IV. THE NAFTA LABOR SIDE ACCORD
As initially conceived and negotiated, NAFTA included no provisions for labor rights. In 1991, President George Bush told the United States Congress:
As Bush pointed out, Mexican law protects a broad array of labor rights. In practice, however, these are not enforced and are routinely flouted by employers in Mexico. Similarly, as a recent Human Rights Watch report shows, problems of weak enforcement of labor law protections for workers' rights are also evident in the United States.36
According to the Bush Administration, the trade agreement would itself generate the economic resources necessary to enable the Mexican government to overcome the technical problem of funding enforcement of the country's labor laws. Yet, in 1991 politics in the United States forced the labor rights issue to the top of the debate on trade. The Bush Administration needed a renewal of fast-track negotiating authority to move forward with the NAFTA trade talks. Such authority would enable the president to negotiate a trade accord that would be submitted to Congress for a straight yes-or-no vote, thereby avoiding a situation in which the president would be required to renegotiate with trading partners those parts of an agreement that Congress wished to change.
Senators and representatives in the U.S. Congress took the opportunity provided by the fast track debate to raise concern about the impact on the United States of inadequate labor standards in Mexico.37 In response, the administration assured them that any trade agreement with Mexico would include "new initiatives to expand U.S.-Mexico labor cooperation," including labor standards.38 Although it was initially unclear what such initiatives would comprise, the Bush Administration subsequently proposed to establish a commission to discuss labor issues arising between Mexico and the United States.39
President Bush signed NAFTA in December 1992, but sending it to the Senate for ratification would be up to the next president. Facing stiff questions from labor unions-a core Democratic Party constituency-candidate Bill Clinton declared that he would support NAFTA if it included side agreements on labor rights and the environment.
In a much-cited speech in 1992, just before the presidential election, Clinton stated that NAFTA, as negotiated, did "nothing to reaffirm our right to insist that the Mexicans follow their own labor standards, now frequently violated." After Clinton's speech, President Carlos Salinas of Mexico expressed his willingness to address concerns beyond the specific trade issues dealt with in the main accord.40
Negotiations for the labor side agreement began soon after Clinton took office. Clinton Administration officials suggested that the labor side accord would actually be used by the United States to promote change in Mexican labor practices. For example, Principal Deputy Assistant Secretary of State for Human Rights and Humanitarian Affairs Nancy Ely-Raphel told the Committee on Small Business of the House of Representatives that "if NAFTA is passed, we will have a great deal more leverage with the Government of Mexico than we have presently, because they will have committed themselves to enforcing their labor laws, doing all the kinds of things that they are not now legally obligated to us to do."41
The agreement intentionally stopped short of creating supra-national labor law enforcement mechanisms, and it did not pretend to establish international labor standards or harmonize standards across borders. An initial U.S. draft side agreement proposed the creation of a multilateral commission with enforcement responsibility, but this was later dropped in the face of Mexican and Canadian opposition.42 In the end, the NAALC established the objective and obligation to "promote compliance with, and effective enforcement by each Party of, its labor law."43
The three signatory states are entitled to amend the agreement if they all agree to the proposed change or addition, and if each state approves the change through its own appropriate legal mechanisms.44
The three signatory states formally reviewed the NAALC beginning in 1997, in furtherance of the accord's call for a review of its "operation and effectiveness in light of experience."45 The findings of the review, which was overseen by the three states' labor ministers in their capacity as the NAALC Council of Ministers, were released in March 1999. These drew on comments solicited from the public as well as insights from government officials and the National Advisory Panels established in the three countries, each composed of members of the public chosen by their respective governments to advise on the implementation of the agreement. The findings of this process, as well as the individual analyses conducted by the Canadian, Mexican, and U.S. advisory panels, are incorporated into the analysis in this report.
In 1997 and 1999, the Executive Office of the President of the United States published a report on the effectiveness of the results of the NAALC. These, too, are incorporated into the findings of this report.46
NAALC Objectives, Obligations, and Principles
The NAALC establishes objectives, obligations, and principles for the parties to the accord. The objectives introduce the overall goals of the accord, including the improvement of working conditions and living standards and the encouragement of an exchange of information related to labor laws and institutions in the three states that are party to the agreement.
The obligations move beyond a mere statement of intent by establishing a series of requirements. Some of these are broad in nature, such as the obligation to have "high labor standards," while others are much more specific, such as the requirement that each state party ensure access to "administrative, quasi-judicial, judicial or labor tribunals for the enforcement of [its domestic] labor law."47 Another obligation requires that such tribunals be "fair, equitable and transparent."48 The obligation that the parties effectively enforce their own labor law stands out, because its violation could, under certain circumstances, as explained below, trigger NAALC mechanisms including an arbitral panel.49 A party's effective enforcement of its labor laws is reviewed in the context of government enforcement priorities; if a party can demonstrate that its failure to enforce a law stemmed from the legitimate pursuit of higher priorities, it will not be held in violation of the accord.50 According to other NAALC obligations, the three state parties must make public any regulations, procedures, and administrative rulings related to the accord, and must promote awareness of their domestic labor laws.51
The parties have taken seriously the accord's call for them to promote cooperative activities.52 According to the U.S. NAO, more than fifty activities have taken place in furtherance of this element of the accord, including training on sampling and analysis of airborne contaminants, hazard recognition for industrial hygienists, protecting children at work, and on best practices with respect to migrant workers.53 These activities, however, are not reviewed in detail in this report, except where they relate to specific petitions filed under the NAALC, because they generally do not address directly the labor rights violations that are the subject of petitioners' complaints.
The NAALC also establishes eleven labor rights norms, which it refers to as principles. These are divided into three levels, with each successive level subject to additional action by the state parties to address a violation. The most basic level, which allows for the least intervention, includes freedom of association and the right to organize, the right to bargain collectively, and the right to strike. The second level includes prohibition of forced labor, compensation in cases of occupational injuries and illnesses, protection of migrant labor, elimination of employment discrimination, and equal pay for men and women. The highest level includes labor protections for children and young persons, minimum employment standards like minimum wage, and prevention of occupational injuries and illnesses.
At all three levels, where enforcement of the relevant rights is in question, the accord provides a basis for the state parties to engage in government-to-government talks and to establish consensual work programs to address the problem. But if such a program does not resolve the problem, and the labor rights norm in question falls into either the second or highest tier, a state party can call for the establishment of an Evaluation Committee of Experts (ECE). An ECE, composed of outside experts, may then issue non-binding recommendations for resolution of the problem. Beyond this, if the ECE recommendations still do not resolve the problem and the labor rights norm in question is one within the highest tier, the accord provides for the appointment of an arbitral panel and, ultimately, the imposition of sanctions on the offending state party.
The NAALC creates several bodies to administer the accord. It is overseen by the Commission for Labor Cooperation, comprising a Council of Ministers and a Secretariat. The Council, which must meet at least once a year, functions as the governing body. The Secretariat, which is permanently convened in Washington, D.C., serves as executor of actions, such as promoting cooperative activities and preparing special studies. The Secretariat's executive director is appointed by the Council for a three-year term, and comes from one of the three state parties on a rotating basis.
As required by the NAALC, each of the three state parties also created a National Administrative Office (NAO) within their respective labor ministries.54 These NAOs, staffed by government officials, act as the main bridge between the three states for addressing issues arising under the NAALC. Thus, the three NAOs exchange information on labor law and adjudication, receive complaints from petitioners about alleged NAALC violations, initiate investigations on their own or following complaints, publish reports on their findings, and develop and implement cooperative activities.
The basic level of government-to-government interaction based on the NAALC takes place through the NAOs. However, the NAALC establishes no standards for which cases to accept or reject, how to follow up on issues raised by petitioners, or what constitutes appropriate action for ministers to take to address a labor rights issue. By setting their sights low, therefore, the governments effectively enabled themselves to short-circuit even the few remedial possibilities that exist. At the same time, they avoided establishing a structure that would lead to the development of a body of information about patterns of labor-related problems in the three countries and that would assist potential petitioners to understand how best to use the NAALC.
The next level of official communication beyond the NAOs takes place between the three countries' labor ministers. Thus, if one state decides that high-level intervention is required to address a problem arising under the accord, that country's labor minister can call for formal consultations with one or both counterpart ministers in the other states. Such ministerial consultations can be called to address any issue relevant to the NAALC. In practice, to date, all such ministerial consultations have resulted in signed ministerial agreements concerning the issues in question, although the NAALC does not formally require this.
The NAALC establishes four options for addressing issues relating to the NAALC's obligations and labor principles:
1) Consultations between NAOs. This process allows one country's NAO to obtain case-specific information or details of labor law and institutions in another signatory country. An NAO may exercise this authority in response to a complaint or on its own initiative.
2) Ministerial consultations. Any NAO can recommend that minister-to-minister discussions take place "regarding any matter within the scope of [the NAALC]." This authority can be exercised in response to a specific case or on the initiative of an NAO. A minister to whom an NAO issues a recommendation has discretion to request consultations with a counterpart, although in practice all such recommendations have been followed by a formal request for consultations. Ministers could also request consultations without first receiving an NAO recommendation to do so, although this has not occurred in practice.
3) Evaluations. If issues related to the second and highest tiers of the NAALC's labor principles are not resolved through ministerial consultations, the accord provides that a state may request that an Evaluation Committee of Experts (ECE) be formed, with a separate ECE being convened for each specific dispute. Such ECEs are to be composed of experts in "labor matters or other appropriate disciplines" from outside the NAALC machinery, who, in a "non-adversarial manner," are to analyze "patterns of practice" by each state party in enforcing their labor law, and to present non-binding recommendations for resolving the issue in question. ECEs, whose members need not be nationals of the signatory countries,55 normally are to consist of a chairperson and two other members chosen by consensus by the Council of Ministers.56 For an ECE to be formed, however, the matter at issue must be trade-related and covered by mutually recognized labor laws.57 Members of the public are permitted to make written submissions to the ECE.58 To date, no ECE has been formed.
4) Arbitration and penalties. On issues unresolved by the ECE that are related to the first tier of the NAALC's labor principles, the labor ministers of the signatory countries can convene an arbitral panel. The panel will issue a report on whether there has been a consistent pattern of failure by the government concerned to effectively enforce the law in question. In the event that the panel determines that such a pattern exists, it will make recommendations. "Normally," according to the NAALC, the recommendation will be that "the Party complained against adopt and implement an action plan sufficient to remedy the pattern of non-enforcement."59 If the government fails to implement the action plan, a financial penalty not to exceed .007 percent of the value of the total trade in goods between the parties can be assessed against the offending government.60 In case of a failure to pay the penalty, the complaining government can suspend NAFTA benefits in an amount no greater than that sufficient to collect the monetary penalty.61
Criticism of the NAALC's Structure
Three-Tier System, Focus on Disputes, Time Lapse
The division of labor rights into three tiers necessarily limits the NAALC's potential effectiveness by seriously weakening the remedies available. A strengthened accord, therefore, should open the full range of labor principles, including those currently consigned to the lowest tier, to the full range of mechanisms available to remedy non-compliance.
A similar restriction exists with respect to the NAALC's obligations. Only non-compliance with article 3-the obligation to effectively enforce domestic labor law-can lead to the establishment of an ECE, although there is nothing to prevent an ECE from analyzing a state's non-compliance with other NAALC obligations in order to assess the full implications of an article 3 violation. Again, if the NAALC were to be amended and strengthened, it should permit an ECE to be formed to address and remedy non-compliance with any NAALC obligation.
Some members of the business community have argued that the NAOs have focused too much on dispute resolution. For example, according to the U.S. Council for International Business (USCIB), an organization that represents the interests of U.S. businesses, "implementation of the NAALC has unduly emphasized the compliance and effective enforcement of labor law obligations of the NAALC over positive cooperative activities. As a consequence, it sets the wrong tone and focus."63
Cooperative activities are indeed important, but the exclusion of case-related activities would eliminate one key role of the NAALC. To focus on the obligations created under the pact falls squarely within the bounds of legitimate and much-needed NAALC-related activity.
Other criticism has focused on the amount of time it takes to complete the NAALC complaint process. In effect, it can take years to progress from filing a complaint to obtaining a ministerial agreement. For example, although the Echlin case was filed with the Canadian NAO on April 6, 1998, the Mexican and Canadian governments had still to reach an agreement almost three years later. As Thea Lee of the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) rightly points out, "Even in the areas subject to dispute settlement, the consultation and dispute resolution procedures are so lengthy and tortuous as to discourage complaints and petitions."64
The NAALC's Council of Ministers, however, unsurprisingly takes a more sympathetic view of the NAALC's "long and cumbersome" processes:
These processes do not adjudicate or enforce the rights of individuals in specific circumstances or particular cases. These NAALC procedures involve sovereign governments in the discussion, investigation and resolution of major governmental responsibilities and may have broad implications for administrative and judicial process or for policy and the interpretation of legislation. The procedures must move at a deliberate pace with full opportunity for consultation to ensure complete understanding of matters which are by nature middle to long term.65
Clearly, the NAOs and labor ministers must have sufficient time to carefully examine and assess complaints, and identify and agree to appropriate remedies, but Human Rights Watch believes that the current system could and should be streamlined. For instance, a reasonable deadline should be established for governments to agree to ministerial consultations. Currently, no such deadline exists. However, the greatest problem is not so much the length of time that the process takes but the fact that, despite the long duration, complaints brought under the NAALC have consistently resulted in weak outcomes. This fatal combination creates an even stronger disincentive to participate in the process by demonstrating that years of effort and expense are likely to come to naught.
Failure to Define Case Processes
Even without changing the structure of the NAALC, the Council of Ministers could and should develop guidelines to ensure that the NAOs and labor ministries fully investigate and effectively address problems that are identified by petitioners or brought to light directly by the NAOs.
Failure to Define the Reach of the NAALC's Obligations
Neither problem is insurmountable. Indeed, in order to ensure that the obligations are met, the NAOs should be working actively to overcome the NAALC's weaknesses in these areas. The Council of Ministers, which is formally responsible for interpreting the NAALC, should also take the lead in overcoming this problem.66 Through the review of cases and other activities designed to address NAALC obligations, these implementing structures of the NAALC should be working to develop a collective understanding of the meaning of the NAALC's obligations. Even though the accord itself fails to establish adequate remedial mechanisms to resolve problems, the NAOs and other NAALC structures should seek ways to ensure that states comply with the requirements of the accord.
Unfortunately, the parties have, for the most part, avoided taking any action that would establish through case histories an authoritative interpretation of these key aspects of the accord. The failure to imbue NAOs with clear authority to ensure that violations of the NAALC's obligations are clarified and remedied has also led to calls for the NAOs to avoid any work on enforcement. The Mexican National Advisory Committee, convened by the government and consisting of business and labor leaders, argued in 1997, for instance, "The NAOs do not possess jurisdictional characteristics and should therefore be limited to facilitating contact, cooperation and mutual support between the signatory countries of the Agreement."67
Similarly, in 1998, the Mexican government argued strongly that the U.S. NAO should not take up a particular case on the grounds that the NAALC only "commits each Party to promote the enforcement of its own labor legislation, and the other Parties to respect it." The Association of Flight Attendants of the United States had filed the case in question on behalf of Mexican airline workers after the Mexican government intervened in a 1998 strike by AeroMéxico flight attendants and issued an executive order to take over the airline and end the strike. The Mexican government argued national security concerns to justify its actions. According to the Mexican Labor Ministry, the NAALC does not permit other state parties to the accord to question "a sovereign decision of the Mexican Government.68 This, Human Rights Watch believes, was incorrect, because the NAALC permits, at a minimum, ministerial consultations on any issue relevant to the accord.69 In the event, however, the U.S. NAO neither accepted the case for review nor justified its refusal in any detail.
Problems have also emerged concerning the NAALC's relationship to domestic laws. The NAALC requires the state parties to enforce their own labor laws and affirms the right of each to adopt its own labor standards and modify its own laws. Yet, it does not exclude the content of those standards and laws from review under the NAALC. Article 2, for instance, requires that the state parties promote "high labor standards."70 In addition to allowing ministerial consultations on any matter within the scope of the accord, the NAALC also gives the NAOs authority to receive and review petitions "on labor law matters arising in the territory of another Party."71
These provisions place the content of each state's domestic labor laws squarely within the purview of the accord, even as they avoid establishing cross-border standards for content. The Mexican NAO has argued, however, that changes in domestic laws cannot be considered under the NAALC, as when it asserted in reporting on the DeCoster Egg Farm complaint brought against the United States: "The commitments assumed under the NAALC do not call for establishment of common standards on labor matters, changes in the domestic laws, or supranational mechanisms."72 Petitioners in this case complained that the U.S. was failing to uphold NAALC standards relating to the protection of migrant workers, minimum employment standards, elimination of employment discrimination, prevention of occupational injuries and illnesses, and compensation in cases of occupational injuries and illnesses at an egg farm in Maine.
Differences in Interpreting and Using the NAALC
Despite the fact that the signatories have not actively sought to define the reach of the NAALC, the record to date shows that the three state parties have adopted somewhat different approaches toward the agreement. Only the Canadian NAO has sought to interpret the meaning of the NAALC's obligations: for example, it proposed that labor tribunals, when deciding between different options for structuring union elections, should take account of the NAALC's obligation to establish high labor standards.
The Mexican NAO, by contrast, appears to have adopted the position that it should generally avoid any interpretation of the NAALC and limit its reporting on individual complaints to simply repeating the information it has received from petitioners, without issuing any findings or conclusions.
The U.S. NAO, meanwhile, appears to have adopted a midway position between that of Canada and Mexico. It has not sought to interpret the NAALC's obligations, but it has often provided important and detailed analyses of individual complaints and contributed to wider understanding of labor rights problems in Mexico.
The lack of defined standards for accepting or rejecting cases has led to a wide variety of practice by NAOs. The U.S. NAO, for instance, has sometimes used its latitude to the benefit of petitioners by including broad topics for review. On the other hand, it has not always addressed those same issues in its final reports, and has rejected some cases for review on the vague grounds that they would not further the objectives of the NAALC. Indeed, two cases that the U.S. NAO rejected for review-relating to the national security rationale cited by the Mexican government for its intervention in a strike in Mexico and the exclusion of rural postal workers from the safeguards provided under federal labor legislation in Canada-could surely have added to important discussions of the NAALC.
As part of a four-year review of the NAALC begun in 1997, each country's national NAALC advisory panel reviewed the status of the accord, and interested parties and groups were invited to comment on the agreement. This exposed important differences between Mexico, on the one side, and Canada and the United States on the other. The Mexican council argued that the NAALC should highlight cooperative programs, while the others proposed that the NAOs should more actively seek cases in order to promote change. Unsurprisingly, significant differences emerged also between the attitudes of business groups and labor unions, with the former calling for the NAALC to focus on cooperative initiatives and for NAOs to require that all local remedies be exhausted before accepting complaints, and the latter criticizing the lack of results obtained through NAALC cases.
However, three years after this debate, little has changed. The governments themselves have not publicly discussed, clarified, or challenged each other's positions related to the NAALC, with the result that the NAALC's potential as a means to effect broad improvements in the labor rights situation in the signatory countries has remained severely under-utilized.
35 Cited in Jerome Levinson, "Unrequited Toil: Denial of Labor Rights in Mexico and Implications for NAFTA," World Policy Institute, April 1993, p. 2.
36 See, for example, Human Rights Watch, Unfair Advantage: Workers' Freedom of Association in the United States under International Human Rights Standards (New York: Human Rights Watch, 2000). Regarding Mexico, see, for example, Graciela Bensusán, El Modelo Mexicano de Regulación Laboral (Mexico City, Plaza y Valdés, 2000).
37 Robert E. Herzstein, "The Labor Cooperation Agreement Among Mexico, Canada, and the United States: Its Negotiation and Prospects," United States-Mexico Law Journal, Vol. 3, The University of New Mexico School of Law, pp. 122-123.
38 Ibid., p. 123.
39 Ibid., p. 124.
40 Minnesota Advocates for Human Rights, "No Double Standards in International Law," December 1992, p. 9.
41 House of Representatives, "Hearing before the Committee on Small Business, June 29 and September 30, 1993," Serial No. 103-29, U.S. Government Printing Office, p. 51.
42 Laura Okin Pomery, "The Labor Side Agreement Under the NAFTA: Analysis of Its Failure to Include Strong Enforcement Provisions and Recommendations for Future Labor Agreements Negotiated with Developing Countries," 29 Go. Wash. J. Int'l L. & Econ, 1996, p. 221. See also Jerome Levinson, "Nafta's Labor Side Agreement: Lessons from the First Three Years," Institute for Policy Studies and International Labor Rights Fund, November 21, 1996, p. 11.
43 NAALC, Article 1(f).
44 Ibid., Article 52.
45 Ibid., Article 10(1).
46 Executive Office of the President, Office of the U.S. Trade Representative, "Study on the Operation and Effects of the North American Free Trade Agreement," July 1997. Executive Office of the President, Office of the U.S. Trade Representative, "NAFTA Works for America," July 1999.
47 NAALC, Articles 2 and 4(1).
48 Ibid., Article 5(1).
49 Ibid., Article 3(1).
50 Ibid., Article 49. "A Party has not failed to `effectively enforce its occupational safety and health, child labor or minimum wage technical labor standards' or comply with Article 3(1) in a particular case where the action or inaction by agencies or officials of that Party: reflects a reasonable exercise of the agency's or the official's discretion with respect to investigatory, prosecutorial, regulatory or compliance matters; or results from bona fide decisions to allocate resources to enforcement in respect of other labor matters determined to have higher priorities."
51 Ibid., Articles 6(1) and 7.
52 Ibid., Articles 1 and 11.
53 U.S. NAO, "Cooperative Activities," December 2000, available on the Internet at http://www2.dol.gov/dol/ilab/public/programs/nao/coopact.htm.
54 When Canada broadened the scope of its hemispheric trade program in the late 1990s, as evidenced by the free trade agreement it signed with Chile in 1997, its NAO was renamed the Office for Inter-American Labour Cooperation. This report uses the term NAO to refer to the NAALC administrative agency in the labor ministry of all three signatory countries.
55 Commission for Labor Cooperation, "Rules of Procedure for Evaluation Committees of Experts of the North American Agreement on Labor Cooperation," no date, paras. 18-21.
57 Ibid., Article 23(1)(2).
58 Ibid., para. 35.
59 NAALC, Article 36(2).
60 According to U.S. census data, the total trade in goods between the United States and Mexico in 1999 reached $196,629.5 million. This would permit a maximum fine of $13.76 million. Census data is available at www.census.gov/foreign-trade/balance/c2010.html.
61 Canada has ensured that it will not be the subject of trade sanctions by guaranteeing payment of fines through enforcement in its courts. See NAALC, Annex 41A.
62 Morton Bahr, president, Communication Workers of America, comments reproduced in Commission for Labor Cooperation, "Review of the North American Agreement on Labor Cooperation," March 1999. Available at www.naalc.org/english/publications/review_annex5_us.htm.
63 Abraham Katz, United States Council for International Business, comments reproduced in "Review of the North American Agreement on Labor Cooperation."
64 Thea Lee, AFL-CIO, comments reproduced in "Review of the North American Agreement on Labor Cooperation."
65 Commission for Labor Cooperation, "Review of the North American Agreement on Labor Cooperation," p. 9.
66 Among the Council of Minister's functions is to "address questions and differences that may arise between the Parties regarding the interpretation or application of this Agreement." NAALC, Article 10(1)(g).
67 Commission for Labor Cooperation, "Review of the North American Agreement on Labor Cooperation."
68 Letter from Claudia Franco Hijuelos, general coordinator of the Ministry of Labor, to Andrew Samet, Deputy Undersecretary for International Labor Affairs at the U.S. Department of Labor, September 3, 1998. This letter was obtained by the Association of Flight Attendants (AFA) through a Freedom of Information Act request. The AFA requested the document after the U.S. NAO decided not to review a case against the Mexican government that it had submitted.
69 NAALC, Article 22(1).
70 Ibid., Article 2.
71 Ibid., Article 16(3).
72 Mexican NAO, "Report of Review, MEX Public Communication 9803," December 1999, p. 5. Italics added.
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