The Labor Rights Rationale to Approve the USMCA
Steve Charnovitz
13 December 2019
Three days ago, the US, Mexico, and Canada completed talks to update the renegotiation of the North American Free Trade Agreement (NAFTA) that had begun in 2017 and had been touted as having succeeded in 2018. During the past three days, the trade community has perused the most recent version of the United States-Mexico-Canada Free Trade Agreement (USMCA) and widespread support within the United States (US) has been announced for the new agreement. Although in recent decades, free trade agreements (FTAs) have been a highly polarized issue in US politics, the new USMCA has drawn public support from across the spectrum — Republicans and Democrats, business and unions. Pulling this off is a notable political achievement for the Trump Administration.
On purely trade grounds, the United States would be better off if the US Congress rejected the USMCA in favor of just keeping the NAFTA. The USMCA is a mixed bag of pro-trade and anti-trade features. On the plus side, the USMCA expands FTA disciplines, reduces Canadian agricultural protection, and fixes the main procedural flaws in NAFTA's dispute settlement. In view of the successful attacks on WTO dispute settlement by the Trump Administration culminating this week in the destruction of the WTO appellate court, assuring the viability of the NAFTA dispute mechanism has grown in importance. On the minus side, the USMCA guts investor protections, subjects USMCA to automatic termination after 16 years, and enshrines a highly protectionist condition for automobile trade by requiring that certain value added be produced by workers earning at least $16 an hour. Given that $16 an hour is 221 percent of the US minimum wage, the condition is purely protectionist and has nothing to do with worker rights. Another problem is that one of the best features of the NAFTA, the acknowledgement of a North American economic, social and environmental community, is now dropped. By crossing out the "North American" name, the three governments are recasting the FTA into a purely transactional exercise and are digging up the promises planted in 1992 of building continental solidarity.
Recognizing the benefits of just staying loyal to the NAFTA, President Trump has put his thumb on the scale by threatening to pull the US out of the NAFTA if his USMCA is not approved. Although some analysts have argued that Trump does not have legal authority to pull the US out, I believe that the President does have that authority. A utilization of that Presidential authority would surely be challenged in federal court and given the present volatile legal climate, I would imagine that there would be at least one litigant who could find at least one federal judge to enjoin such a US departure. But in the end, US courts would uphold Presidential authority to quit a treaty in the absence of a federal law to the contrary. The costs of a US exit from NAFTA multiplied by the probability of its occurrence generates an additional reason to support the USMCA that, for me, puts the go or no-go choice on USMCA in equipoise.
The new labor rights provisions added to the USMCA change the equation and provide a solid reason to go with USMCA over NAFTA. The weight that I give to the labor aspect of the USMCA, no doubt, reflects the fact that for most of my career, I have been engaged as a US government official or as a scholar in developing or exploring the labor dimension to international trade agreements. As an International Relations Officer serving in the US Bureau of International Labor Affairs (ILAB) beginning in 1978, I developed an expertise on the labor-trade connection that in 1983 launched me onto the beachhead of the first US government initiative to lift labor conditions in particular countries as part of a trade liberalization negotiation. That was the Caribbean Basin Initiative (CBI) which for the first time included a labor condition in US legislation for extending preferential trade benefits. I credit former Congressman Charles Rangel for originating those provisions.
In 1983, I served on the US team that negotiated labor law and practice improvements with Haiti, the Dominican Republic, El Salvador, and Honduras. I inhaled first-hand the lesson that governments with entrenched labor rights violations would put those issues on the table in order to receive trade benefits. The numerous labor rights concessions promised by those governments were chronicled in an article I wrote at the time, "Caribbean Basin Initiatives: setting labor standards," Monthly Labor Review, Nov. 1984, https://www.bls.gov/opub/mlr/1984/11/rpt5full.pdf. I thank the two co-heads of that US delegation, Ambassador Robert Ryan and Assistant US Trade Representative Jon Rosenbaum, for supporting my efforts as labor specialist on the US negotiating team, including my investigation of worker rights violations in those countries.
The positive US experience with the labor condition in CBI catalyzed the incremental expansions over the next 36 years in the labor rights aspirations of future US trade laws and FTAs. Next up was the inclusion of labor conditions in the revision of the Generalized System of Preferences (GSP) in 1984. I credit former Congressman Don Pease for originating those provisions. Then in 1988, Pease championed the addition of a "worker rights" objective to US trade law for bilateral and multilateral trade agreements. This was an important development because it converted worker rights from an obligation that the US imposed on other countries (e.g., CBI) to a mutual obligation between the US and other FTA party. Although this worker rights objective was not attained in the NAFTA negotiations in 1992, Presidential candidate Bill Clinton promised to address that omission. In 1993, the Clinton Administration negotiated a NAFTA side agreement on labor. In 2000, the Clinton Administration negotiated an article on Labor to be included in the Jordan-US FTA. The expiration of fast track trade negotiating authority did not get fixed during the Clinton Administration, but in 2002, the Congress passed new negotiating authority that contained stronger and more specific worker rights negotiating objectives. These objectives were used in subsequent FTA negotiations such as the Dominican Republic- Central America Free Trade Agreement. In May 2007, the Bush Administration and Congressional leaders reached the so-called "Bipartisan Trade Deal" that established a template for incorporating internationally-recognized labor principles into new trade agreements. The Bush Administration modified three recently negotiated FTAs — for Colombia, Korea, and Panama — to include these new labor principles, but the agreements did not progress to ratification. The Obama Administration kept these FTAs on the shelf for two years, but in 2011 sent the FTAs to the Congress for approval which was quickly obtained. For Colombia there was an accompanying Action Plan for labor; for Panama, that government undertook certain labor domestic actions; and for Korea, the Obama Administration demanded some dilution of the free trade provisions. Although candidate Obama had campaigned in 2008 on the promise to renegotiate NAFTA's provisions on labor, he did not do so during his eight years in the White House. That failure provided a springboard for candidate Trump to decry the labor aspects of NAFTA as part of Trump's overall sharp criticism of the NAFTA. Upon entering the White House, Trump and his trade team began the NAFTA renegotiations that culminated in the new labor provisions announced earlier this week.
When I negotiated the CBI's labor requirements in 1983, the pushback I received from every CBI country was that it was hypocritical of the US to ask other countries to honor freedom of association and labor union rights when the US had refused to ratify the Freedom of Association Convention (No. 87) of the International Labour Organization (ILO). The gap between US practice and US negotiating demands was troubling to me. The ILO's Freedom of Association Convention is the most fundamental of ILO conventions. Adopted in San Francisco in 1948, the Convention was sent by President Truman to the US Senate in 1949 for approval. For over 70 years, the Senate Foreign Relations Committee has not found the time to hold a hearing on this core convention that has now been ratified by 155 countries (including Canada and Mexico). Even self-styled internationalists who have chaired the Senate Foreign Relations Committee, such as Senators John Kerry, Joe Biden, and Richard Lugar, have shown no interest in signing onto freedom of association. I discussed this Senate pathology in an essay in the American Journal of International Law in January 2008 titled "The ILO Convention on Freedom of Association and its Future in the United States" available at https://www.cambridge.org/core/journals/american-journal-of-international-law/article/ilo-convention-on-freedom-of-association-and-its-future-in-the-united-states/D17C8AD77C08056153A8C0673E949B11.
Although the first best approach for the United States to adhere to internationally recognized worker rights is to ratify ILO conventions, the inclusion of labor commitments in US trade agreements constitutes a second-best approach. In international law, it doesn't matter whether a country's commitment to a particular human right appears in a Treaty on X or a Treaty on Y. So I have often spoken out in favor of using trade agreements to commit the US government to take on new national commitments in support of internationally recognized worker rights. For example, see my article, "The U.S. International Labor Relations Act," ABA Journal of Labor & Employment Law, Winter 2011 at https://www.jstor.org/stable/41320580?seq=1#metadata_info_tab_contents. For those reasons, I was delighted to see how the Trump Administration is pushing the envelope forward so as to expand US commitments in international law in favor of worker rights.
Chapter 23 of the USMCA addresses labor and contains numerous obligations for the United States. These US obligations extend only to the federal level, not to the state level. Under this Chapter, Mexico and Canada would be able to bring cases against the US for violations of the labor rights set out in USMCA. The prospect of establishing US accountability is important because although complaints against the US are sometimes brought in the supervisory mechanisms of the ILO, when the ILO finds a US violation, the ILO has no enforcement mechanism against the US. In contrast, the USMCA would give Mexico or Canada an enforcement mechanism to levy trade sanctions against the US should the US be found to be out of compliance with Chapter 23 and to fail to correct that violation.
Numerous USMCA provisions impose new international requirements on the US that the US might not always meet:
- Article 23.3(1)(a) requires the US to adopt and maintain freedom of association and the effective recognition of the right to collective bargaining. Helpfully, this provision clarifies that "the right to strike is linked to the right to freedom of association, which cannot be realized without protecting the right to strike." No such clarification existed in previous US FTAs whether ratified or unratified.
- Article 23.3(1)(d) requires the US to adopt and maintain the elimination of discrimination in respect of employment and occupation.
- Article 23.5 requires the US not to fail to effectively enforce its labor laws through a sustained or recurring course of action in a manner affecting trade or investment. The newly revised USMCA provides a rebuttable presumption that a failure to comply does affect trade or investment.
- Article 23.6 requires the US to prohibit the importation of goods produced by forced or compulsory labor.
- Article 23.7 (Violence Against Workers) requires the US to not fail to address "cases of violence or threats of violence against workers" related to the exercise of labor rights (in a manner affecting trade or investment with the same presumption above).
- Article 23.8 (Migrant Workers) requires the US to "ensure that migrant workers are protected under its labor laws ...." This requirement might be of particular interest to Mexico.
- Article 23.9 (Discrimination in the Workplace) requires the US to implement policies "that it considers appropriate to protect workers against employment discrimination on the basis of sex (including with regard to sexual harassment), pregnancy, sexual orientation, gender identity and caregiving responsibilities ...." Many aspects of this provision are unclear in the text. Since this provision is addressed to "policies" rather than to laws, the provision may have applicability to federal policies regarding states and cites. Another puzzle is the enigmatic footnote to this provision which states that this Article "requires no additional action on the part of the United States" in order for the US to be in compliance. The phrase "that it considers appropriate" would seem to suggest more of a subjective rather than an objective legal standard.
The FTA's statement about worker strikes is consistent with the jurisprudence of the ILO Committee on Freedom of Association and with the Committee of Experts, but may be inconsistent with the views of the US and international employer community as to the normativity of a right to strike under international labor law. Within the US legal system, this provision could be read as stating that there is federal right to strike embedded in freedom of association. The US National Labor Relations Act is interpreted as providing for a right to strike, but the Act as applied puts limitations on the right to strike.
The newly revised USMCA also contains a new Annex 31-A which would allow an international panel to make a Rapid Response on-site verification of certain covered company facilities within the US on the basis of allegations from one of the other governments that the facility is denying the rights of workers. Only US facilities under an NLRB order would be covered. Based on the findings of this independent panel, the complaining government might gain the right to impose “penalties" on goods or services or a denial of entry. On 12 December, Professor Kathleen Claussen posted a very helpful analysis of this provision as well as the other USMCA labor provisions.
I have no idea whether either of the USMCA governments would ever bring a labor case against the US. Except in the area of trade remedies, the USMCA, like the NAFTA, fails to provide any private right of action to bring cases against governments. Providing such a private right of action would be a much more effective way to enhance worker rights than expecting governments to lodge cases against each other.
In summary, the willingness of the Trump Administration to add strong worker rights to US obligations under USMCA is remarkable and has induced me to support US ratification of this labor-related trade treaty (or perhaps trade-related labor treaty).
