International Economic Law and Policy Blog

Situating Labor in a Trade Agreement: Questions from the First RRM Panel

This is the second of two posts that take a look at the submissions and recount some of what was said at the hearing in the first USMCA Rapid Response Labor Mechanism (RRM) dispute between the United States and Mexico.  If you’re new to the discussion, check out the prior post here.  Since my last post, however, the panel’s 119-page determination (including a separate view by one panelist and three annexes) was made public so I will comment briefly also on its findings where applicable.

In this post, I concentrate on two interrelated issues.  One is the parties’ discussion about the meaning of “Covered Facility,” and the other is the parties’ dialogue with the panel about the panel’s purpose and the purpose of the RRM.    If you're short on time, here are the two bottom-line points that came through from the panel proceedings: (1) the intersection of trade and labor and the issue of how the latter fits into the former are far from settled, and, (2) despite the extensive customs data that governments now collect, specific details about goods crossing borders remain challenging to prove – a point that is relevant also to other sustainability and due diligence laws beyond the RRM.

To be sure, the panel’s decision did not turn on either of these issues.  Rather, the panel’s determination that it did not have “jurisdiction” over the dispute rested on its conclusion that, under the USMCA, a denial of rights finding “can only be applied to events . . . that are subject to [Mexico’s] 2019” Federal Labor Law and that the events alleged by the United States in this instance did not meet that criterion.  I take up that analysis in a forthcoming case note; in the meantime, colleagues have summarized the panel’s discussion on their law firm websites in case of interest.

Covered facilities and their sales profiles

To remind us again, the Agreement defines “Covered Facility” as a facility in Mexico or the United States that “(i) produces a good or supplies a service traded between” Mexico and the United States; “or (ii) produces a good or supplies a service that competes in the territory of a Party with a good or a service of the other Party.”  I will confess that, among all the topics that one could find legally or institutionally interesting (and, I suppose, controversial) in the RRM when the RRM was first announced, the definition of Covered Facility was relatively low on my list.  It was on the list, sure, but I did not expect the extended discussion that played out among the parties and the panel, and perhaps I was not alone among stakeholders.

Throughout the hearing, the panel asked several questions about the meaning of “Covered Facility.”  The issue was contentious as an evidentiary matter because the United States did not provide evidence to show that substances being mined at the San Martín facility were entering the United States. Rather, the United States took the position that it was sufficient to rely on the operating company’s U.S. Securities and Exchange Commission Form 10-K demonstrating that the company, which also operates other facilities, had recorded sales in the United States.  Mexico later called out the United States on this point, saying that if the United States had wished to show that minerals from the mine were exported to the United States, it could have and should have submitted documents from U.S. Customs and Border Protection, but it did not.  The panel subsequently had no difficulty dismissing the U.S. arguments with respect to the first possible definition, (i), of Covered Facility. 

More challenging was the question of whether the facility produces something that competes in Mexico with a U.S. good or service under definition (ii).  Let’s look back at the parties’ arguments.

The United States argued that the panel’s interpretation should “reach as many facilities as possible” to ensure that employers do not evade coverage under the RRM.   Consequently, the U.S. position was that the good produced at a covered facility does not have to be exported or be put on the market to be considered a good that is traded between the parties or that competes in the territory of a party with a good of the other party.  Rather, the United States maintained that where a good is a traded good, the circumstances of production of that good in any particular facility will affect the market for that good more generally.  When questioned, the United States argued that “whether or not goods from the San Martín facility themselves are exported does not change the fact that if the labor rights of the workers producing those goods are not protected, costs are likely to fall,” affecting both the labor market and the economic market in which the facility operates. 

Now this assertion sounds a lot like some of the arguments that arose in the U.S.-Guatemala dispute concerning the phrase “manner affecting trade” – a phrase that comprises part of an obligation on the parties to the CAFTA-DR.  In the context of that dispute, there was some discussion as to whether a government’s failure to effectively enforce its labor laws would give firms in that country an economic advantage.  It came to light that some economic studies have suggested that the opposite is true: firms -- and their host countries -- benefit financially where higher labor standards are enforced, not the other way around.  Surely there are various layers of generality and nuance to such studies, and likely there is countervailing research.  The point remains that these really complex interacting factors have contributed to the creative and still evolving experimentation in trade agreement drafting.  For its part in the present dispute, Mexico offered that the United States failed to identify any U.S.-origin merchandise competing with the products from the mine.

Spoiler alert: The panel agreed with Mexico that the United States did not meet its burden in this regard.  However, the panel nevertheless concluded that the mine was a Covered Facility on the basis of a statement made by the mine itself in its written submission.  The mine argued, like Mexico, that the United States did not show that minerals produced at the mine competed against U.S.-origin goods, and that it could not do so, because the mine “has not sold any copper ore or concentrates to unaffiliated facilities in Mexico. It is all captively consumed.”  This statement – that something is captively consumed – was sufficient for the panel to find that “production from the San Martín mine was in fact captured internally . . . presumably in Mexico”.  The panel concluded that this statement “shows that the San Martín mine does indeed sell in Mexico and prima facie competes with other suppliers in the Mexican market.”

The place of “trade” in “trade & labor” disputes

The issues surrounding the RRM’s scope and the participants’ corresponding arguments are reflective of a broader conversation about the relationship between trade and labor and why we have labor chapters in trade agreements.  Obviously, that is a question that many scholars and practitioners have addressed in the last 30 years.  But it came to a clear point when the panel chair asked the following question on the second day of the hearing:

“As I sit here listening to the parties talk about USMCA as a trade agreement, I’m forced to wonder why I’m sitting in this chair. I was selected . . .  because I have experience in labor matters.  . . . Your repetition, both of you, that this is a trade agreement makes me wonder how you see the labor relations lens superimposing itself on a trade agreement.”

This debate about the panel’s role came up in several moments during the hearing.  Mexico repeated more than once that “USMCA is not a labor treaty.  It is a trade treaty.” A panel member at one point asked both sides whether the purpose of the Mechanism was to provide protection to the most workers possible.  And, on another occasion, a panel member questioned the United States on the “ultimate purpose” of the RRM and whether it was to support a “notion that violations of freedom of association and collectively bargaining are a form of unfair competition.”  As per the arguments I recounted above, the United States replied that the purpose was to prevent companies from producing in Mexico with an unfair advantage, which led the panelist to ask whether the panel ought to take into account in this dispute whether the actions complained of were giving Mexico an economic advantage.  The conversation continued to the point where the panelist suggested that it would likely be to the advantage of the United States not to intervene on behalf of the striking workers as it would potentially eliminate a competitor for U.S. exporters.

These exchanges again showed the complications of the trade-labor relationship and the multiple functions of labor chapters in trade agreements: leveling the playing field and protecting human rights to name two common, but not obviously complementary, narratives.  A footnote in the panel’s determination revealed just how many U.S. and Mexican companies are part of the corporate structure of this one mine.  And some customs practitioners strongly believe that the RRM as presently structured inflicts more pain on U.S. companies (importers) than it does on the “misbehaving” facilities in Mexico.

In this context, these questions also intersect with issues of complementarity – is the RRM about strengthening Mexican institutions and what place for them in the story?  At the hearing, Mexico raised concern that the United States was trying to broaden the Mechanism by creating “universal jurisdiction” over violations of Mexican labor law whereas, in Mexico’s view, the only law of relevance is the 2019 Federal Labor Law.  Mexico argued that the panel could not act in this instance because to do otherwise would make it an appellate body over Mexican courts, which it is not. 

Similarly, the panel did not get much into the standard for a “denial of rights,” but the parties did discuss it during the hearing.  The United States argued that a denial of rights could be shown through a demonstration of a violation of Mexican law.  Mexico replied a denial of rights is a term that is defined by the international agreement, not by domestic law, and must involve something more than just an ordinary violation of Mexican law.  These questions about the relationship between Mexican law and treaty interpretation will have to wait for another day.

Looking ahead

As the next RRM panel gets underway, it will face its own set of interpretive challenges.  What is clear thus far is that the language of the instrument has made it hard to square some of the parties’ intended review processes with traditional dispute settlement proceedings.  The parties and the panel all appear to have struggled with reconciling these expectations and the text. 

In the meantime, we will see if the United States carries on with accepting more RRM petitions in the months leading up to the election and, perhaps more importantly, in the period leading up to the USMCA review where both the United States and Mexico seem poised to want to make some changes to the current RRM arrangement.

First Rapid Response Labor Panel Begins Work under USMCA

Many readers will know that the United States called for the very first panel under the USMCA Rapid Response Labor Mechanism (RRM) at the end of August.  One month in, the panel has been busy.  This post briefly summarizes the panel’s work so far and makes a few preliminary observations.

As a reminder, the situation before the panel involves a mine owned by Grupo México in Zacatecas, Mexico.  On May 15, the AFL-CIO, the United Steelworkers, and a Mexican union filed a petition with the United States alleging a denial of workers’ rights at the mine.  Following an investigation, the United States requested that Mexico review the situation.

On July 31, Mexico reported to the United States that it had determined that no denial of rights existed at the mine.  According to Mexico, the situation was not covered by the USMCA because (1) the alleged denial of rights occurred prior to entry into force of the USMCA and did not implicate legislation that complies with Annex 23-A of the USMCA, and (2) the San Martín mine is not a “Covered Facility” within the meaning of Article 31-A.15 of the USMCA.

As required by the USMCA, the Mexican Section of the Secretariat selected the panel members by lot and the following panel members began their work on August 30: Gary Cwitco (chair), Kevin Kolben, and Lorenzo Roel.  Cwitco is a union representative from Canada; Kolben is a business school professor in New Jersey; and Roel is the president of the National Labor Commission of the Business Coordinating Council in Mexico.

The USMCA requires that a panel within five business days of its constitution “confirm that the petition: (a) identifies a Covered Facility; (b) identifies the respondent Party’s laws relevant to the alleged Denial of Rights; and (c) states the basis for the complainant Party’s good faith belief that there is a Denial of Rights.”

Let’s just acknowledge how quick of a turnaround that is for a panel facing a very complex – let alone novel – set of proceedings.  And those are not insignificant determinations.  Those are, in fact, the fundamental points of dispute between Mexico and the United States. 

The panel, faced with very short submissions from both sides, and this very short deadline, adopted a “prima facie”-styled decision in which it “confirmed” the petition.  [“Confirmation” is an unusual concept in this space, styled somewhat as a jurisdictional stage of the proceedings but again with very little to work with, something the panel acknowledged.]  On September 6, the panel stated:

• The panel finds that the petition . . . meets the prima facie requirements of Article 31-A.6 and the petition is hereby confirmed.
• The panel also notes that nothing in this confirmation prejudges arguments that the Parties may make with respect to any issue before the panel including but not limited to: Whether or not the San Matín [sic] mine is a covered facility within the meaning of Article 31-A.15; (2) Whether or not the alleged Denial of Rights is covered by the USMCA; and (3) The substance of the allegations.

On September 12, the panel met with the parties via Zoom. On September 14, the panel announced a schedule in which it required Mexico to submit a document describing Mexico’s investigation by September 28.  (No document is yet available on the Secretariat website.)  The panel has given the United States seven days to reply to that document following its translation into English.  There will be further written replies from both sides.

Most importantly, the panel has indicated that it will hold an in-person “verification hearing in Mexico City”. The panel will allocate two days for oral arguments and the hearing will be open to the public.  No date is set yet.  We’ll see if the panel adopts the same practice as many of the Chapter 31 panels with a public livestream of some sort.

There is a particularly contentious labor and political history surrounding the San Martín mine that this blog post does not have space to address.  Suffice it to say that this situation is complicated – which is why making it the first to go to a panel surprised some observers.  But there may be advantages to sending this situation, raised by organized labor in the United States, to a panel following Mexico’s rejection.  Doing so lets the panel make the final call on further action.

Now, back in 2019 when the RRM was first announced, it appeared the text left many unanswered questions about just how the panel process would or could work.  This first panel is now facing these questions.  For example:

1. What rules apply to the RRM proceedings? The panel so far has adopted the Chapter 31 Rules of Procedure, at least in part (notably Articles 26 and 27 of those Rules deal expressly with RRM proceedings, while others of the Rules sometimes make reference to the RRM and sometimes do not).  Most of those are designed for more traditional state-to-state disputes, but likewise could apply to the RRM, which is an annex to Chapter 31, to fill in gaps as they arise in the proceedings.  The match is not a perfect one though, and we’ve already seen the panel depart as necessary.
2. How do workers groups – or others – participate, if at all? Interestingly, the panel has invited non-governmental entities that are directly involved in the dispute to submit briefs.
3. What does “verification” mean? Does it mean panels will go to facilities?  Under what authority and with what protection?  The U.S. government decided the San Martín mine was in too dangerous a location for it to allow its staff to visit.  It appears the panel has dispensed with the possibility that it could get there at least in this instance, although Mexico has asked the panel for clarification. In a communication on September 18, Mexico asked the panel to indicate whether it will visit the mine, and also whether it will engage in some form of discovery.

As this panel gets underway, there may be others in the wings.  One especially challenging RRM situation to watch is that involving Mas Air, which tests the application of the RRM to the services sector.  Without the threat of higher tariffs or the immediate suspension of liquidation, what power does the U.S. government have to exert over Mas Air?  Those are questions that I would expect the government agencies involved have asked and answered as they go down this road.  We’ll have to wait and see what sources of authority they have selected.

The U.S. “Worker-Centered Trade Policy” is helping some workers in Mexico but not in America

This Labor Day post seeks to shed light on the Biden administration’s “worker-centered” trade policy.  It argues that the United States-Mexico-Canada trade agreement (USMCA) misses a critical opportunity to strengthen workers’ rights in America.  The agreement’s provisions exclude protections for the most vulnerable workers in U.S. trade sectors and they erroneously protect employers in the U.S. transportation sector.  This post urges amendments to the USMCA to protect workers – not just their employers – under a worker-centered trade policy.

On August 30, as workers in Europe began to emerge from well-deserved August slumber and workers in America began to look forward to an extra day of rest in celebration of workers’ historic achievements, the Biden administration announced it was seeking a review under the USMCA’s Labor Rapid Response Mechanism (LRRM) concerning the rights of pilots at a Mexico-based airline.  

President Biden claims that workers’ fundamental rights represent the heart, or center, of its domestic and foreign policies.  Although the USMCA is a Trump-negotiated trade agreement, current U.S. Trade Representative Katherine Tai was influential in pushing for the labor provisions in her previous position as chief trade counsel for the House Ways and Means Committee.  The Biden administration’s Office of the U.S. Trade Representative (USTR) has invoked the LLRM numerous times to ensure respect for fundamental collective bargaining and associational rights in private facilities in Mexico.  Recently, it initiated the first formal panel to litigate those rights.  

My work points out myriad ways the administration’s worker-centered trade policy risks undermining rather than fortifying workers’ rights abroad.  It traces how that policy deprives foreign actors of fundamental due process rights in the name of fundamental labor rights and leaves workers vulnerable to retaliation.  On this Labor Day, I shift the focus to workers in the United States.

A well-known story by now, the USMCA resulted from fierce bargaining between the President, his executive office, and a Democrat-controlled Congress.  Somewhat less known is that, at the midnight hour, as pens hovered in Mexico, Canada, and the United States to put to bed an emotional and lengthy NAFTA renegotiations process, the U.S. administration advanced an amendment quietly nestled in the form of a footnote to an Annex.  It has received little attention.

That footnote, in Annex 31-A of the USMCA’s Dispute Settlement Chapter, narrows the scope of applicable U.S. facilities subject to enforcement of collective bargaining and freedom of association rights in the United States.  It reads as follows:

With respect to the United States, a claim can be brought only with respect to an alleged Denial of Rights owed to workers at a covered facility under an enforced order of the National Labor Relations Board.

To the uninitiated, that footnote looks innocuous.  In theory, domestic legal processes should be exhausted before international mechanisms weigh in.  Otherwise, one risks inconsistent findings, fragmentation, and interference with national juridical decisions.  The National Labor Relations Board (NLRB) is the U.S. federal agency that administers federal labor law in private facilities.  Its findings are not self-executing and thus are not legally final unless and until a Court of Appeals enforces them.  Although the expression “enforced order of the National Labor Relations Board” is not defined under U.S. labor statutes, the footnote’s intention to ensure legal finality at the national level before opening the door to international intervention appears relatively straightforward.

Nevertheless, until the powers-that-be delete this footnote, workers in America will lack the same fundamental rights protections that USTR provides workers in Mexico.  Below, I offer three reasons.

1. The footnote leaves millions of workers in trade sectors in the U.S. without hope of labor improvements

As I have pointed out before, the footnote excludes the vast majority – if not all – of the facilities in the United States.  That exclusion leaves millions of workers in the U.S. private sector without hope of economic pressure under the USMCA.

That exclusion is important.  U.S. labor law, as interpreted by the NLRB and courts, has long been the subject of international scrutiny.  The U.S. administration has proven disinterested in, if not immune to, criticisms by the International Labor Organization (ILO).  U.S. representatives at the ILO sometimes respond that the ILO does not understand international labor law as well as do U.S. authorities.  Their position is unsurprising given the U.S. government's longstanding refusal to bend to international law or norms concerning workers’ rights.

Meanwhile, workers at auto facilities and other trade-related sectors in the United States face sub-optimal rights. Their employers fire them for seeking to unionize, threaten them with discharge, and manipulate U.S. labor law to avoid entering into collective bargaining agreements.  Those workers do not benefit from the ILO’s protection.  While the USMCA could have lent economic teeth to the ILO’s reputational sanctions, the Trump administration’s footnote cleverly protected corporate America.  

2. The footnote imposes significant remediation delays

Even workers at facilities that arguably fall under the NLRA cannot benefit under the LRRM.  Recall that a significant objective of the mechanism is that it is rapid.  Rather than wait years for litigation, workers should be able to benefit from immediate injunctions and remedial action.  However, under U.S. labor law, cases may take years to wind through the courts.  Even if Mexico were to bring a case against a facility in the United States, the case must first go before an NLRB administrative law judge, then the NLRB in Washington, D.C., and then to an appeals court.  

Section 10(j) of the NLRA “authorizes the National Labor Relations Board to seek temporary injunctions against employers and unions in federal district courts to stop unfair labor practices while the case is being litigated before administrative law judges and the Board.”  Those cases acknowledge that time is of the essence.  However, they do not produce a Board order for the appeals court to enforce.  Consequently, 10(j) injunctions do not qualify as an “an enforced order of the National Labor Relations Board.”  Even workers facing significant and immediate threats to their fundamental labor rights cannot benefit from protections under the USMCA.

3. Not all workers in the United States fall under the National Labor Relations Act

America’s most vulnerable workers are also her most important.  They labor in our agricultural fields, fix our roofs in scorching summers, clean our houses, and watch our children.  Yet, owing to institutionalized racism that carries into our statutory protections today, agricultural workers, undocumented workers, domestic workers, and day laborers are excluded from the NLRA’s coverage.  Notwithstanding the significant labor and human rights violations in agriculture and other invisibilized sectors, their facilities will never face a court-enforced Board order.  Those violations either directly implicate trade sectors (agriculture) or indirectly benefit trade sectors (childcare).  Excluded when the NLRA’s drafters sought to ensure that racialized minorities could not threaten property owners, those workers are re-excluded and thus re-prejudiced under contemporary trade protections.  Policymakers should take notice of how the USMCA reifies racial inequality in America.

USTR’s most recent, dawn-of-Labor-Day announcement sheds additional light on the USMCA’s inarticulate and improper footnote.  That announcement expresses concern over the bargaining rights of pilots in Mexico’s airline sector.  Under the USMCA’s procedures, those workers may soon benefit from international scrutiny, inspections, and prescriptive plans drawn up by American bureaucrats.

On the other side of the border, however, workers in the airline sector fail to benefit from equal protections.  Under the terms of U.S. labor laws, those workers, too, are excluded from the scope of the NLRA.  A separate law, the Railway Labor Act (RLA), covers them.  Specifically, it covers freight and commuter railroads, airlines, companies directly or indirectly controlled by carriers who perform services related to the transportation of freight or passengers, and the employees of these railroads, airlines, and companies.

Deemed “essential,” workers under the RLA cannot exert their right to engage in a spontaneous work stoppage.  Instead, a different Board, the National Mediation Board (NMB), conducts mediation.  While a Presidential Emergency Board may review the NMB’s decisions, those reviews are discretionary.  In other words, the NMB’s findings do not suffer from the same intermediacy as the NLRB’s decisions.

The ILO has expressed concerns with the RLA’s restrictive approach to bargaining.  It has also found that national laws like the RLA stipulating compulsory dispute settlement interfere with workers’ fundamental right to bargain.  While international labor standards are lenient concerning restrictions on public sector strikes, the ILO clarifies that the government may restrict a strike:

in the case of disputes in the public service involving public servants exercising authority in the name of the State or in essential services in the strict sense of the term, namely those services whose interruption would endanger the life, personal safety or health of the whole or part of the population.

In 2022, railway workers in the United States sought to bargain hard to improve their collective bargaining agreement.  Under the international labor standards above, they should have been able to do so as long as their actions did not endanger “the life, personal safety or health” of the U.S. population.  Although inconvenient, their work stoppage would not have been life threatening.  President Biden faced criticism within the labor community when he intervened and passed a law imposing a contract agreement that the majority of America’s freight rail workers had voted down.  As a result of that agreement, railway workers may benefit from a hefty raise but they lack paid sick days in a compromise they never agreed to and should have been able to protest.   

Airline workers in the United States face a bleaker situation.  They cannot strike despite dwindling crew members and abysmal pay and leave benefits.  Notwithstanding their hostile legal environment, airline workers are staging careful pickets to raise public awareness of America’s abusive airline sector.  Under the RLA, they may not protest their working conditions during work hours; they can only carry out those concerted activities during the hours they should be resting and spending with family.  They cannot rely on the ILO to persuade an otherwise deaf U.S. administration that the RLA deprives them of fundamental labor rights under international law.  And they cannot rely on the USMCA’s LRRM because their employers, by statute, will never be the subject of an NLRB order. 

A Litmus Test?

USTR’s recent invocation of the LRRM in the airline sector offers the Mexican government an opportunity to fight for the equality it (perhaps) unknowingly relinquished during the final hour of the USMCA’s negotiations.  Following USTR’s recent lead, it could invoke the LRRM to protest the freedom of association and collective bargaining violations in U.S.-based airline companies.  The Mexican government has manifold U.S.-based airline companies from which to choose.  

The Biden administration’s worker-centered trade policymakers should take such allegations seriously and collaborate to ensure an equitable solution.  If the USMCA’s torrid labor negotiations (beginning during the TPP negotiations) teach us anything, it is that Congress cares about international standards governing collective bargaining.  After all, it demanded that Mexico adopt radical changes to Mexico’s Constitution and labor laws to protect the rights of workers in Mexico to form and join unions and associate freely.  The ILO, as mentioned, has aired concerns over how U.S. legislation fails to protect those rights in America.  If Congress and the Biden administration refuse to consider the same types of legislative reform in the United States that they demanded in Mexico, their stated intentions to advance a worker-centered trade policy should be critically questioned.

Inu Manak reminds me that the parties will soon revisit the USMCA’s provisions as part of its six-year review.  Given that Mexican negotiators were given little advanced notice or explanation of the USMCA’s restrictive LRRM scope, and given the Biden administration’s efforts to strengthen workers’ bargaining rights at home, this review offers ample opportunity for the parties to make the agreement more equitable.

Workers in America should not have to rely on the Mexican government to champion their rights.  The Biden administration and Congress have promised to protect them.  The USMCA offers U.S. policymakers the opportunity to turn promises into action.  On this Labor Day, let’s hope they seize it.

Fit for Whose Purpose?: How Panelists Interpret Labor Rights in Trade, and What That Tells Us about the Trade/Labor Relationship

While many of us were celebrating the holidays with family, an important law review article dropped silently and inconspicuously into the fray. That article, Fit for Purpose: The Extent and Enforcement of International Trade Agreement Labor Obligations After Guatemala – Labor Obligations Decision, was written by Professor Kevin Banks, who served as a panelist on the controversial US-Guatemala labor case under the Dominican Republic-Central America – United States Free Trade Agreement (“CAFTA-DR”).

The article is a stiff-upper-lipped rejoinder to the panel report’s symphony of criticism. Some of that criticism accused the panelists of ignoring the fundamental principles of the International Labor Organization (ILO) rights that were incorporated into the CAFTA-DR. Rather than bow to that criticism, Professor Banks leans in, attempts to justify the report’s myriad flaws, and confirms that these panel decisions are as much about their authors as they are about the facts.

Referencing the panel’s interpretive reasoning concerning the Agreement’s “in a manner affecting trade” language, Professor Banks asserts that the report “stands to influence how dispute settlement panels interpret the similarly worded obligations in many other trade agreements,” including U.S. and Canadian trade agreements. His defense of and insight into the panel’s decision-making thus warrant our attention.

This post will not do the complexities of the specific legal arguments involved in that case justice, nor is that my intention. Instead, I hope to shed light on a broader question: Whether trade agreements that incorporate external, multilateral instruments such as the ILO’s 1998 Declaration should outsource the interpretation of those instruments to panelists selected by governments. This question is particularly salient when the instruments in question regulate social rights. The selected panelists will not necessarily be familiar with those instruments or, in Banks’ case, their familiarity will be obscured by interpretive devices that undermine the very rights that the trade agreements claim to protect. The result, particularly as these labor cases continue to metastasize under various trade agreements with different panelists, will be a legal pluralism that confuses rights, objectives, and incorporated instruments, to the detriment of predictability and legitimacy.

The Guatemala – Labor Obligations Decision

On June 14, 2017, the arbitral panel established under the CAFTA-DR issued its nearly 300-page final report entitled In the Matter of Guatemala – Issues Relating to the Obligations Under 16.2.1(a) of the CAFTA-DR.

Plenty of experts have written about that report, so I will not go into detail here. Suffice it to note that the case centered on the CAFTA-DR labor chapter, found in Chapter Sixteen of the Agreement, which begins by reaffirming 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 and its Follow-Up (1998) (ILO Declaration).”

Art. 16.2.1(a), entitled “Enforcement of Labor Laws,” stipulates

“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.”

The case arose from a 2008 complaint filed by the AFL-CIO and Guatemalan trade unions alleging that Guatemala failed to enforce its labor laws effectively under the CAFTA-DR labor chapter. The complaint took nine years to percolate through the U.S. government’s procedures, the Agreement's dispute settlement procedures, and ultimately to a final panel report. The panelists ruled in favor of Guatemala, despite evidence of pervasive abuses of workers’ rights in trade sectors in Guatemala in violation of “an obligation enunciated in the ILO’s Declaration …and grounded in the ILO Constitution….”

The panel found that Guatemala had violated its commitments under the labor chapter to “respect, promote and realize” the ILO’s fundamental rights. Yet, it also found that the United States failed to satisfy its burden of proving that those labor infractions had been carried out “in a manner affecting trade” with the United States.

The panel focused on the fact that “labor laws, like other regulations, tend in their ordinary operation to impose administrative costs on employers.” A trade party could establish a failure to effectively enforce another party’s labor laws through a sustained or recurring course of action of inaction “in a manner affecting trade” if that action or inaction demonstrably “confer[red] some competitive advantage on an employer or employers engaged in trade between the Parties…”. Noting that this was a “question of fact,” the panel found that the United States had failed to show “that the enterprise or enterprises in question export to CAFTA-DR Parties in competitive markets or compete with imports from CAFTA-DR Parties” and that those effects were “sufficient to confer some competitive advantage on such an enterprise or such enterprises….” 

The Backlash

Labor and trade experts, rare bedfellows, seem to agree that the CAFTA-DR labor decision was wrongly decided. In their critical report of the decision and its processes, entitled Wrong Turn for Workers’ Rights, labor advocates Lance Compa, Jeff Vogt, and Eric Gottweild point out that two of the three panelists were international trade and dispute resolution experts who frequently represented corporations, while Professor Banks was the sole labor law expert. Maybe he was outnumbered?

Noting that the panelists relied on 38 trade disputes and not on labor disputes, and on WTO reports while discounting ILO reports, the authors speculate that “the imbalance of trade and labor backgrounds of panel members contributed to the decision [that was] clearly based on a narrow, trade-oriented analysis divorced from labor law practice – particularly in a developing country like Guatemala.” They also note that no single person representing the trade unions who had filed the complaint or the workers themselves was allowed to speak at the hearing.

Rejecting the panel’s interpretation of “a manner affecting trade,” the authors argue that the panel was distracted by the missing “costs” associated with labor infractions rather than focusing on the “higher importance” of labor laws and labor provisions – which is “protecting workers’ exercise of fundamental rights.”

Through a trade lens, Kathleen Claussen argues that traditional dispute settlement frameworks are ill-equipped to deal with “trade-plus” commitments like labor rights. She points out that disagreements over the purpose of labor commitments led to a “cacophony of rationales and basic principles.” Even objectively, “there are also procedural or evidentiary elements that make labor commitments more challenging to illustrate than traditional trade areas such as tariffs or subsidies.”

Professor Banks’ Response

Banks quickly proves that he was not an outnumbered labor voice. Instead, he dismisses the scholarly criticism for failing to understand the purposes of labor provisions “and what they imply about the extent of obligations.” He argues that the CAFTA-DR panel imposed a workable evidentiary burden, requiring “proof of competitive advantage” but not “data drawn from employer records” as alleged. The United States could have satisfied that burden by providing “credible, but approximate, information regarding how many workers were affected by that failure, in what way, for how long, and on the basis of reasonable inferences regarding effects on employers, in the light of the ordinary operation of labor law and/or the ordinarily expected consequences of unremedied labor law violations.”

Focusing on interpretive matters more generally, Banks argues that “where a clear statement of purpose is lacking, one’s interpretation of the extent of obligations supports inferences about why those obligations exist.” Given the ubiquity of labor chapters, and the use of the ILO’s instruments and rights to define the relevant trade commitments, Banks summarizes how the panel viewed its role in defining those obligations:

 “It follows that a convincing account of extent of obligations will often rest on a convincing account of purposes, that changes to or clarifications of extent of obligations imply changes to or clarifications of purposes, and that a construction of extent of obligations that does not correspond to stated purposes, or vice versa, should be resisted unless agreement text makes it clear that none other is possible.”

Addressing the panel’s consideration of those purposes and obligations, Banks argues that the panel interpreted the phrase “manner affecting trade…in light of the context and purposes of the Article 16.2.1(a) obligation within the CAFTA-DR, and the purposes of the agreement itself.”

Banks recalls that the panel read Art. 16.2.1(a) in conjunction with Art. 16.1 (which references the ILO) together with other “objectives of the Agreement” that promoted “conditions of fair competition in the free trade area….” The panel interpreted “fair” conditions of competition to be affected “when international competition operated to transmit incentives that tend to undermine efforts to recognize and protect labor rights through domestic law that the labor commitments under Chapter 16 centered on.” The panel thus “observed that treating a failure to enforce labor laws that conferred some competitive advantage in trade as ‘affecting trade’ was consistent with a coherent account of how Article 16.2.1(a) serves the objectives of the agreement, and with the focus of the Agreement’s objectives on trade.”

The panel’s finding, Banks insists, “did not preclude the possibility that other types of effects could be ‘in a manner affecting trade,’ in light of other potential Agreement or labor chapter purposes.” Banks then advances various arguments to address those “other" purposes.

First, Banks disputes suspicions that “other” purposes could be protectionist. He notes that plenty of legitimate trade provisions likewise afford an unfair competitive advantage in trade. Consequently, he reasons, it makes no sense to argue protectionism on the grounds of “labor obligations without an independent account of why they receive priority among the myriad of possible competitive advantages that could be harmonized in the interests of creating a level international playing field.” Noting that labor chapters regulate “vaguely defined claims,” he concludes that protectionists had “shown little enthusiasm for labor rights chapters as a response to their concerns.”

Second, Banks offers that trade agreements are not intended to “advance a social development agenda.” While conceding that the ILO’s mission includes “preventing destructive forms of international competition between nations,” Banks concludes that neither U.S. nor Canadian trade agreements pay attention to development agendas. If they did, “one would expect to find direct reference to them” as we do in EU trade agreements.

More broadly, Banks urges us to “turn to the role of labor norms themselves within international trade” to understand the purposes of labor chapters in trade agreements. He teaches us that labor and employment laws are understood “within many polities to embody strongly held social norms” that serve various conceptions of justice. Their regulation “protects socially valued interests that might otherwise be harmed…[and] norm-abiding businesses from losing out for being norm-abiding” and “prevents norm-breaking businesses from unjustly benefitting from the harms that they inflict.” In light of those values, “failures to provide for and effectively enforce internationally recognized labor rights can constitute breaches of fairness ground rules for economic competition.”

Finally, Banks reminds us that broader interpretations may have been possible had the United States’ allegation not been so narrowly focused on “the proven course of failure to enforce labor rights affected conditions of competition by influencing or making a material impression upon them.” Even so, he cautions that the United States’ legislative history will be unhelpful in trying to glean interpretivist meaning – the original intention was the result of hard-won political compromise, and ambitions have since shifted. He concludes by suggesting that if the phrase “in a manner affecting trade” raises more questions than it answers, future negotiators should drop it altogether.

A Few Reflections

Still with me?

I began this post by noting that my concern with the arbitral panel, and Professor Banks’ insight into the intention of the CAFTA-DR interpreters, has little to do with the panel report and more to do with the broader process of outsourcing the interpretation of the ILO’s labor rights to panelists under trade agreements. That process leaves workers incredibly vulnerable. The Guatemalan workers in the CAFTA-DR case were mistreated, were essentially ignored for nine years, and were left with nothing at the end. These decisions matter, particularly when panelists’ interpretations of the ILO’s rights in trade agreements serve to undermine those rights.

Contrary to Banks’ assertions, the panel could have interpreted the CAFTA-DR labor chapter to embody the ILO’s 1998 Declaration and its principles more purposively. If you will recall, in January 2021, a different arbitral panel released its final report interpreting similar labor provisions in a dispute under the EU –Korea Free Trade Agreement. I was equally unimpressed with that decision (maybe I am just insufferable). However, the contrast in the interpretive methodology between the two panels bears mention.

In examining the same language cited above in the CAFTA-DR, Art. 16(1), the EU-ROK panel emphasized that the incorporation of the ILO’s Declaration and rights “clearly indicate[s] that any obligation arising from the first sentence has been defined by the Parties to the full extent of their internationally accepted meaning.” Dismissing Korea’s reliance on the CAFTA-DR report, the panel found that “[t]he language of ‘fundamental rights’ in the context of the ILO Constitution and 1998 Declaration … exclude[s] the possibility that this domestic commitment to achieve or work towards these key international labour principles and rights exists only in relation to trade-related aspects of labour.”

Imagine that the CAFTA-DR panel, like the EU-ROK panel, had interpreted the express incorporation of the ILO Declaration similarly. Professor Banks’ arguments concerning the missing sustainable development framework or agenda would be moot. The ILO Declaration’s Preamble emphasizes its objective “to ensure that, in the context of a global strategy for economic and social development, economic and social policies are mutually reinforcing components in order to create broad-based sustainable development.” By expressly incorporating the “obligations as members of the International Labor Organization (ILO) and their commitments under the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-Up (1998),” as the CAFTA-DR does, the Agreement arguably incorporates the Declaration’s “global strategy for economic and social development…”. And if the CAFTA-DR’s labor chapter incorporates the ILO Declaration in that manner, then evidence of Guatemala’s sustained violations of the ILO’s fundamental labor rights in trade sectors should have sufficed. Under that interpretation, the United States should have won its case.

A group of panelists under CAFTA-DR read the incorporation of the ILO Declaration incredibly restrictively, and a group of panelists under the EU-ROK read the incorporation of the ILO Declaration incredibly broadly. Either interpretation is, of course, permissible under these labor chapters. Professor Banks is no more correct than he is incorrect.

The ILO has a critical role to play here. It is best positioned to interpret its own standards and Declaration and identify the prevalence and impact of labor infractions in its member countries. I am currently exploring how to reinvigorate efforts within the ILO to create an authoritative labor tribunal under Art. 37(2) of its Constitution that could adjudicate these matters. However, even if the ILO establishes such a tribunal, States haven’t shown a willingness to give the ILO a formal role in their trade agreements, despite touting new “worker-centered” trade policies. Perhaps, if nothing else, the CAFTA-DR report is the canary in the coalmine, reminding even powerful governments like the United States of the unpredictability in the ubiquitous labor/trade relationship that they have created.

Katherine Tai on Labor Issues in the USMCA and at the WTO

In a speech today to the AFL-CIO, U.S. Trade Rep. Katherine Tai said the following:

The USMCA agreement is a good example of what can happen when labor is at the table.  It’s not perfect, but because we collaborated closely with President Trumka and many of the union leaders here today, we negotiated a better deal for American workers.  

Because of our partnership, the USMCA now includes:
- The strongest labor and environmental standards in any agreement ever;
- A new rapid response mechanism that allows us to quickly take action at a specific factory where workers are being denied their rights to freedom of association and collective bargaining; and
- Critical changes to the intellectual property provisions designed to increase access to affordable medicine for regular people.

Unlike previous trade agreements, USMCA passed with overwhelming, bipartisan support.  It is proof that consulting – really listening and working with workers, the labor movement, and a broad range of stakeholders – leads to more pro-worker, more meaningful, and more popular policy.  

Less than a year after USMCA went into effect, we’re already using its labor enforcement tools. Last month, we asked Mexico to investigate whether workers at a GM facility in Silao were denied their rights during a contract ratification.   

This was the first time that the new rapid response tool was used by the U.S. government.  It was also the first time in history that the United States proactively initiated labor enforcement in a trade agreement.  

The AFL-CIO recently filed a Rapid Response petition alleging workers’ rights had been violated at an auto parts manufacturer.  Yesterday, we asked Mexico to review the allegations – the second time we’ve taken this step in the last month.

Under previous agreements, labor petitions could – and did – languish for years without a response from the Administration.  But we have acted quickly.  

These enforcement actions matter.  The Rapid Response Mechanism will help to protect the rights of workers, particularly those in low-wage industries who are vulnerable to exploitation.  Because when we fight for workers overseas, we are fighting for workers here at home.

And we’ll do that across the board.  Enforcing all of our trade rules is a priority for the Biden-Harris Administration.  Those who work hard and play by the rules, you deserve to have the government on your side when faced with illegal and unfair trade practices. 

We must apply the same principles at the WTO.  Despite a preamble that says “trade…should be done with a commitment to raising living standards and ensuring full employment,” the WTO’s rules actually don’t include any labor standards, and workers are often an afterthought.  This needs to change.

The United States recently submitted a proposal to ensure that fighting forced labor is included in any agreement the WTO reaches to prohibit harmful fisheries subsidies.  We know that forced labor is a serious problem in the fisheries sector, particularly on distant water fishing vessels.  I hope WTO Members will commit to a high-standards, meaningful agreement that includes our common-sense provision and that will contribute to tackling this problem.  

This is not just an economic issue.  This is a moral imperative, and I ask all of you to help us to build support for our effort.  The WTO must show in these negotiations that it can improve the lives of regular people and that it is capable of responding to crises and tackling difficult matters, particularly when it comes to worker abuse.

If the WTO is to be relevant and a force for good, it must be revitalized and modernized.  We must take bold steps to fix its negotiating function, commit to greater transparency, and reform the dispute settlement process.  

Under the Biden-Harris Administration, we will bring dignity of work – and the empowerment of workers – to the WTO.  

Let me offer a few comments on all this.

First, the USMCA was something that succeeded in the politics of a particular moment. President Trump was leading an extremely economic nationalist administration; the free market-oriented Republicans in Congress were afraid to stand up to him and afraid of losing NAFTA; and many Democrats saw an opportunity to expand the scope of issues such as labor rights in trade agreements. But that moment has passed, and I think it's pretty clear that it would be difficult to replicate this kind of agreement in U.S. politics today. If President Biden proposed something that was substantively along the lines of USMCA, I would expect just about every Republican to oppose it.

As to the WTO, while Tai clearly wants to ratchet up the role of labor rights there a bit, she probably doesn't expect those rules to go as far as USMCA labor rules do. Is even a small ratcheting possible? Will India and other countries who usually object to the inclusion of labor rights be willing to go along with any of this? That may depend in part on how the Biden administration approaches this and other WTO issues. For example, Tai said that "[w]e must take bold steps to ... reform the dispute settlement process." If these bold steps include a reasonable U.S. proposal on resolving the Appellate Body crisis, maybe there is scope for some grand compromise. But I have doubts that anything significant on labor rights is possible at the WTO (forced labor in fisheries is narrow enough that perhaps something could be done there), and it's also not clear to me why the focus is on pushing these issues at the WTO as opposed to the ILO.

And finally, there has been a lot of talk from the Biden administration about workers. But one thing missing from the conversation is how the tariffs they have carried over from the Trump administration harm workers (they may help specific industries and workers in those industries, but they harm workers more generally). Tai said this in her speech: "The WTO must show in these negotiations that it can improve the lives of regular people ... ." I've always seen this as the core mission of the WTO's rules that constrain tariffs and tax/regulatory protectionism: Protectionist domestic policy is something demanded by special interests that harms regular people, and through the WTO governments have agreed to engage in less protectionism. For me, the big question about the Biden administration on trade policy is whether they are willing to stand up to interest groups and, in doing so, to promote the interests of regular people. Arguably they have been doing this in the area of intellectual property (although I know that some people disagree with this assessment), but with certain influential industries it seems like they are reluctant.

Biden’s Worker-Centered Trade Policy: Whose Workers?

As Simon mentioned in an earlier post, various labor-related complaints and requests under USMCA are “heating up.” This activity reinforces the Biden Administration’s new “worker-centered trade policy” that, according to USTR Ambassador Katherine Tai, “will foster broad-based, equitable growth, increase innovation, and give workers a seat at the table.” Specifically, she promised that “Our farmers, ranchers, fishers and food processors will benefit from our new approach and they are essential to meeting our climate and sustainability goals.”

On May 17, the USMCA Free Trade Commission is launching its inaugural meeting. It seems all the more appropriate for us to turn our thoughts to the Biden Administration’s new worker-centered trade policy. At the outset, there is cause for caution. The Biden Administration has inherited an agreement negotiated by the economic-centered Trump Administration. The new Administration also seems to believe that a trade policy protecting “farmers” and “ranchers” is the same thing as a policy that would protect the workers on those farms and ranches.

Without delving into the procedural details in depth (for those details, see this recent report), this post looks specifically at the recent activity that has arisen under USMCA’s Labor Chapter and Facility-Specific Rapid Response Mechanism (“Rapid Response Mechanism”). Examining the implications of the text and those activities, I explain how USMCA fails to give American workers a seat at the table.

USMCA Labor Chapter (Chapter 23)

USMCA’s labor provisions are contained in Chapter 23, which commits the Parties to “adopt and maintain in its statutes and regulations, and practices thereunder, the [fundamental labor] rights, as stated in the ILO Declaration on Rights at Work.” Those rights concern:

(a) freedom of association and collective bargaining;

(b) elimination of forced labor;

(c) abolition of child labor and the prohibition of the worst forms of child labor; and

(d) the elimination of discrimination in respect of employment and occupation.

USMCA adds an additional right concerning “acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.”

Disputes under the Labor Chapter fall under the general state-to-state dispute mechanism in Chapter 31.

USMCA Rapid Response Mechanism

One of USMCA’s most significant innovations is the “Faculty-Specific Rapid Response Labor Mechanism” (Rapid Response Mechanism), a new form of dispute settlement contained in Chapter 31 (Dispute Settlement) under Annex 31-A, and further described in the USMCA Implementation Act.

Importantly, the Rapid Response Mechanism is not the same thing as the state-to-state dispute settlement mechanism under Chapter 31. Whereas the state-to-state dispute settlement mechanism involves State failures to uphold USMCA obligations, the Rapid Response Mechanism applies to individual facilities within a country that are allegedly infringing upon workers’ freedom of association or collective bargaining rights.

Under the Rapid Response Mechanism, members of the public can file a petition or use a confidential hotline to report information regarding labor issues at those facilities. The Interagency Labor Committee may invoke the Mechanism:

“whenever a Party (the “complainant Party”) has a good faith basis belief that workers at a Covered Facility are being denied the right of free association and collective bargaining under laws necessary to fulfill the obligations of the other Party (the “respondent Party”) under this Agreement (a “Denial of Rights”).”

Finally, the Rapid Response Mechanism may impose financial penalties onto private facilities, such as “suspension of preferential tariff treatment for such goods; the imposition of penalties on such goods or services; or the denial of entry of such goods.”

The Limited Scope of the Rapid Response Mechanism in the United States

The Rapid Response Mechanism does not apply to all facilities in the State Party territories. Indeed, its scope of application, particularly in the United States, is extremely limited.

First, the facilities must satisfy the conditions of the “Covered Facilities,” which are facilities “in the territory of a Party” that involve a “priority sector,” currently defined as “a sector that produces manufactured goods, supplies services, or involves mining”; and that produce goods or supplies services traded between the parties or that compete in the territory of the other party.

Second, under footnote 2 of Annex 31-A, the Trump Administration further limited the Rapid Response Mechanism’s scope of application as follows:

“With respect to the United States, a claim can be brought only with respect to an alleged Denial of Rights owed to workers at a covered facility under an enforced order of the National Labor Relations Board.”

On its face, this footnote makes sense. The Administration wanted to limit the application of the Rapid Response Mechanism to U.S. facilities (cynics might say full stop) only after domestic legal processes had been exhausted. However, by adding the term “enforced order,” which is not defined in national legislation, the Trump Administration effectively shielded U.S. facilities from the scope of the Rapid Response Mechanism.

In the United States, the National Labor Relations Board (NLRB) adjudicates complaints against employers (and unions) for violating the National Labor Relations Act (NLRA). The Board’s decisions are not automatically enforceable. Rather, either the Board or an aggrieved party must appeal the Board’s decision to an appropriate U.S. Court of Appeals.

In practice, footnote 2 shields nearly all U.S. factories from the application of the Rapid Response Mechanism. According to the NLRB, only around 65 cases per year are appealed to Circuit Courts. Of those 65 cases, the Court enforces only 80 percent, or 52 orders. Those statistics do not indicate whether the 52 enforced orders were directed against employers or unions. They also do not mention whether those enforced orders dealt with repeat offenders.

A glance at the Board’s public registry of appellate court briefs and motions shows that these numbers, however dismal, are significantly higher than recent practice. In Fiscal Year 2020, the Board only brought 24 of its cases to the Circuit Courts. Out of those 24 cases, 21 cases were brought against employers (three were brought against unions). Accounting for repeat offenders, only 16 different employers faced a potential enforced order. If the Board’s 80 percent track record holds up, we are looking at about 12-13 facilities facing enforced orders, of which only a minority will satisfy the definition of “Covered Facilities” described above. Consequently, in 2020, less than 12-13 employers in the United States became vulnerable to enforcement action under the Rapid Response Mechanism.

By contrast, the scope of application for Mexico is incredibly broad. It specifies that “a claim can be brought only with respect to an alleged Denial of Rights under legislation that complies with Annex 23-A (Worker Representation in Collective Bargaining in Mexico).” In other words, it applies to all employers and factories subject to applicable labor legislation.

Recent Labor-Related Activity under USMCA Labor Chapter

On March 23, 2021, migrant women from Mexico filed a petition under the USMCA Labor Chapter. They alleged that the United States violated Article 23.3 (elimination of discrimination in respect of employment) and Article 23.8 (ensuring migrant workers are protected under labor laws) by allowing sex-based discrimination in recruitment and hiring practices of migrant workers, and consequently also failing to enforce Title VII and U.S. labor laws.

Their complaint is not new. Mexican women attempting to secure and work under H-2A visas repeatedly submitted similar complaints under the NAFTA labor side agreement. Those attempts were all unsuccessful. According to the most recent complaint, despite years of drawing attention to these labor-rights abuses, migrant women continue to suffer from sex discrimination during the recruitment process and are “excluded from H-2 visa programs as a matter of course.” Those who make it into the program in the United States are assigned to “less favorable and lower-paid positions than their male counterparts, despite having equal qualifications as men.”

Only State Parties to USMCA may bring a dispute under the Labor Chapter. Consequently, the migrant workers’ petition is directed to the Mexican government in hopes that Mexico will “encourage the United States to make [certain recommended] policy and regulatory changes.”

Mexico has not fully taken up the baton. Instead, on May 12, the Mexican Ambassador to the United States, Esteban Moctezuma, sent a letter to Secretary of Labor Marty Walsh, complaining of certain violations under the Labor Chapter. Note that this is a letter, not a formal complaint under the Agreement. Furthermore, while the letter details alleged violations of the rights of Mexican workers in the United States, it fails to reiterate the specific allegations of sex discrimination. It instead details violations of occupational health and safety standards for agricultural workers, interference with the workers’ rights to collectively bargain, and obstacles that prevent undocumented workers from recouping unpaid wages, to name a few.

Migrant women who are working in the United States, meanwhile, continue to wait for an answer or protective action.

Recent Labor-Related Activity under the Rapid Response Mechanism

On May 10, the AFL-CIO and other groups filed a petition with the Biden Administration alleging labor violations at a group of auto parts factories in Mexico across the border from Brownsville, Texas. Specifically, they allege that Tridonex auto parts factories harassed and fired workers for attempting to organize an independent union in violation of their freedom of association rights.

According to the USMCA Implementation Act, after receiving a petition such as this, the Interagency Labor Committee has 30 days to decide whether a petition contains sufficient, credible evidence of a Denial of Rights enabling the good-faith invocation of enforcement mechanisms. If it accepts the petition, USTR will request Mexico to conduct a review. Assuming Mexico agrees to conduct a review, Mexico will have 45 days to remediate.

Although folks are excited about the prospect of seeing the Rapid Response Mechanism put into action, it is unlikely that this petition will mature to a panel. The odds are that the Interagency Labor Committee will either not accept the petition or, if it does, that Mexico will agree to mutually-acceptable remedial action.

Far more interesting, in my opinion, is the activity that took place two days later under Art. 31-A.4(2) of the Rapid Response Mechanism. On May 12, 2021, responding to a tip on the hotline, USTR self-initiated a request that Mexico conduct a review of the General Motors de México facility in Silao, State of Guanajuato (“GM”). In its request, USTR noted its concerns that workers at the facility were denied their right to free association and collective bargaining. In support, USTR points to an April 2021 contract-ratification vote where workers were asked to reaffirm the bargaining authorities of a company-controlled union. The company had allegedly destroyed ballots and threatened workers to control their votes.

Here’s the rub. According to its request, USTR acknowledges the efforts of the Secretaría de Trabajo y Previsión Social (STPS), the Mexican federal department in charge of labor policies, in suspending the election and taking follow up action. In other words, Mexico had initiated its domestic processes to protect the voting conditions and to follow up with the employer. Despite that ongoing process, USTR instigated its own action under the Rapid Response Mechanism.

One potential interpretation of this parallel action is that USTR believes remedial action will be stronger under the Rapid Response Mechanism than it would be under Mexico’s domestic labor laws. As a worker rights advocate, I salute efforts to strengthen protections for workers and sanctions for disobedient employers.

Nevertheless, there are at least two issues here, one specific and one more general. Specifically, USTR is invoking the Rapid Response Mechanism process before Mexico’s domestic processes have been exhausted, leading to potential fragmentation. More generally, the disparate scope of the Rapid Response Mechanism makes it possible for facilities like GM to be held accountable when they are located across from Brownsville, Texas but shields those facilities when they are located in Brownsville, Texas. I explain those concerns below.

Early concerns with the Rapid Response Mechanism

The first issue raised by the May 12 request for review is that, based on its terms, the Rapid Response Mechanism requires respect for U.S. domestic processes (i.e., after an enforced order) but allows the U.S. to interfere with ongoing domestic processes in other countries. Double standards aside (welcome to trade negotiations), the implications could be significant and harmful if the conclusions of the domestic and international bodies differ.

The second issue is the disparate scope of the Rapid Response Mechanism, which imposes greater penalties on Mexican employers than on American employers. If Mexican labor laws fail to enforce international labor standards, Mexican employers face financial penalties under the Rapid Response Mechanism. If U.S. labor laws fail to enforce international labor standards (which they sometimes do), American employers and workers at their facilities will likely fall outside the application of the Rapid Response Mechanism.

Some might be tempted to argue that workers in the U.S. do not need a mechanism like the Rapid Response Mechanism because they are already protected by federal labor laws. Granted, the NLRA prohibits things like company-controlled unions and election interference. However, the NLRA lacks financial penalties for disobedient employers. USTR and Congress had the opportunity to supplement the NLRA’s weak enforcement scheme by exposing U.S. employers to possible financial penalties under the Rapid Response Mechanism. Instead, they limited the scope of the Mechanism’s application. Now, Mexican employers have a greater incentive to respect international labor rights than their American counterparts.

As an aside, it will be interesting to see whether this development impacts the frequency in which the NLRB brings cases to the Courts of Appeals (I could see arguments cutting both ways). I imagine it will deter employers from doing so.

Conclusion

The Biden Administration is advancing a worker-centric trade policy but it has inherited a trade agreement designed for other purposes. To strengthen protections for American workers, Congress will need to make difficult decisions and compromises that it has thus far been unwilling to make. Meanwhile, if Ambassador Tai is sincere in her pledge to give all workers a seat at the trade table, she must work with Congress to broaden the scope of application to provide the same protections for workers in the United States as in the other USMCA countries.

Katherine Tai on the USMCA Rapid Response Labor Mechanism Developments

U.S. Trade Rep. Katherine Tai testified in front of the Senate Finance Committee today on the Biden administration's trade agenda. She was asked about the USMCA rapid response labor cases I noted in my previous post:

Senator Brown:

Let me talk about what you would expect me to ask about, the Brown-Wyden rapid response mechanism. During your confirmation hearing, you committed to fully enforcing the USMCA agreement with Brown-Wyden. Today under your leadership, for the first time, self initiated an enforcement case under that mechanism. Thank you for that. We have now two Brown-Wyden cases, as you know. I'd like to ask you two or three questions, I'll ask them together and just get you talking a little more about Brown-Wyden, to explain it to people, how it's working, a sense of how many cases we might expect under this mechanism, some sort of ballpark estimate, talk to me about how the hotline works if you would, how do workers file complaints, do you take tips and come in through the hotline seriously, and tell me what does full use of the Brown-Wyden mechanism look like to you in the months and years ahead.

Ambassador Tai:

... On the Brown-Wyden rapid response labor enforcement mechanism, let me just distinguish a little bit between the two announcements this week.

The first one was a petition that was filed by the AFL CIO in partnership with several other labor organizations. That is the very very beginning of a petition process, and as constructed, there is a 30 day period during which USTR, working with the Department of Labor, will review that petition for whether follow up is needed, and whether USTR should then request Mexico to review whether a denial of rights has happened.

In the second case that has been initiated today, that was self initiated, and as you've noted, that is USTR initiating the request to Mexico today that will start the next timeline under the mechanism that's been created.

In terms of the tips and hotline and taking in information from people with experience of what's happening on the ground at some of these facilities, absolutely we take that information extremely seriously. 

 

USMCA Labor Complaints Are Heating Up

On Monday, the AFL-CIO and some other groups announced the filing of a petition under the USMCA rapid response labor mechanism (for background on this procedure, see Kathleen's post here). Now today, USTR announced that it has initiated a request for review under that mechanism on a different matter:

United States Trade Representative Katherine Tai today announced that the United States has asked Mexico to review whether workers at a General Motors (GM) facility are being denied the right of free association and collective bargaining.  The request is the first time any country has used the novel Rapid Response Labor Mechanism in the United States-Mexico-Canada Agreement (USMCA). USTR and the Department of Labor received information appearing to indicate serious violations of these workers’ rights in Silao, State of Guanajuato in connection with a recent worker vote, organized by the existing union, to approve their collective bargaining agreement. 

We'll be covering these issues on WorldTradeLaw.net. (For DSC subscribers, our list of USMCA labor petitions is here). I don't see the U.S. request for review in the GM case yet, but hopefully the relevant documents will be made public at some point.

UPDATE: The request for review is here.

Guest Post: The Panel Report under the EU-Korea Trade Agreement Concerning Labor Practices: What are the Purposes of Trade Agreements as they Relate to the ILO’s Fundamental Labor Rights?

This is a guest post from Cornell professor Desiree LeClercq:

In recent years, workers’ rights advocates have increasingly urged the US and the EU to strengthen the commitments under the labor chapters of their trade agreements. Following up on the innovative labor mechanisms in the U.S.-Mexico-Canada Agreement (USMCA), the Biden Administration has recently nominated several pro-labor officials to various positions throughout its Cabinet, including key positions at the Office of the United States Trade Representative (USTR). Doing so has reinvigorated the trade and labor conversation in the United States.

On January 21, 2021, a Panel of Experts published its Report on the Proceeding Constituted under Article 13.15 of the EU-Korea Free Trade Agreement (“panel report”). The  panel’s report interpreted the meaning and import of the EU’s labor chapter that, like the labor chapters in US agreements, incorporates the fundamental labor rights included in the ILO’s 1998 Declaration on the Fundamental Principles and Rights at Work (“1998 Declaration”). The United States discourse should pay attention to this development.

Along with the panel report in the CAFTA-DR dispute between the United States and Guatemala (CAFTA panel report), which was issued in 2017, this EU panel report is only the second attempt to interpret and discern the labor-standards commitments in trade agreements. It is therefore alarming that the recent panel report raises significant questions and concerns as regards its interpretation of the meaning and significance of the 1998 Declaration and the requisite nexus between labor derogations and trade. Given that we only have the (imperfect) CAFTA report to supplement or counter this report, in my view, things do not bode well for future dispute settlement under labor chapters.

Panel Report

The report specifically addressed the EU’s allegations that the Republic of Korea (ROK) failed to satisfy its commitments under the agreement’s Trade and Sustainable Development Chapter. The text at issue, contained in Article 13.14.3 of the agreement, reads as follows:

The Parties, in accordance with the obligations deriving from membership of the ILO and the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, adopted by the International Labour Conference at its 86th Session in 1998, commit to respecting, promoting and realising, in their laws and practices, the principles concerning the fundamental rights, namely:

1. Freedom of association and the effective recognition of the right to collective bargaining;
2. The elimination of all forms of forced or compulsory labour;
3. The effective abolition of child labour; and
4. The elimination of discrimination in respect of employment and occupation.

The Parties reaffirm the commitment to effectively implementing the ILO Conventions that Korea and the Member States of the European Union have ratified respectively. The Parties will make continued and sustained efforts towards ratifying the fundamental ILO Conventions as well as the other Conventions that are classified as “up-to-date” by the ILO.

The EU’s complaint was twofold. First, it alleged that the ROK failed to satisfy its commitments to “respecting, promoting and realizing, in their laws and practices, the principles concerning the fundamental rights,” namely freedom of association and the recognition of the right to collective bargaining. Second, the EU alleged that the ROK failed to satisfy its commitment to “make continued and sustained efforts towards ratifying the fundamental ILO Conventions” because the government had not “resorted to all the appropriate measures that could allow it to attain the objective.”

Jurisdiction

As a critical preliminary matter, the panel first addressed the ROK’s defense that the panel lacked jurisdiction over the matters in the complaint. Article 13.2.1 of the EU-ROK agreement, entitled Scope, states: “Except as otherwise provided in this Chapter, this Chapter applies to measures adopted or maintained by the Parties affecting trade-related aspects of labour, and environmental issues in the context of Articles 13.1.1 and 12.1.2.” The EU made no effort to demonstrate that the ROK’s labor laws were trade-related. Instead, it argued that the Scope provision “comes into play only where the scope of application of another provision of Chapter 13 cannot be ascertained in accordance with customary treaty interpretation.” Remarkably, the panel agreed.

In dismissing the ROK’s objection and finding that it had jurisdiction over the EU’s complaint, the panel examined the “ordinary meaning” of the commitments’ terms and the “object and purpose of the Agreement as a whole.” It found that the object and purpose of the agreement were to ensure that the trade partners' domestic laws and practices, outside of the trade context, comport with the ILO’s “universal” labor principles. Because Korea had decided to “join the ILO,” the obligations stemming from its membership as enshrined in Article 13.4.3 (“in accordance with the obligations deriving from membership of the ILO”) “relate to purely domestic responsibilities in relation to fundamental principles and rights.” Accordingly, reference to those obligations and to the 1998 Declaration “indicate that any obligation arising from the first sentence has been defined by the Parties to the full extent of their internationally accepted meaning.”

Trade-Related

Turning to the internationally-accepted meaning of the ILO’s fundamental rights, the panel decided that the “universality” of those rights necessarily foreclosed the ROK’s attempts to limit its labor commitments to trade-related matters. To rule otherwise, the panel mused, would allow countries to violate the ILO’s fundamental labor rights of workers in non-trade sectors with impunity. 

Going even further, the panel decided that the ROK could not have limited the scope of its labor commitments to trade-related sectors even if the text had expressly done so. Drawing from the ILO’s constitutional procedures that prohibit governments from making reservations at the time they ratify ILO Conventions, the panel concludes that “it is not legally possible for a Party to aim to ratify ILO Conventions only for a segment of their workers.”

The panel does not stop there, although it should have. Instead, it argues that its “finding that complaints about measures based on Article 13.4.3 are not limited to trade-related aspects of labour does not mean that the Panel has concluded that the EU’s Panel Request refers to matters which have no connection to trade.” In case you, too, struggled with that string of negatives, the panel is essentially declaring that the ROK’s labor laws, which the EU has not alleged to be trade-related, are in fact trade-related. The panel then surveys the “hortatory” commitments made under the chapter’s Preamble to several various, nonbinding international declarations and statements. It decides that the Parties must have intended to create a “floor” of labor rights as “an integral component of the system they commit to maintaining and developing.” Consequently, the panel finds that all “national measures implementing [labor] rights are therefore inherently related to trade as it is conceived in the EU-Korea FTA.”

Comments

Where to begin.

First, the panel assumes that labor chapters in trade agreements, so long as they incorporate the 1998 Declaration, evidence that the trade agreement’s overarching object and purpose include realizing the ILO’s fundamental rights in domestic laws and practices. That decision stands in stark contrast to the conclusion of the CAFTA panel report. The CAFTA panel also examined the object and purpose of the trade agreement in question, which contained a labor chapter also incorporating the 1998 Declaration, and came to the opposite conclusion. It found that the trade agreement as a whole sought to regulate the conditions of fair competition and concluded that the United States had failed to demonstrate that Guatemala’s labor derogations had the effect of profiting competitors in tradeable sectors in Guatemala. How is it that two panels, examining the same incorporation and the same type of agreement, could come to two entirely different conclusions regarding the agreement’s overall objective and intent? Could US and EU trade agreements serve entirely different purposes?

These two panel decisions illustrate the extremes on both sides of the equation. Taken together, they also paint a clear picture of the dangers of opaque labor provisions in trade agreements. If the incorporation of the ILO’s fundamental rights means a priori an overall objective to regulate domestic, non-tradeable sectors of employment, then the concerns raised by developing countries of imperialism and potential protectionism ring valid. By contrast, if the incorporation of the ILO’s fundamental rights is limited to the demonstrable nexus between labor derogations and competitive advantage on trade-sector enterprises as interpreted by the CAFTA panel, then the concerns raised by developed countries and worker-rights advocates of inefficacy ring valid given the impossibly high evidentiary bar.

USMCA may present a way out of this interpretive conundrum by shifting the burden of proof for the “manner affecting trade” criterion to the defendant Party to demonstrate that labor derogations were carried out in non-trade sectors. In doing so, USMCA maintains the requisite link between labor-rights derogations and the trade relationship. While imperfect, this criterion protects against the overextension of rights prescription in foreign countries while ensuring fair competition.

Second, the panel has mistaken its role as arbiters under trade agreements as ILO enforcers. It assumes that, should trade agreements not encompass purely domestic labor sectors, labor-rights derogations in countries will continue without penalty. The weaknesses of the ILO’s supervisory bodies, including its toothless system of reprisal, have long been documented and scorned by the labor community. Nevertheless, trade agreements have never been intended to replace the functions of international organizations. It is one thing to reimagine how the ILO’s internal mechanisms may be strengthened. It is quite another to presuppose that the ILO’s internal mechanisms have now been entirely outsourced to the government-to-government trade regime and ad hoc panelists.

Third, as with the prohibition on reservations, the panel frequently confuses the ILO’s constitutional procedures, the ILO’s Conventions, and the obligations enshrined in the 1998 Declaration. These are, after all, entirely different legal instruments with their own procedures. That is, simply because the 1998 Declaration enshrines certain fundamental principles does not mean that governments are bound, outside of the ILO’s context, to follow the ILO’s constitutional procedures as they relate to ratifying the ILO’s Conventions. Should governments incorporate part of the 1998 Declaration, or a portion of a fundamental right, through express agreement and a meeting of the minds, that is their prerogative. It is not up to panelists to override the express terms of a trade agreement. If that were the case, the United States’ limitation of those rights to “a manner affecting trade” would be equally invalid. Also invalid would have been the United States’ longstanding omission of one of the ILO’s four fundamental labor rights – nondiscrimination – in its trade legislation. Either labor rights inherently extend to all workers, trade-related or not, or they can be limited in the trade context through express agreement.

Moreover, even the panel’s argument that Conventions must extend to all employment sectors is wrong. The ILO’s standards, including its Conventions, are process-oriented. They do not prescribe the exact manner in which governments should apply those rights domestically; only governments may make that determination in consultation with national workers and employers. For example, following national consultations, the ILO permits governments to exclude categories of workers such as armed forces and the police at the time of ratifying the fundamental Conventions concerning freedom of association and collective bargaining. It also permits governments to include categories of workers (and thus exclude others) at the time of ratification for certain greater protections under the fundamental Convention on the elimination of child labor.

Fourth, the panel’s decision that all domestic violations of labor matters were trade-related is alarming. It also again deviates from the CAFTA panel, which had the same arsenal of hortatory international commitments had it wanted to establish some form of universal social floor of rights throughout the agreement. The CAFTA panel did not take the bait and instead emphasized the objectives of the trade agreement to regulate fair competition. If US and EU trade agreements have entirely different objectives, then the panel’s recent decision may remain confined to the EU space. Nevertheless, it suggests significant hurdles in future US-EU trade negotiations.

Fifth, the deviations across panel interpretations and application of the 1998 Declaration to trade illustrates the very type of incoherence and dangerous external application of international norms that some of us have been cautioning for some time. While working as a lawyer for the ILO’s supervisory bodies, I joined two other ILO officials to research the intention and significance of the incorporation of the 1998 Declaration in trade agreements. We interviewed the ILO Legal Advisor who drafted and negotiated the terms of the Declaration in 1998 (Francis Maupain) and dissected every word in the preparatory works. Our findings (set out in this report and this report) were less than reassuring.

First, we learned that the ILO never intended for the 1998 Declaration to be interpreted and applied by governments outside of the ILO’s uniquely tripartite environment. For those unfamiliar with the ILO, its system of supervision and standard-setting are based on international consultations between representatives of governments, employers, and workers. Even when the ILO adopts Conventions or makes recommendations to ratifying member governments, it leaves it to national governments to implement its fundamental labor rights through consultations with national workers and employers. Prescription of those standards through trade agreements is antithetical to that process. Second, we learned that there is absolutely no agreement on the meaning of the 1998 Declaration in the trade context. For instance, the EU and US both incorporate the 1998 Declaration but do so differently. Whereas the US refers to the “rights as stated in” the 1998 Declaration, the EU refers to the “principles concerning the fundamental rights” in the 1998 Declaration. Does the 1998 Declaration enumerate “rights” or “principles,” and is there a difference between those two standards? No one knows. Our work, therefore, concluded that the residual ambiguities in the 1998 Declaration and its opaque use in the trade context would inevitably lead to incoherence and litigation. And here we are.

The panel acknowledged our 2015 work but dismissed it (our conclusions would have contradicted its efforts to conflate the ILO’s legal instruments into a package of trade commitments). To do so, the panel relied on a disclaimer we had made in which we noted that, although we were all ILO officials, we were writing in our personal capacities. Fair enough. Except that the panel goes on to base its other substantive conclusions on “research by the ILO,” a 2017 document written by a research team in the ILO that, of course, contains the exact same disclaimer text as ours did.

Despite numerous flaws, the panel did get some things right. The ROK’s labor laws do significantly fail to protect workers. Had the EU tried, I am also fairly confident that it could have established a trade-related link to the ROK’s labor derogations. That evidence would have spared the panel from formulating some illogical conclusions that, unfortunately, could guide future panel reports.

The panel also correctly dismissed the EU’s claim that the ROK violated the labor chapter for failing to “make continued and sustained efforts towards ratifying the fundamental ILO Conventions.” Finding that the clause was a “best endeavors” standard, the panel decided that the ROK had committed to taking “an on-going obligation” that afforded it “leeway…to select specific ways to make continued and sustained efforts.” Consequently, the fact that the ROK had not yet ratified the Conventions was not, itself, “evidence of its failure to comply” with that obligation. Had the panel ruled otherwise and found that the commitment was outcome-determinative, its finding would have arguably raised serious questions of consent and sovereignty.

There are many other observations, but those tend to become more granular and appropriate for those in the weeds of international labor law. I would be happy to discuss the panel’s substantive findings with those interested. I would also love to hear others’ impressions on the above.

The First Labor Complaint Under a Trade Agreement

From a speech today by USTR Ron Kirk:

So today I am announcing that the Obama Administration will file a case against Guatemala under our trade agreement with Central America and the Dominican Republic, for apparent violations of obligations on labor rights.

This is the first labor case the United States has ever brought against a trade agreement partner.

With this case, we are sending a strong message that our trading partners must protect their own workers, that the Obama Administration will not tolerate labor violations that place U.S. workers at a disadvantage, and that we are prepared to enforce the full spectrum of American trade rights from labor to the environment.

More details as they emerge.

ADDED:  Here's the CAFTA-DR consultations request.

And here's the press release: http://www.ustr.gov/about-us/press-office/press-releases/2010/july/united-states-trade-representative-kirk-announces-lab.  A key excerpt:

What Concerns Does the United States Have With Guatemala’s Compliance With its Obligations under Chapter 16 (Labor) of the CAFTA-DR?

In April 2008 the AFL-CIO and six Guatemalan unions filed a public submission under the CAFTA-DR alleging that the Guatemalan government is failing to effectively enforce its labor law. Since then the U.S. Government has conducted an extensive examination of Guatemala’s compliance with its obligations under the Labor Chapter of the CAFTA-DR. This examination has included (1) a careful review of Guatemala’s labor laws, (2) extensive collection of factual evidence, and (3) a careful analysis of Guatemala’s obligations under Article 16.2.1(a). Based on this examination, it appears that the Government of Guatemala is failing to meet its obligations under Article 16.2.1(a), with respect to effective enforcement of Guatemalan labor laws related to the right of association, the right to organize and bargain collectively, and acceptable conditions of work. For example, we have identified a significant number of failures to enforce Guatemalan labor law, constituting a sustained or recurring course of action or inaction, including:

1) Ministry of Labor failures to investigate alleged labor law violations;

2) Ministry of Labor failures to take enforcement action once the Ministry has identified a labor law violation; and

3) Court failures to enforce Labor Court orders in cases involving labor law violations.

The United States also has grave concerns about the problem of labor-related violence in Guatemala, which is serious and apparently deteriorating. The United States is seriously concerned about the Government of Guatemala’s response to the use and threats of violence that appear to be related to the exercise or attempted exercise of labor rights in Guatemala, including the right of association and the right to organize and bargain collectively. The concerns of the United States include apparent failures by the Government of Guatemala to adequately protect those threatened with violence and apparent failures to adequately investigate and prosecute such crimes. Our request for consultations expresses our grave concerns about this problem and indicates that we intend to examine and take this issue up with the Government of Guatemala in the near future.

In Defense of Child Labor

From economist Steven Landsburg:

As any historian could tell you, no society has every pulled itself out of poverty without putting its children to work. Back in the early 19th century, when Americans were as poor as Bangladeshis are now, we were sending out children to work at about the same rate as the Bangladeshis are today. Having had the good fortune to get rich first, Americans can afford to give Bangladeshis a helping hand, and there are plenty of good ways for us to do that. Denying Third Worlders the very opportunities our ancestors embraced, whether through fullfledged boycotts or by insisting on health and safety standards they can’t afford to meet, is not one of those ways.

Labor Rules in Trade Agreements: Child Labor

A reader points me to the following from the Progressive Policy Institute:

The ILO's 'core' labor standard on child labor is set out in ILO Convention #138 on Minimum Working Age. Dating to 1973, the Convention reads as follows:

"The minimum age ... shall not be less than the age of completion of compulsory schooling and, in any case, shall not be less than 15 years. ... The provisions of [this] Convention shall be applicable as a minimum to the following: mining and quarrying, manufacturing; construction; electricity, gas and water; sanitary services; transport, storage and communications; and plantations and other agricultural undertakings mainly producing for commercial purposes, but excluding family and small-scale holdings producing for local consumption and not regularly employing hired workers."

With the ILO standard as context (though the United States has not ratified the Convention) some state child labor laws make startling reading. According to the Department of Labor's online summary of 35 state agricultural child labor codes, at least 27 states are at least close to the ILO standard, with a minimum age of 16 or higher in the school year. But the summaries nonetheless find Illinois with a minimum agricultural age of 12 (and 10 outside the school year); Hawaii with a minimum age of 10 for coffee-picking and Oregon a nine-year minimum age for berry-picking (though both are outside the school year and Oregon's requires parental consent); and Vermont exempting youth agricultural work from working-hour limits. North Dakota's guide to child labor law says bluntly that child labor law is not meant for agriculture: "Work on a farm (doing agricultural work) -- exempt from all child labor provisions."

This leads to some questions for Barack Obama and Hillary Clinton, who have argued for including international labor standards in trade agreements:  Would the ILO Convention at issue be included in future trade agreements?  And if so, will U.S. state laws be changed to conform to ILO rules?

Some Questions about Labor/Environment Provisions in Trade Agreements

This Presidential campaign has made it very clear that there are a number of people (mostly Democrats, I would guess), including the two remaining Democratic Presidential candidates, whose support for trade agreements is conditional on having enforceable labor and environmental rules as part of these agreements.  This view raises a number of questions for me.  These are rhetorical, but people are free to offer their thoughts, of course.

1.  Would those who support putting enforceable labor/environment rules in trade agreements prefer to have these rules in free-standing mutilateral agreements on these issues, outside the context of trade agreements?  If so, why not try to make the case for that?  In other words, why aren't Obama, Clinton and others arguing for, say, an independent, binding, enforeable international agreement on labor protections?   If that approach is rejected, then go the trade agreement route, but why not start there?

2. How realistic is it to think that certain U.S. trading partners will agree to having labor and environmental rules in trade agreements?  By demanding inclusion of labor/environment rules, aren't we just ensuring that many of these agreements do not get signed?

3. The unstated assumption seems to be that the U.S. can use these provisions to ensure that our trading partners follow the rules.  But do those who support these provisions anticipate complaints being brought against the U.S. under binding labor/environment rules?  If yes, would that be a good thing?

4. By how much, if at all, do supporters of this view believe that inclusion of these rules in the NAFTA and other trade agreements will reduce the number of U.S. job losses caused by trade agreements?

5. What is the scope of the labor/environment rules that should be included?  For example, would a minimum wage be included in the labor protections?

How Important Are Labor/Environmental Standards in Trade Agreements?

As noted many times on this blog, Barack Obama and Hillary Clinton have been making a big deal of the absence of enforceable labor/environmental standards in certain trade agreements, such as NAFTA.  But how important would these really be?  Dan Drezner gives the following answer:

Repeat after me: attaching labor and environmental standards to trade agreements will have no appeciable effect on trade flows. Anyone who tells you differently is selling you something.

I'm sympathetic to that view, with one caveat:  Demanding that labor and environmental provisions be included could scuttle some trade deals, and that would have an impact on trade flows.