PDF _ 97-861 - NAFTA Labor Side Agreement: Lessons for the Worker Rights and Fast-Track Debate
9-Oct-2001; Mary Jane Bolle; 25 p.

Abstract: The North American Free Trade Agreement (NAFTA), between the United States, Mexico, and Canada was the first trade agreement ever linked to worker rights provisions in a major way. Its companion ¨side agreement,¨ the North American Agreement on Labor Cooperation (NAALC, which rhymes with ¨talc¨) went into effect with NAFTA on January 1, 1994. The NAALC agreement is ¨broad¨ in that NAFTA signatories agree to enforce their own labor laws and standards while promoting 11 worker rights principles over the long run. However, under NAALC, sanctions as an enforcement tool are applicable to only three of the 11 labor principles (pertaining to minimum wages, child labor, and occupational safety and health), and are not applicable to three basic rights: the right to organize, bargain collectively, and strike.

NAALC and NAFTA were negotiated by the Administration and approved by Congress under presidential ¨fast-track¨ authority ? without amendment and with limited debate. This authority which expired in 1994 was included in the Omnibus Trade and Competitiveness Act (OCTA) of 1988. It encouraged the birth of a document such as NAALC when it listed as a principal negotiating objective in trade agreements ¨to promote respect for worker rights.¨ The 104th Congress considered but failed to pass renewed fast-track authority. In the 105th Congress, H.R. 2621 and S. 1269, both reported out of committee, would have renewed presidential fast-track authority but limited the potential to include worker rights provisions in trade agreements negotiated under fast-track procedures. They would have permitted only worker rights provisions aimed at preventing foreign governments from lowering or ¨derogating from¨ their existing domestic labor standards (e.g., child labor standards), in order to attract investment or inhibit international trade. The U.S.-Jordan free trade agreement (P.L. 107-43, September 28, 2001) incorporated provisions from both the NAALC and the House and Senate-reported fast-track bills from the 105 th Congress. In addition, for the first time, it included labor provisions in the body of the agreement and made them subject to the same dispute resolution procedures as other provisions in the trade agreement. Letters exchanged by the U.S. and Jordanian governments, however, vowed to resolve differences under the agreement without resorting to sanctions. H.R. 3005, the Bipartisan Trade Promotion Authority Act of 2001, was introduced October 3, 2001 (Thomas et al), as a possible compromise to extend presidential fast-track or trade promotion authority to July 1, 2005. Provisions of H.R. 3005 both compare and contrast to those in OCTA.

Trade liberalization ultimately results in gains to all economies; however, there are winners and losers (both industries and workers) along the way. Worker rights provisions could mitigate the effects of trade liberalization on both winners and losers by increasing labor costs in developing countries. However, NAALC as a worker rights promotion vehicle with a developing country has mitigated the effects of trade expansion from NAFTA very little so far, because most compliance is voluntary. [read report]

Topics: Economics & Trade, International Finance, International

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