The U.S. complaint against Guatemala for failure to enforce labor laws -- mentioned here -- seems to be going forward. The first U.S. written submission is now online here. Here's an excerpt:
2. This submission demonstrates that Guatemala has breached its obligation under Article 16.2.1(a) of the CAFTA-DR by failing to effectively enforce its labor laws, through a sustained and recurring course of inaction, in a manner affecting trade between the Parties.
3. Guatemala’s failures involve workers at over a dozen companies, each in one of four of Guatemala’s major exporting sectors: shipping, apparel, steel and agriculture. At each company, Guatemalan products are either exported to the United States or other CAFTA-DR Parties, or compete in Guatemala with imports from the United States or other CAFTA-DR Parties.
4. The instances that demonstrate Guatemala’s failures recounted and carefully documented in this submission occurred over the course of many years. They involve longstanding complaints of violations of the Guatemalan Labor Code – the foundation of Guatemalan labor law. These instances involve Guatemalan labor laws directly related to the right of association, to the right to organize and bargain collectively, and to acceptable conditions of work.
5. The evidence shows at least 189 instances in which Guatemala has failed to effectively enforce its statutes and regulations directly related to workers’ right of association and right to organize and bargain collectively by not securing compliance with court orders requiring employers to reinstate and compensate workers they wrongfully dismissed for union activities, and to pay a fine for their retaliatory action.
6. The evidence shows at least 197 instances in which Guatemala has failed to effectively enforce its statutes and regulations directly related to acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health, by not conducting investigations in accordance with the Labor Code and by not imposing the requisite penalties when it has identified employer violations.
7. The evidence shows at least 16 instances in which Guatemala has failed to effectively enforce its statutes and regulations directly related to the right to organize and to acceptable conditions of work by not registering unions or instituting conciliation processes in a timely fashion.
8. That is, in at least 402 separate instances, Guatemala has failed to effectively enforce its labor laws. With respect to each of the U.S. claims, the instances cited represent a “sustained or recurring” course of inaction “affecting trade between the Parties.” Therefore, the United States respectfully requests that the Panel find that Guatemala has acted inconsistently with its obligation under Article 16.2.1(a) of the CAFTA-DR.
I have a few thoughts on this.
First, are there implications for U.S. trade politics? The Republicans are not known for supporting stronger labor protections. What will the new GOP Congress make of this case? It was one thing when labor chapters in trade agreements were just empty promises. But now they look like enforceable international law obligations (which could be applied in both directions -- imagine Europeans using TTIP labor provisons against the U.S.). Will the circulation of a panel report in this case have an impact on how the Republicans approach TPA in the coming months?
Second, there are a bunch of cites in the U.S. submission to WTO jurisprudence. In a number of places, the U.S. calls WTO findings "useful guidance." Do we need a more formal explanation of how WTO jurisprudence can guide FTA panels? Or are we OK just muddling through?
Third, and most interesting to me, the CAFTA labor obligations apply only when trade is affected. As the U.S. puts it:
97. CAFTA-DR Article 16.2.1(a) requires that “a Party shall not fail to effectively enforce its labor laws . . . in a manner affecting trade between the Parties.”
The U.S. then explains its view of the standard, and why Guatemala's inaction here affects trade. In this regard, it says:
103. ... the ordinary meaning of the phrase “in a manner affecting trade” in Article 16.2.1(a) encompasses any course of action or inaction by a Party that has a bearing on, influences or changes – i.e., affects – cross-border economic activity, including by influencing conditions of competition within and among the CAFTA-DR Parties.
and:
104. The United States will demonstrate below that, through Guatemala’s failure to effectively enforce its labor laws, Guatemalan companies face different conditions of competition than they would face were the laws effectively enforced. As a result, the competitive conditions between Guatemalan companies and companies in other CAFTA-DR Parties have been altered from the agreed terms of the CAFTA-DR. In this respect, Guatemala’s failures have occurred “in a manner affecting trade between the Parties” within the meaning of Article 16.2.1(a). For example, Guatemala’s failures to effectively enforce its labor laws bears upon the conditions of competition in trade between the CAFTA-DR Parties because it both directly and indirectly changes the relationship between Guatemalan companies and one of their important industrial inputs – i.e., labor.
The U.S. then lays out the trading relationship between Guatemala and the U.S., noting several industries where there is competition and trade.
Here's what I wonder, though. If the agreement specifies that the failure to enforce labor laws must affect trade, doesn't that imply there are some situations where such inaction will affect trade, and other situations where it will not affect trade? If that's the idea, if we apply a conditions of competition standard, I'm not sure I see any situations where a failure to enforce labor laws does not affect trade. In practice, there will always be at least some trade between Guatemala and the U.S., and that trade will be affected by labor policies. And regardless, there is always theoretical, potential trade between Guatemala and the U.S., so trade could still be affected even if there were no actual trade. As a result, if we adopt a conditions of competition approach, are we reducing this langague -- "in a manner affecting trade between the Parties" -- into redundancy or inutility?
On the other hand, is it possible that there are some non-tradable areas that still exist, so that failure to enforce labor laws would not affect trade in some situations? Perhaps there are some services that can't be traded? Given that trade in services can take place, inter alia, via movement of natural persons, the internet, and commercial presence, there can't be many.
