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1 1 (March 23, 2023)

handle is hein.crs/govekzu0001 and id is 1 raw text is: Congressional Research Service Informinq th legisIlive deAme sinceo 1914 Labor Enforcement Issues in U.S. FTAs Background Labor provisions in free trade agreements (FTAs)-both in the United States and globally-were first included in the North American Agreement on Labor Cooperation (NAALC), a side agreement to the 1994 North American Free Trade Agreement (NAFTA). Since then, U.S. provisions have evolved from commitments not only to enforce a country's own domestic labor laws, but also to adopt and enforce core principles of the International Labor Organization (ILO). As requested by Congress through trade promotion authority (TPA), recent U.S. FTAs also subject labor chapters to the same dispute settlement (DS) procedures as other FTA obligations, with minor modifications. Some Members of Congress view strong labor provisions in U.S. FTAs as an important issue and have raised concerns over FTA partner compliance with commitments and the U.S. record of enforcement. Other Members question whether FTAs are appropriate or the most effective vehicle for addressing the cross-cutting issue of worker rights. These issues were part of the debate in the renegotiation of NAFTA as the U.S.-Mexico-Canada Agreement (USMCA), which entered into force in 2020. Labor standards are not part of World Trade Organization (WTO) rules; WTO members deferred to the ILO as the competent body to deal with such issues, while denouncing use of labor standards for protectionist purposes. Limited progress at the WTO led to labor provisions within FTAs and in eligibility criteria of trade preferences programs. U.S. FTAs have set precedents in terms of the scope and enforceability of labor provisions. An ILO report found as of 2019, 90 FTAs, or a third of agreements in force globally, have labor provisions. Unlike U.S. practice, the majority of these agreements do not subject labor provisions to DS; they provide a framework for dialogue, capacity building, and monitoring, rather than link violations to economic consequences, such as trade sanctions. In cases where DS is applicable, such mechanisms have been rarely invoked; countries largely aim to solve disputes via cooperative consultations. Enforcement Mechanisms in U.S. FTAs The United States has brought complaints over FTA partners' compliance with labor commitments under the FTAs listed below. Among these agreements, provisions subject to DS procedures and remedies may differ: NAALC provisions were subject to separate dispute settlement procedures from those applicable to the main NAFTA. NAALC aimed to settle labor complaints primarily via dialogue and consultations. Full dispute procedures, e.g., arbitral panel and limited monetary penalties, applied to a limited set of obligations or allegations involving: a persistent pattern of failure to enforce occupational safety and health, child labor or minimum wage technical labor standards, where the matter is trade-related and covered by mutually Updated March 23, 2023 recognized labor laws. Other issues, such as freedom of association and the right to organize, were limited to ministerial consultations. USMCA DS procedures supersede NAALC for labor disputes (see below). Dominican Republic-Central America FTA (CAFTA-DR) and U.S.-Bahrain FTA labor chapters include one provision subject to enforcement-a party shall not fail to effectively enforce its labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade. Parties may impose monetary penalties in limited circumstances. Creation of a labor cooperation mechanism, in addition to a capacity building mechanism and labor affairs council in the case of CAFTA-DR, aimed to oversee review and implementation of the labor obligations. CAFTA-DR was the first U.S. FTA to include measures in support of labor capacity building. U.S.-Peru, U.S.-Colombia FTA labor chapters reflect provisions required by the May 10th Agreement, a 2007 bipartisan deal between congressional leadership and the George W. Bush Administration. It called for: an additional enforceable commitment that FTA parties adopt and maintain core labor principles of the 1998 ILO Declaration; and the same DS procedures and remedies for FTA labor provisions that applied to FTA other obligations. A party alleging a violation of the provision on ILO commitments must demonstrate that failure to adopt or maintain ILO principles has been in a manner affecting trade or investment. Colombia agreed in a separate bilateral labor action plan to meet certain commitments prior to FTA ratification. USMCA replaced NAFTA and includes a dedicated labor chapter, which largely reflects negotiating objectives in the latest version of TPA (TPA-2015, which expired 2021). It also imposed commitments that go beyond the U.S. FTAs with Peru and Colombia, and created a new facility-specific rapid-response labor mechanism for addressing certain worker rights violations. Regarding disputes, USMCA shifts the burden of proof through a presumption that an alleged violation of labor commitments affects trade and investment, unless demonstrated otherwise-this clarifying language was motivated by the U.S. dispute loss against Guatemala (see below). Changes to overall USMCA DS provisions aim to prevent a party from blocking the formation of a dispute panel. Summary of U.S. Labor Disputes The Office of Trade and Labor Affairs (OTLA) within the Bureau of International Labor Affairs (ILAB) of the U.S. Department of Labor (DOL) receives and reviews complaints (termed submissions) of alleged violations of FTA labor commitments. DOL consults and coordinates with the U.S. Trade Representative (USTR) and State Department on labor enforcement. Per OTLA, a submission

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