Enforce Your Own Laws, or Else!

 

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U.S.Trade Representative Michael Froman recently announced that the Obama administration is proceeding with a labor enforcement case against Guatemala. The case arises under the Labor Provisions of the U.S.-Dominican Republic-Central America Free Trade Agreement (“CAFTA-DR”) and is the first case to be litigated under any free trade agreement. The CAFTA-DR is a free trade agreement the United States entered into with five Central American Countries; Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua and the Dominican Republic. Since its creation, the treaty has been used to create new economic opportunities by opening markets and promoting transparency in the region.

The thrust of this case rests on Chapter 16 of the CAFTA-DR. Chapter 16 outlines the parties shared commitment under the International Labor Organization to ensure internationally recognized labor norms. More specifically, article 16.2 contains an “enforce your own laws” standard: “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 between the parties, after the date of entry into force of this Agreement.”

It is apparent the United States has been concerned with the action or inaction of the Guatemala government in implementing its labor laws for a while now. In 2008 AFL-CIO and six Guatemalan labor unions filed a complaint with the U.S. Labor Department alleging that the Guatemalan government was failing to enforce its own labor laws, as required under the trade agreement. Then in 2011, due to Guatemala’s continued and apparent failure to comply with Article 16.2, the United States requested the establishment of an arbitral panel under the CAFTA-DR’s dispute settlement chapter. Soon thereafter, Guatemala and the United States agreed to suspend the arbitral panel in hopes an implementation and enforcement plan would be effective.

Through the Enforcement Plan, Guatemala promised to strength its labor inspections, streamline the process of sanctioning employers, increase labor law compliance by companies, and enforcement by labor court order. Guatemala has since failed to meet the terms of the Enforcement Plan, and therefore, is still in violation of Article 16 of CAFTA-DR. As such, The United States is expected to file a brief for the arbitration panel within four weeks.

This step by the Obama Administration has been applauded by AFL-CIO President Richard Trumka who knows this arbitration could have important implications on the trade agreements currently being negotiated by the United State, such as the Trans-Pacific Partnership (“TPP”) and Transatlantic Trade and Investment Partnership (“TTIP”). Trumka hopes these treaties will include stronger labor protections with mechanisms that are powerful toprotect workers’ rights in a timely manner.

Depending on the outcome of the arbitration, there may be an uptick in arbitral enforcement of treaties, and human rights provisions therein. But is this enough? Trumka’s statements suggest the arbitral panel and provisions of the CAFTA-DR are not strong enough protections for workers under a trade agreement. Is the arbitration a clear enough message to future trade partners that labor rights are fundamental to a trade relationship with the United States? If not, what provisions could be drafted into TPP or TTIP to ensure our future trade partners will meet their obligations and enforce labor rights?

Sources: CAFTA-DR Art.16; U.S. Trade Rep. Treaty BackgroundU.S. Trade Representative Press Release; U.S. Trade Rep. Announcement; Bloomberg

Image: Export.gov

2 comments

  1. Very interesting piece. I think it’s commendable of the Obama Administration to step in and take affirmative measures regarding the enforcement of the trade agreement. From my understanding, the U.S. is telling parties of the trade agreement that in order to do business with us (the U.S.), you have to at least enforce your own labor laws. I don’t believe that is asking too much of Guatemala. Such measures are imperative to the dependability of the U.S. in future trade agreements, with any foreign state.
    However, as the article suggests, merely enforcing Article 16 may not be enough. The labor laws of foreign states may not be strong enough to protect foreign workers equally among all parties to such trade agreements. Perhaps the TPP or TTIP can adopt a universal minimum standard that all parties must meet. This would create a baseline protection for all workers privy to the agreement.
    But such provisions may have some drawbacks. Implementing a baseline standard could be viewed as the U.S. using its prominence in the global economic market to force countries to play by their rules—which is not necessarily a bad thing.

  2. This article raises a very important point. The enforcement of trade agreements by a nation is necessary to carryout international business relations. The Obama Administration should in fact be applauded for taking measures to enforce the trade agreement between Guatemala and themselves. If the United States were to ignore this issue, it would have a negative effect on the nation’s image; it would appear to other nations that the U.S. does not take labor laws seriously. Labor laws should not be regarded lightly.

    The U.S. is not asking Guatemala to do anything that they did not sign onto during the trade agreement negotiations. There was an understanding between all the parties to the agreement that labor laws of your nation have to be enforced. If the outcome of the arbitration is in the United States favor, it may not be enough. It would certainly send a message to other nations that the U.S. takes the enforcement of labor laws seriously, but Guatemala is already signed into an agreement with them. Perhaps the parties could draft into the TPP or TTIP agreements requirements for labor standards. Guatemala could be meeting their labor standards, but to the U.S. it may seem like they are not meeting high enough standards. If one nation’s standards are lower than another’s, this could create a problem. The agreements should have specific labor standards set out within them to ensure that all the parties to the agreement are abiding by the same level of standards.

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