The North American Agreement on Labor Cooperation
and Labor Provisions of U.S. Free Trade Agreements
September 2004
Lewis Karesh
Acting Director
National Administrative Office
U.S. Department of Labor
I. North American Agreement on Labor Cooperation
The North American Agreement on Labor Cooperation (NAALC) was ratified as a
supplemental agreement to the North American Free Trade Agreement (NAFTA) and
entered into force at the same time on January 1, 1994. The primary objective of the
Agreement is to improve working conditions and living standards in the U.S., Mexico,
and Canada.
The three governments, while affirming full respect for each Party’s sovereignty, agreed
to promote eleven labor principles and committed each Party to effectively enforce its
labor law. The Agreement provides a means for the Governments to resolve differences
or areas of concern through cooperation and collaborative efforts on a full complement
of labor law and practice issues. This cooperative aspect has been, and will continue to
be, the primary focus of the Agreement.
Structure and Institutions
The three NAFTA Governments established international and domestic institutions to
implement and administer the NAALC. An international Commission for Labor
Cooperation, composed of a Council (the three labor ministers) and a Secretariat, was
created.
The Secretariat is located in Washington, D.C. and is staffed by professionals from the
three countries. It is designed to conduct research and produce studies and reports on
labor matters of mutual interest, and to provide administrative support to the Council.
Each country contributes equally to the Commission’s budget and the organization has
full standing as an international organization, with all of its attendant rights and
privileges.
As called for in the Agreement, each Government also established a National
Administrative Office (NAO) within its Labor Ministry. The NAOs are the primary
points of contact between the Governments on labor issues and are in charge of
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coordinating and conducting trilateral cooperative activities, disseminating information
on labor law and practices, and overseeing the Parties’ obligation to effectively enforce
domestic labor laws.
Cooperative Activities
Since the inception of the NAALC, the three Governments have carried out over 50
cooperative programs to provide specific technical training and expertise, create
mediums for exchange of information and best practices, and promote awareness of
workplace rights and responsibilities. Many of the exchanges have been trilateral and
bilateral government-to-government programs, but most have been public events
conducted with tripartite (government, business, and labor) representation, as well as
that of academia and relevant non-governmental organizations.
The subjects of the cooperative programs have included occupational safety and health,
industrial relations, workplace equity issues, such as gender and child labor, workplace
violence, workforce development, migrant worker protections, and others. The first
years were spent primarily on seminars and conferences designed to exchange
information to facilitate better understanding of each country’s labor laws and practices
between government officials, business and labor representatives, and academics.
As the process progressed, the events focused more on sharing of best practices – not
only those of government agencies, but also business, labor union, and nongovernmental organization programs that have been successful at improving working
conditions in the three countries. Later, numerous outreach programs were added
designed to reach workers, front-line supervisors, and local officials to educate them
about their rights and responsibilities in the workplace.
The cooperative program is now moving to the next logical step – direct technical
cooperation and assistance efforts from one government to the other. The U.S. has been
working closely with Mexico to share knowledge and expertise on workforce
development techniques, including internet-based job banks, the development of
employment centers, the improvement of occupational classification methods, and the
development of labor market projection methods. The U.S. Department of Labor’s
Bureau of International Labor Affairs has sponsored study visits by Mexican experts in
the United States and the visit of a U.S. technical team to Mexico to review, analyze, and
make recommendations on current Government of Mexico efforts.
The three Governments also established a high-level Occupational Safety and Health
Working Group. This Working Group reviews safety and health issues, formulates
technical recommendations, and develops and evaluates technical cooperation
programs. The safety and health experts meet regularly to develop their agenda and
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timelines.
Additional areas under discussion for technical cooperation include efforts to improve
institutional capacity and to develop good practices and effective collaboration to
combat child labor and trafficking of persons, and to ensure protections for migrant
workers. For example, the U.S. Department of Labor recently signed a Joint Declaration
and accompanying Letters of Agreement with the Mexican Foreign Ministry designed
to improve collaboration on programs to help protect the workplace rights of migrant
workers in the United States. The U.S. Department of Labor has devoted significant
resources to these efforts and is committed to working with the Governments of Mexico
and Canada to promote them, as well as other programs.
Commission for Labor Cooperation Efforts
In addition to the ongoing cooperative efforts directly between the Governments, the
Commission for Labor Cooperation, through its international Secretariat, undertakes a
regular research, study, and reporting program. The Secretariat currently has several
valuable resource documents available, including:
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Guide to Labor and Employment Laws for Migrant Workers in North America
(2004);
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Labor Markets in North America: Main Changes Since NAFTA (2003);
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The Rights of Nonstandard Workers: A North American Guide (2003);
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Protection of Migrant Agricultural Workers (2002);
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Labor Relations Law in North America (2000) – the first of a several volume
set comparing labor laws in the three NAFTA countries;
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‘Standard’ and ‘Advanced’ Practices in the North American Garment Industry
(2000);
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Income Security programs for Workers in North America (2000);
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The Employment of Women in North America (1998); and
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North American Labor Markets: A Comparative Profile (1997).
The Secretariat currently is working on several other reports and studies:
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the second volume of the comparative labor law publication, this time
addressing the law on employment discrimination and equal pay in
Canada, Mexico and the United States;
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Legal Protection of the Labor Rights of Working Women in North America; and
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Labor Markets in North America, 3rd Edition.
In addition, the Secretariat is working on a project that will study trends in industrial
relations (IR) and human resource management (HRM) in North America. A prime
goal of the project will be to develop a systematic comparison of IR and HRM in the
three countries and to study specific issues that are of concern to all three countries.
Another study that the Secretariat will be launching soon is an in-depth examination of
ways to improve the comparability of data available in the three countries on labor law
enforcement, labor standards, and labor markets. This is an important contribution that
the Secretariat can make to assist policy-makers, employers, and unions to better
understand the similarities and differences among the three countries.
In order to better serve the public’s need for timely information on labor topics, the
Secretariat publishes data on trends in labor markets, labor law, labor relations and
human resources management via its web site – part of a wider project to revamp that
site in order to make it a more useful resource for students, researchers, practitioners,
policy makers, and the public.
All of the Commission for Labor Cooperation’s publications are available on the
Secretariat’s website at www.naalc.org.
Consultations and Dispute Settlement
The Agreement recognizes that the three countries will not always find cooperative
ways to address concerns; thus, it envisions consultations and dispute settlement
processes when the countries have disagreements. However, even when these
processes have been invoked, the practice of the Governments has been to seek
cooperative ways to address the differences. To better understand the dispute process,
which generally has been addressed through the handling of “Public Submissions,” it is
helpful to appreciate what the Agreement does and does not do.
The Agreement authorizes a country to review another Party’s effective enforcement of
its labor laws. Each country established a review process by its NAO, which includes
the issuance of public reports with findings and recommendations.
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An NAO review may lead to ministerial-level consultations and other procedures to
deal with issues not resolved at the NAO level. All labor issues, except for freedom of
association, collective bargaining, and the right to strike may proceed to a nonadversarial comparative review by an independent evaluation committee of experts.
Matters concerning minimum wage, child labor, and occupational safety and health
may be taken to an arbitral panel for consideration as to whether a country is effectively
enforcing its labor law. If there is an adverse finding and the problem is not adequately
addressed, a monetary assessment or suspension of trade benefits may be imposed.
The Agreement does not impose harmonized labor standards on the countries. Each
country agrees to enforce its own laws in accordance with the practices of that country.
The Agreement does not allow an NAO to review labor law concerns arising under its
own country’s laws. The review process does not replace existing domestic institutions
in place to address labor disputes. For example, individuals cannot seek to bypass U.S.
National Labor Relations Board jurisdiction on an unfair labor practice by seeking
review through the NAO process.
The NAOs are not empowered to adjudicate individual rights. This is an often
misunderstood point because submissions brought before the NAOs have tended to
focus on particular companies and involve specific factual situations. This limitation on
the submission review process is important so as not to create unnecessary concern
among business or expectations among workers that cannot be realized.
Submission Process
The Agreement enables any individual or entity, including labor unions, employers,
and non-governmental organizations, to raise allegations that a Party government is not
effectively enforcing its labor law. A “submission” is presented to an NAO seeking
review by that NAO of another Party’s labor law. Each NAO has developed guidelines
for considering submissions.
The U.S. NAO published guidelines (59 FR 16660) specifying the requirements for filing
a submission and setting out factors the NAO would consider in reviewing a
submission. A submission must address and explain whether:
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the matters complained of appear to demonstrate action inconsistent with
another Party’s obligation under the NAALC;
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there has been harm to the submitter or other persons, and to what extent;
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the matters complained of appear to demonstrate a pattern of nonenforcement of labor law;
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relief has been sought under domestic laws and the status of any legal
proceedings; and
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the matters complained of are pending before an international body.
Once a submission is filed, the U.S. NAO has 60 days to determine whether to accept it
for review.
The U.S. NAO shall accept a submission for review if “it raises issues relevant to labor
law matters in the territory of another Party and if a review would further the objectives
of the Agreement.” The NAO may decline to review a submission if:
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the submission does not clearly identify the submitters or is not
sufficiently specific about the nature of the request;
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the submission, even if substantiated, would not constitute a failure to
comply with obligations under the NAALC;
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the submission or available information demonstrates that appropriate
relief has not been sought under domestic law of the Party or the matter is
pending before an international body; or
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the submission is substantially similar to a recent submission and
significant, new information has not been made available.
How much weight is given to each of these factors is important in determining the
appropriateness of a review. In past instances, the U.S. NAO has focused mainly on
whether a review would further the objectives of the Agreement. It has considered the
four factors for declining review, but has not given particular weight to any of them.
Currently, the NAO will focus more heavily on these four factors as a basis for
declining review, particularly whether appropriate relief has been sought under
domestic law.
If a submission is accepted for review, the U.S. NAO is to conduct such further
examination as may be appropriate to assist it to better understand and publicly report
on the issues raised. The established guidelines provide for the holding of a public
hearing to gather information, unless the NAO determines that it would not be suitable.
The hearings are intended to be information gathering and not adversarial, and only
NAO officials question witnesses. An NAO is not provided authority to undertake
labor law enforcement activities in another country. Rather, it uses the other NAOs,
public hearings, embassy staff, NGOs, and other contacts to gather information so that
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it may consult with the other governments and publicly report on labor matters of
concern.
The U.S. NAO is to complete its review and issue a public report within 120 days of the
date of acceptance, with a possible 60-day extension at the discretion of the NAO
Secretary. In its report, the NAO will review and analyze the applicable law, and make
recommendations to the Secretary of Labor.
The Canadian and Mexican NAOs have similar procedures in place. In the case of
Canada, the only principle variation is no presumption of a public hearing, although in
practice the Canadian NAO has held hearings. In the case of Mexico, there is no
provision for a public hearing and there are no time deadlines for the review or for the
issuance of a public report.
Since 1994, there have been a total of 29 submissions -- 18 filed with the United States
(16 against Mexico and 2 against Canada), 7 with Mexico (all against the United States),
and 4 with Canada (2 against Mexico and 2 against the United States). In the cases
brought before the United States concerning Mexico, the allegations principally have
involved freedom of association and collective bargaining and occupational safety and
health. There also was one important submission concerning employment
discrimination against women, particularly with regard to pregnancy.
The freedom of association cases have raised several factors, including the requirement
for union registration, the structure and role of the federal and local conciliation and
arbitration boards, the conduct of union representation elections (particularly open
voting), and the harassment and dismissal of workers for union activities. In the cases
brought against the United States, the principal issue has been protection of migrant
workers, particularly agricultural workers.
Recent Submissions
U.S. Secretary of Labor Elaine L. Chao and Mexican Secretary of Labor and Social
Welfare Carlos Abascal signed a Joint Declaration in June 2002 resolving three
outstanding submissions (US 9901 concerning TAESA, US 2000-01 concerning
Autotrim, and MEX 9804 concerning migrant workers). In this declaration, the
Trinational Occupational Safety and Health Working Group was established in
response to the safety and health issues raised in the submissions. Additionally, Mexico
committed to address relevant collective bargaining rights in a public seminar and to
undertake outreach efforts to inform the public about legal advice and assistance
available to workers related to occupational safety and health cases, and the United
States agreed to undertake outreach efforts concerning workplace rights of migrant
workers.
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The creation of the Trinational Occupational Safety and Health Working Group is a
result of a collaborative effort intended to focus on a broad labor issue, rather than the
single instance at a specific facility. The Working Group is headed by the top safety and
health officials in the three NAFTA governments and meets on an ongoing basis to
develop technical cooperation programs and make recommendations to the
governments on addressing safety and health concerns.
Currently, several submissions remain pending at varying levels of review.
In November 2001, Mexico accepted a submission (MX 2001-1) concerning worker
compensation issues in New York State. The Mexican NAO issued a public report on
this submission on November 8, 2002, in which it requested further cooperative
consultations under article 21 of the NAALC. The U.S. NAO has consulted with its
Mexican counterpart and the submission remains pending.
In 2003, Mexico received a submission concerning the rights of migrant workers in
North Carolina. The Mexican NAO currently is reviewing the submission.
In 2003, the U.S. NAO received one submission concerning enforcement of labor law in
Mexico (US 2003-01). The submission involves conditions at garment facilities in the
state of Puebla and raises freedom of association and the right to organize, minimum
employment standards (principally minimum wage and overtime), and occupational
safety and health. The U.S. NAO has reviewed the submission and the issuance of a
public report of its findings is pending.
In 2003, Canada received a submission on the same subject matter as submission US
2003-01. The Canadian NAO also is conducting a review and is expected to issue a
public report soon.
The U.S. NAO received one submission in 2004 concerning Mexico (US 2004-01), but it
was withdrawn.
Conclusions
There have been criticisms and perceived deficiencies expressed about the NAALC,
including, for example:
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labor groups argue that the Agreement is powerless, lacking protection
for individual rights, and that it provides the least protection for the most
fundamental labor rights;
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on the other hand, the business community contends that the Agreement
is overly intrusive and can disrupt the ability to conduct business,
asserting that the Agreement should not permit sanctions for labor
violations and that only cooperative mechanisms should be used to
advance workplace standards.
Despite these criticisms, the NAALC has presented valuable opportunities to address
labor issues of mutual concern.
First and foremost, the Agreement represents the first instance in which the U.S. has
negotiated an instrument dealing with labor standards to supplement an international
free trade agreement. As the U.S., and other countries, proceed with negotiation of
future free trade agreements, the NAALC is likely to be looked upon as a model.
Secondly, the NAALC has enhanced transparency and public dialogue on labor law and
enforcement in our respective countries, and shown them to be useful tools in
addressing workplace concerns. The Agreement has created an international forum for
airing labor concerns, which requires the national governments to explain to the
international community why they treat labor issues in a particular way. This process
places issues on the agenda of high-level government officials, routinely at the cabinet
level, and has contributed to improved international and domestic dialogue for change.
This had not happened to a large extent prior to the Agreement, and likely would not
have occurred to the same extent without it.
The increased openness has led to successful cooperative efforts to address workplace
issues. Under the NAALC, over 50 trilateral cooperative programs have been carried
out involving governments, business, labor organizations, academics, and NGOs in
efforts to exchange information, expertise, and best practices, to facilitate better
understanding of each country’s labor laws, policies, and practices, and to promote
awareness of workplace rights and responsibilities.
That being said, there is still a great deal more to be done. The three Governments are
committed to continue to enhance cooperation in many ways, including:
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increasing understanding of the operation of our respective labor relations
systems and how we might improve the effectiveness of those systems;
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developing and maintaining effective programs to eliminate safety and
health hazards, strengthen safety and health standards, and enhance
inspection methodologies;
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heightening awareness of workplace risks and ways to combat them
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among workers and employers in high hazard industries;
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creating links between experts in government, industry, and labor across
North America;
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identifying collective pertinent data to evaluate the impact of worker
safety and health conditions on economic activity; and
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fostering public-private sector partnerships in order to develop worker
skills, improve access to training, promote fairness in employment, and
ensure equal opportunities for disabled and displaced workers consistent
with 21st century workforce needs and strategies.
The NAALC balances national sovereignty concerns with the need for oversight of
labor law enforcement, and the interests of those seeking adjudication of individual
rights with concerns over possible interference with domestic business affairs. It
provides a process whereby Governments are able to engage each other on a broad
range of labor issues, including effective enforcement of labor laws. It also underscores
the notion that labor issues can be constructively addressed without inhibiting trade
and that labor rights have become, and will continue to be considered, an integral part
of the international trade agenda.
II. Labor Provisions in Other Free Trade Agreements
Although it would be six years after the NAALC became effective before the United
States would negotiate another free trade agreement (FTA), the NAALC’s provisions
would serve as a model. In FTAs negotiated with Jordan, Singapore, Chile, Australia,
Morocco, Central America (Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala)
and the Dominican Republic, and Bahrain, several aspects first included in the NAALC
remain: effective enforcement of domestic law; the existence of dispute settlement
mechanisms; procedural guarantees of access, fairness, and transparency; and
institutional arrangements. Similar provisions also would seem likely to be included in
agreements being negotiated with the South Africa Customs Union (South Africa,
Namibia, Botswana, Lesotho, Swaziland), Panama, and the Andean countries (Peru,
Colombia, Ecuador). Although these FTAs maintain some aspects of the NAALC, they
also differ in key ways: the inclusion of the labor provisions within the core trade
agreements as opposed to a side agreement; the number of covered labor law areas; the
dispute settlement mechanisms being the same as commercial disputes; and no
international institutions created.
The U.S.-Jordan FTA was the first U.S. free trade agreement subsequent to the NAFTA
and the NAALC. The agreement includes labor provisions within its core text in article
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6. The provisions include a reaffirmation of the Parties’ obligations as members of the
International Labor Organization (ILO) and their commitments under the ILO
Declaration on Fundamental Principles and Rights at Work. This declaration was
ratified by the ILO in 1998, well after the negotiation of the NAALC. The Parties
recognize that it is inappropriate to encourage trade by relaxing domestic labor laws
and commit to strive to ensure that they do not waive or derogate from such laws as an
encouragement for trade. Each Party also obligates itself not to fail to effectively
enforce its labor laws. However, “labor laws” is defined differently than in the
NAALC. The U.S.-Jordan agreement follows a definition utilized in unilateral U.S.
trade legislation over the years, rather than language in the NAALC. All of the labor
provisions of article 6 are subject to the Agreement’s overall dispute settlement
provisions. Unlike the NAFTA and the NAALC, the U.S.-Jordan agreement does not
spell out specific sanctions in the case of violations. Instead, it provides that the affected
Party may take “any appropriate and commensurate measure.”
In 2002, following the U.S.-Jordan FTA and subsequent to the completion of free trade
negotiations with any other countries, the U.S. Congress passed Trade Promotion
Authority legislation specifying trade negotiating objectives (see 116 Stat. 994, Pub. Law
107-210 (Aug. 6, 2002)). These negotiating objectives serve as the ground rules for U.S.
positions in all subsequent free trade agreement negotiations. The objectives are
divided into overall trade negotiating objectives, principal trade negotiating objectives,
and promotion of certain priorities, all of which contain directives on labor-related
matters. The overall objectives include to seek provisions in trade agreements that
promote respect for worker rights consistent with the core labor standards of the ILO,
strive to ensure that the parties do not waive protections afforded in domestic labor
laws as an encouragement for trade, and promote universal ratification an full
compliance with ILO Convention 182 on the Worst Forms of Child Labor. The principal
objectives include to ensure that a party does not fail to effectively enforce its labor
laws; strengthen the capacity of trading partners to promote respect for core labor
standards as defined in the legislation; seek provisions that treat principal negotiating
objectives (which includes labor issues) equally with respect to dispute settlement and
the availability of equivalent procedures and remedies; and seek commitments by
parties to vigorously enforce laws prohibiting the worst forms of child labor. The
enumerated “certain priorities” include to seek greater cooperation between the World
Trade Organization (WTO) and the ILO, and consultative mechanisms to strengthen
trading partners to promote respect for core labor standards. The priorities also include
to direct the Secretary of Labor to consult with any country seeking a trade agreement
with the United States concerning that country’s labor laws and provide technical
assistance if needed, and to submit to Congress reports on meaningful labor rights, the
extent to which each country has in effect laws governing exploitative child labor, and
the trade impacts on U.S. employment.
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All of the FTAs negotiated subsequent to TPA have addressed these issues. They all
contain language similar to the U.S.-Jordan FTA on obligations as members of the ILO
and commitments under the ILO Declaration. The language in the U.S.-Jordan FTA
concerning not waiving or derogating from domestic labor laws has been expanded to
cover encouragement of investment, as well as trade. All of the agreements commit
U.S. trading partners to not to fail to effectively enforce their labor laws. In addition,
the recent FTAs contain provisions similar to the procedural guarantees in the NAALC,
such as ensuring access to impartial and independent labor tribunals and proceedings
before such tribunals are fair, equitable, and transparent. Each agreement provides for
the establishment of contact points within the labor ministries to administer the labor
provisions and to implement Labor Cooperation Mechanisms, which are intended to
enhance opportunities to improve labor standards and common commitments under
the ILO Declaration and the ILO Convention on the Worst Forms of Child Labor. The
FTAs establish Labor Affairs Councils or Subcommittees on Labor Affairs to address
matters that may arise under the labor provisions, and provide consultative and dispute
settlement mechanisms that permit labor issues to be taken to dispute settlement with
procedures and remedies intended to be equivalent to those available for commercial
disputes. However, unlike the NAALC and the U.S.-Jordan FTA, violations other than
those concerning the obligation not to fail to effectively enforce labor laws are
specifically excluded from dispute settlement. Nonetheless, unlike the NAALC, there
are no provisions that limit dispute settlement to only some of the covered labor law
matters.
In each case, the officials from the Department of Labor and other agencies have
consulted with representatives of government, business, labor, and social partners in
each country in order to inform U.S. positions in the trade negotiations. Department of
Labor officials participate in interagency groups to develop U.S. negotiating positions
and text and serve as representatives on the negotiating groups. The Department has
had primary responsibility for producing reports on meaningful labor rights, child
labor, and employment impact for all of the free trade agreements. The Department is
providing technical assistance to several of the U.S. trading partners and is
implementing the Labor Cooperation Mechanisms for the agreements that are in force.
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Resoures
U.S. National Administrative Office
U.S. Department of Labor
200 Constitution Ave., N.W. Room S-5205
Washington, D.C. 20210
202-693-4900
www.dol.gov/ILAB/programs/nao/main.htm
Mexican National Administrative Office
Secretaría del Trabajo y Previsión Social
Periférico Sur 4271, Edif. A, Planta Baja
Col. Fuentes del Pedregal, Del. Tlalpan
14149 México, D.F.
5255-5645-2218
www.stps.gob.mx/
Canadian National Administrative Office
Inter-American Labour Cooperation
Labour Branch
Human Resources Development Canada
165 Hotel de Ville
Phase II, Place du Portage
Hull, Quebec K1A 0J2
Canada
819-953-8860
www.hrsdc.gc.ca/en/lp/spila/ialc/01International_Agreement_on_Labour_Cooperation.shtml
Commission for Labor Cooperation
Secretariat
1211 Connecticut Ave., N.W. Suite 200
Washington, D.C. 20036
202-464-1100
www.naalc.org
North American Agreement on Labor Cooperation
Available online at -- www.naalc.org/english/infocentre/NAALC.htm
North American Agreement on Labor Cooperation: A Guide (U.S. NAO publication)
Available online at -- www.dol.gov/ILAB/media/reports/nao/naalcgd.htm#NAALC
Four-Year Review of the North American Agreement on Labor Cooperation
Available online at -- www.naalc.org/english/publications/review.htm
Status of Submissions (U.S. NAO publication)
Available online at -- www.dol.gov/ILAB/programs/nao/status.htm
Cooperative Activity Summary (U.S. NAO publication)
Available online at – www.dol.gov/ILAB/programs/nao/procguide.htm
U.S. NAO Procedural Guidelines (59 FR 16660)
Available online at -- www.dol.gov/ILAB/programs/nao/procguide.htm
Trinational Occupational Safety and Health Working Group
Website – www.naalcosh.org
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