA provides that if a committee of experts is convened, following unsuccessful ministerial consultations, the committee "may invite written submissions from ... the public" and "may consider, in preparing its report, any information provided by ... organizations, institutions and persons with relevant expertise, and the public."[55] Similarly, even though the arbitral panel rules of procedure in all accords since the US-Jordan agreement require at least one hearing open to the public and mandate that the parties' written submissions, written versions of oral statements, and written responses to panel inquiries be publicly available, the rules fail to explicitly provide for public participation. Instead, they only instruct an arbitral panel to "consider requests from non-governmental entities in the disputing parties" to provide their written views.[56]

It is only for the very initial stage of the labor complaint process that, in some cases, domestic regulations require that public participation be facilitated. For example, US regulations governing such labor submissions establish that OTLA "shall provide a process for the public to submit information relevant to the review, ... which may include holding a public hearing."[57]

Recommendation

Guarantee Opportunities for Public Participation

The public and, in particular, civil society groups and private companies and employers implicated in a complaint should be explicitly granted an opportunity to be heard during each phase of the labor complaint and dispute settlement processes.[58] This opportunity should include at least one public hearing in the country where the alleged abuses occurred that allows for the possibility of calling workers, management, and other witnesses to testify and the presentation of written or oral statements. These public views, especially those presented by relevant organizations and companies, should be incorporated into any report by a national contact point or arbitral panel and in the development of "mutually satisfactory action plans" to remedy any labor rights shortcomings identified.

Facilitating Access to Labor Rights Enforcement Mechanisms

The labor complaint process should be easily accessible and widely utilized to ensure that workers' rights provisions in trade agreements are effectively enforced. Since the first US trade accord with labor protections took effect 14 years ago, only 23 workers' rights cases against four trading partners have been filed in the United States, though there are eight accords with workers' rights provisions in force involving 13 different countries.[59] In contrast, over that same period, reports by the ILO Committee on Freedom of Association and the US Department of State together have documented repeated failure by at least ten of the 13 trading partners to effectively enforce their domestic labor laws, potentially in violation of the agreements.[60]

There are many reasons for the apparent underutilization of US trade agreements' complaints processes, including potential disillusionment with the processes themselves. One key factor, however, is the complexity of the US complaint submission process and the significant level of trade law expertise, resources, and basic technical capacity required to draft complaints that satisfy the submission requirements.

For example, a submission to OTLA not only must specify all allegations and include, "wherever possible," available supporting laws and regulations, but also should, "as relevant," identify the particular accord commitments allegedly violated; describe the extent of any harm to the submitter or other persons; show whether the allegations "demonstrate a sustained or recurring course of action or inaction" of labor law non-enforcement; explain whether the alleged violation affects trade between the accord parties; and note the status of any domestic or international legal proceedings underway on the issues raised.[61] These requirements may be extremely difficult to meet for workers suffering abuses and the underfunded and understaffed civil society organizations that often serve them, particularly the notoriously resource-strapped groups in "developing" US trading partners.

Human Rights Watch proposes that two complementary approaches be adopted to facilitate the filing of workers' rights complaints under US trade accords: 1) the creation of an independent, private entity to assist those organizations whose resource constraints and limited technical expertise impede them from filing complaints that fulfill OTLA's rigorous submission criteria; and 2) the expansion of OTLA's mandate to explicitly charge the office with assisting small entities, including businesses, labor unions, and nongovernmental organizations, in understanding US trade agreements' labor provisions and the intricacies of the complaint filing process. Useful models for both such organizations are found in the US Department of Commerce and International Trade Commission bureaucracy established to facilitate the filing of commerce-related complaints under US trade agreements and trade laws. Such US government-provided guidance has proven invaluable for many US entities seeking redress for commercial injuries arising from unlawful trade practices; similar assistance should be available to those seeking justice for labor abuses committed in the context of free trade.

Private Labor Complaint Filing Assistance

The US Department of Commerce's Trade Compliance Center provides an instructive model for how a private organization might streamline the labor complaint filing process. The TCC is the self-described "one-stop shop for getting U.S. government assistance in resolving the trade barriers or unfair situations you encounter in foreign markets."[62] Unfair treatment in commercial cases can be reported to the TCC with just "one e-mail, fax or phone call"-no fulfillment of demanding submission criteria is required.[63] The TCC explains:

You don't have to be a trade agreement expert. If you believe you are facing an unfair situation, let us know. Our specialists can determine if a trade agreement covers your case. If we believe it does, we will handle it as a compliance complaint.[64]

Human Rights Watch does not advocate precisely the same approach with respect to labor rights provisions; there are good reasons for rigorous submission criteria for workers' rights complaints under US free trade accords. The uniform standard that these criteria establish and the detail and analysis they require help ensure at least a minimum level of transparency and corresponding accountability for OTLA as it reviews these publicly available complaints. Instead, we suggest establishing an entity, borrowing from the TCC model, to receive allegations of labor-rights-related trade accord violations, both from US groups and those in US trading partners, and to follow up with much-needed assistance in transforming those allegations into complaints that fulfill OTLA's submission criteria. Well-funded public awareness campaigns in the United States and its trading partners should publicize the launch of the new entity. To help ensure that the new organization is not politicized, Human Rights Watch recommends that it be private and government funded.

Recommendation

Create a Private Government-Funded Entity to Assist Potential Complainants

A new entity, composed of workers' rights experts and providing services in English and the national language of each US trading partner, should be created in the United States to:

1)receive informal allegations of potential violations of trade accords' workers' rights provisions from groups in the United States and abroad, including by fax, email, or a telephone hotline established specifically for this purpose;

2)investigate all such allegations, in consultation with relevant labor and trade experts;

3)determine whether the allegations, "if substantiated, would constitute a failure of ... [a] Party to comply with its [labor] obligations or commitments" under a US trade accord, and:[65]

a)if not, provide a detailed explanation to the submitting parties;

b)if so, prepare and submit a formal workers' rights complaint according to OTLA submission requirements.

Conduct Public Awareness Campaigns in Countries Party to US Trade Agreements

US embassies in each US trading partner, through their labor officers or other relevant personnel and in close coordination with OTLA, should launch in-country public information campaigns, which should include intensive trainings for local workers' rights experts, nominated by local labor rights specialists and organizations, including local trade unions, to serve as a resource for civil society organizations. Such campaigns are necessary to help ensure that local groups, including trade unions and workers' rights nongovernmental organizations, in such countries are fully aware of trade accords' labor complaint procedures and any available complaint filing assistance programs.

Fund Private Complaint Filing Assistance

All US free trade accord implementing legislation should authorize annual appropriations of "such sums as may be necessary for the establishment and operations" of a private, government-funded entity in the United States to assist in the submission of workers' rights complaints under US trade agreements.[66]

Informal Government Labor Complaint Filing Guidance

Even organizations capable of successfully accessing US trade accords' labor rights complaint procedures could still benefit significantly from informal government guidance on trade agreements' labor provisions and the complexities of the complaint submission requirements. Such advice is currently available from the Department of Commerce and the US International Trade Commission for entities submitting or considering submitting commercial complaints under US free trade accords and trade laws. Human Rights Watch believes that similar guidance should be provided by the US Department of Labor's OTLA for trade-related labor claims.

The Department of Commerce has a Petition Counseling and Analysis Unit consisting of "a dedicated staff of professionals who are available to assist U.S. companies in a myriad of ways with respect to the U.S. unfair trade laws," including by: 1) helping them "understand U.S. unfair trade laws ... and the process of filing a petition requesting the initiation of an investigation"; 2) "[p]roviding guidance to potential petitioners to assist them in determining what types of information will be required"; and 3) "[a]ssisting potential petitioners in ensuring their petition is in compliance with statutory initiation standards."[67]

Similarly, the Trade Remedy Assistance Office (TRAO) in the ITC provides small businesses and other small entities, such as small trade associations and worker organizations, "with general information on specific U.S. trade laws and provides technical assistance to eligible small entities seeking relief under the trade laws."[68] According to the TRAO, "Technical assistance includes ... informal legal support, intended to enable eligible small entities to determine the appropriateness of pursuing remedies under the trade laws, to prepare petitions and complaints, and to seek to obtain the remedies and benefits available under the trade laws."[69] In addition, both the Department of Commerce and the ITC "welcome the opportunity to review a petition before it is filed," noting that "[t]he petitioner benefits by being informed of any deficiencies in the petition which, if not corrected in time, may delay or prevent initiation of the investigation."[70]

Recommendation

Provide US Government Assistance to Potential Complainants

To help organizations understand trade accords' workers' rights provisions and satisfy OTLA complaint submission criteria, OTLA's mandate should be expanded to include complaint filing assistance. Such assistance should be based on the models of the Department of Commerce's Petition Counseling and Analysis Unit and the ITC's Trade Remedy Assistance Office, described above. Specifically, OTLA's responsibilities should be expanded to call explicitly for the provision of non-adversarial, informal legal support to potential petitioners under US trade accords, including:

1)guidance in understanding US trade agreements' labor protections and in determining whether the filing of a formal complaint alleging violation is appropriate;

2)assistance in understanding the complaint submission process and fulfilling the submission criteria;

3)review of complaints before they are filed to identify any deficiencies or gaps, especially those which, if not corrected, might lead to complaint rejection for failure to meet submission requirements.

Monitoring Trade Accord Labor Rights Compliance

There are not enough organizations tracking workers' rights abuses to file complaints for all or even most violations of US trade accords' labor provisions. As a result, Human Rights Watch believes that affirmative government monitoring is needed. Trade agreements' labor protections would benefit from a two-pronged approach to enforcement, just as US labor laws are enforced domestically through individual and collective complaints to the justice system and inspections and follow-up actions by the Department of Labor's various agencies. Similarly, just as theUS Department of Agriculture Food Safety and Inspection Service inspectors conduct routine annual audits abroad to better ensure adequate food safety for US consumers,[71] US Department of Labor inspectors should conduct routine annual inspections abroad to ensure respect for workers' rights under US trade accords.

Although OTLA presently serves "as the Contact Point for purposes of administering the labor chapters" and "labor provisions" of US free trade accords,[72] its regulations do not explicitly charge the office with proactively monitoring compliance. The closest the regulations come to suggesting a possible monitoring function is permitting OTLA to independently "initiate a review of any matter arising under" US trade agreements' labor provisions; "make a recommendation at any time to the Secretary of Labor as to whether the United States should request consultations with another Party"; and, as appropriate:

establish working or expert groups; consult with and seek advice of non-governmental organizations or persons; prepare and publish reports ... on matters related to the implementation of a [trade accord] labor chapter ...; and collect and maintain information on labor law matters involving another Party.[73]

To help ensure that US free trade agreements' labor provisions are applied in practice, OTLA should, in addition, be charged with an affirmative monitoring role in US trading partners' compliance and should be expanded accordingly.

Recommendations

Expand OTLA's Monitoring and Inspection Capacity

Roughly following the model of the US Department of Agriculture Food Safety and Inspection Service, OTLA should be expanded to include expert inspectors charged with conducting annual monitoring visits in countries party to US trade agreements. Their responsibilities should include visits to national and regional labor inspectorates and to a representative random sampling of exporting facilities in different sectors, following the in-country investigative methodology proposed above for OTLA review of labor complaints. OTLA inspectors should be required to produce a public foreign audit report after such investigations.

Strengthen and Reorganize the US Labor Officer Program

The US Department of State's Labor Officer Program should be shifted to the US Department of Labor's Bureau of International Labor Affairs (ILAB), whose resources should be correspondingly expanded to ensure adequate capacity to manage and oversee the program. This reorganization will help ensure greater collaboration among US government officers who focus on labor matters abroad and facilitate OTLA's monitoring of foreign compliance with workers' rights provisions in US trade accords. The number of labor officers, charged with "promot[ing] labor policies in countries to support U.S. interests and provid[ing] information on local labor laws and practices,"[74] should also be increased to guarantee at least one full-time officer dedicated to labor-related issues in each US free trade partner.The officers should complement the monitoring work conducted by the new OTLA inspectors and coordinate closely with them in the preparation of annual foreign audit reports. In the interim, until such shift is made, a previous program allowing US Department of Labor officials to be detailed to the US Department of State and assigned to US embassies abroad should be reactivated and a detailed Department of Labor official placed in each US trading partner to fulfill the above-described duties.

Require OTLA- Initiated Review of US Trading Partners

If OTLA's annual foreign audit report includes information that, "if substantiated, would constitute a failure of the other Party to comply with its [labor rights] obligations or commitments" under a US free trade accord,[75] OTLA should be required to treat the foreign audit report as a submission alleging trade agreement noncompliance, triggering US initiation of the labor complaint process.

Conclusion

US free trade accords can be an important and powerful tool for advancing workers' rights. To date, however, despite recent reforms, US policy and practice in this area have fallen short, squandering the opportunities presented by the negotiation and execution of trade agreements. The recommendations presented here outline the reforms that Human Rights Watch believes are necessary to begin to remedy those failures.

We recognize that additional legal reforms and policy changes are also necessary to ensure that these accords reach their full potential for workers' rights promotion. For example, a new approach must be adopted for any new trade promotion authority or "fast track" legislation, one that prioritizes workers' rights,[76] including in the selection of future US trading partners. And labor-related technical assistance and capacity building should consistently prioritize aid for civil society organizations, including unions, that are best positioned to assist workers seeking to exercise their fundamental rights.

Human Rights Watch urges a new US administration, taking office in January 2009, both to embrace our proposals and to recognize that they form only one component of a multifaceted strategy that must be implemented to ensure effective protection of workers' rights in US free trade accords. Failure to do so will result in the continuation of a flawed US trading model incapable of upholding the promise to workers that their rights will be a priority in the global marketplace.