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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 the US 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.