Labor Provisions in
U.S. Free Trade Agreements
Aaron Rosenberg
Director for Labor Affairs
Office of the United States Trade Representative
July 2007
U.S. Free Trade Agreements with Labor Provisions
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North American Agreement on Labor Cooperation
U.S.-Jordan FTA – Article 6
U.S.-Singapore FTA – Chapter Seventeen
U.S.-Chile FTA – Chapter Eighteen
U.S.-Australia FTA – Chapter Eighteen
U.S.-Morocco FTA – Chapter Sixteen
U.S.-Central America-Dominican Republic FTA – Chapter Sixteen
U.S.-Bahrain FTA – Chapter Fifteen
U.S.-Oman FTA – Chapter Sixteen
U.S.-Peru TPA – Chapter Seventeen
U.S.-Colombia TPA – Chapter Seventeen
U.S.-Panama TPA – Chapter Sixteen
U.S.-Korea TPA – Chapter Nineteen
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Why labor obligations should be in trade agreements
 Social Dimension of Globalization - Assure that all workers
share in the benefits of trade liberalization
 Promote “decent work”/job creation
 Level field - Help protect workers from unfair competition with
workers who are denied fundamental rights
 Promote respect for worker rights and rights of children
consistent with ILO core principles
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U.S. Policy –
Trade Promotion Authority (TPA)
 Bipartisan Trade Promotion Authority Act of 2002
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Overall Trade Negotiating Objectives
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Principal Trade Negotiating Objectives
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Promotion of Certain Priorities
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U.S. Policy – TPA
Principal Trade Negotiating Objectives for Labor
 Ensure that a party to a trade agreement with the
United States does not fail to effectively enforce its
environmental or labor laws, through a sustained or
recurring course of action or inaction, in a manner
affecting trade between the United States and that
party after entry into force of a trade agreement
between those countries
 Recognize the right to exercise discretion with
respect to investigatory and prosecutorial matters
and allocation of resources
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U.S. Policy – Summary
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Have good labor laws consistent with international
standards
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Effectively enforce those laws
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Do not weaken or reduce those laws as an
encouragement for trade or investment
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Assist countries to strengthen capacity
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New Bipartisan Template
 Enforceable reciprocal obligation for the countries to adopt and
maintain in their laws and practice the five basic internationallyrecognized labor principles, as stated in the ILO Declaration on
Fundamental Principles and Rights at Work
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Freedom of association;
The effective recognition of the right to collective bargaining;
The elimination of all forms of forced or compulsory labor;
The effective abolition of child labor and a prohibition on the
worst forms of child labor; and
The elimination of discrimination in respect of employment
and occupation.
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New Bipartisan Template
 The obligation refers only to the ILO Declaration on
Fundamental Principles and Rights at Work
 Enforceable obligation to effectively enforce labor laws; five
basic internationally-recognized labor rights, plus acceptable
conditions of work with respect to minimum wages, hours of
work, and occupational safety and health
 Setting of standards and minimum wages not subject to
obligations of the Chapter. Obligation pertains to enforcing the
level of the minimum wage(s) established by the Party
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Dispute Settlement Provisions
 Public Communications (Submissions)
 Consultations
 Labor Affairs Council/Subcommittee on Labor Affairs
 Free Trade Commission/Joint Committee
 Arbitral Panel
 Loss of trade benefits or monetary assessment
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Dispute Settlement Provisions
 Labor obligations are subject to the same dispute settlement
procedures and remedies as commercial obligations
 Focus on solving problems and remediation
 Multiple layers of consultations (formal and informal)
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Dispute Settlement Provisions
 Failure to effectively enforce labor laws requires demonstration
of a sustained or recurring course of action or inaction
 A violation of the fundamental labor rights or effective
enforcement of labor laws must occur in a manner affecting
trade or investment between the parties
 Only a government can invoke dispute settlement against the
other government for a labor violation under an FTA
 Available remedies are trade sanctions and fines, based on
amount of trade injury
 As with commercial provisions, panel decisions are not self-
executing
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Dispute Settlement Provisions
 Submissions may be made to the Party’s contact point
 The contact point for the United States is the Department of
Labor’s Office of Trade and Labor Affairs
 A Federal Register Notice (Vol. 21, No. 245, 76691, dated
December 21, 2006) explains the procedures and requirements
for a submission
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Dispute Settlement Provisions
 If a submission is accepted, procedures begin with informal
government to government consultations
 Labor Affairs Council (Labor Ministry officials)
 Minimum period for informal consultations is 60 days
 If no resolution, process moves to formal Ministerial-level (Trade
Ministers) consultations
 Minimum period for formal consultations is 30 days
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Dispute Settlement Provisions
 If no resolution, arbitral panel may be formed from independent
experts (including with labor expertise)
 Panel proceedings 120-180 days
 If panel finds violation, disputing Parties attempt to find a
resolution
 If no resolution within 45 days, complaining party may impose
trade sanctions
 Country may also choose to pay fine based on the amount of
trade injury
 Complaining Party retains the fine
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U.S. FTA Labor Chapters
 Article 1 – Statement of Shared Commitment
 Article 2 – Application and Enforcement of Labor Laws
 Article 3 – Procedural Guarantees and Public Awareness
 Article 4 – Institutional Arrangements
 Article 5 – Labor Cooperation
 Article 6 – Labor Consultations
 Article 7 – Definitions
 Annex – Labor Cooperation Mechanism
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What the FTA Labor Provisions do not do
 Do not create or impose harmonized labor standards on the
countries
 Review processes do not replace existing domestic institutions
 No supranational body with authority to enforce labor law
 Contact Points are not empowered to adjudicate individual rights
 Do not provide private rights of action against Governments or
private entities
 Do not act as a barrier to trade
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U.S. Approach
Three track approach to labor issues in U.S. FTAs:
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Negotiate a fully TPA-consistent labor text
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Engage with our FTA partners to analyze labor laws and
practices to ensure that the obligations in the Labor Chapter
are meaningful:
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Consistency with international standards
Encourage consultations with ILO
Commitment to enact reforms – subject to consultation provisions
Enactment of legislation/implementation of regulations
Ensure longer-term technical capacity to effectively enforce
labor laws
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U.S. Approach - Results
 Labor reforms by partners consistent with international standards
 Processes place labor issues on the agenda of high-level
government officials
 Increased transparency and public scrutiny – useful tools for
addressing labor issues of mutual concern
 Improved international and domestic dialogue on labor issues
 Cooperative efforts to address workers’ rights (bilateral and
multilateral)
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U.S. Approach - Challenges
 Trade mechanism to achieve continued economic growth, while
improving the living standards and working conditions of all
workers
 Balancing recognition of national sovereignty with provisions
authorizing oversight of labor law enforcement
 Government commitment to engage in dialogue and cooperation
to promote the agreed to labor rights and principles
 Monitoring enforcement of labor law and progress
 Involving Social Partners
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