International Baccalaureate, Geneva, Switzerland
Can RTAs act as a stimulus or a laboratory for the multilateral system? This chapter examines this in light of the labour provisions in the RTAs discussed. In this chapter, the emphasis is on the NAFTA side agreement (NAALC) since it is about the only RTA that has heard labour disputes. We will review the implications of the NAALC on labour rights protection in North America and how it has impacted on the labour standards and trade debate. This chapter also tries to answer the question as to whether RTAs advance workers’ rights by examining labour enforcement under both the CAFTA-DR and U.S.–Cambodia Textile Agreements. Finally, the chapter discusses the limits of regionalism in addressing the linkage issue.
8.2 The Influence of RTAs on the Multilateral System
The surge in the number of RTAs in recent times has raised the question as to whether they are building blocks or stumbling blocks for the multilateral system. This proliferation has also raised the issue of the effectiveness of the multilateral system on which the principle of non-discrimination is built. This recent surge in the number of RTAs has been distinguished from the earlier RTAs, which failed to make an impact on the world scene. The recent RTAs have succeeded and are making an impact. It is estimated that a greater percentage of the world trade is being conducted on a preferential basis, making some observers see the break-up of world trade into regions. Whilst this trend may raise concerns, recent studies by the Organization for Economic Cooperation and Development (OECD) and the WTO suggest that RTAs may complement rather than threaten the multilateral trade system. It is against this backdrop of complementarities that it is argued that regional trade agreements could act as a stimuli and laboratory for the multilateral system in effecting compliance with ILO core labour standards.
8.2.1 RTAs as Stimulus for the Multilateral System
The formation of the European Economic Community (EEC) in 1958, which was a political formation in ensuring that no wars would be fought in Europe, was supported by the United States. The Americans also supported the formation of the EEC common customs tariffs by proposing a round of talks on liberalisation in the GATT so as to keep the momentum in the multilateral direction. The Kennedy Round was thereafter opened and brought about a worldwide reduction of custom duties. After the 1973 enlargement of the European Community, the Tokyo Round was also started. This round (the last before the Uruguay Round) brought about tariff reductions worth more than $300 billion, even more than all the previous six rounds put together. The adoption of the European Community (EC) of the Single Market initiative to turn a free trade area into a true common market, with its plans on further expansion, contributed in part to the United States’ conversion to regionalism and its revival in South America and the launching of the Asian-Pacific Economic Cooperation (APEC).1
The fear of a “Fortress Europe” and European resistance to American proposals at a General Agreement on Tariffs and Trade (GATT) ministerial conference in Geneva for a new round of multilateral negotiations in Geneva in 1982 contributed significantly to the development of regionalism in North America. The thinking was that if the road towards multilateralism is obstructed, then other roads needed to be explored. The American response was initiating regional agreements with Israel (U.S.–Israel Free Trade Agreement) and an agreement with the Caribbean countries (Caribbean Basin Initiative). The real shift in policy was the agreement with Canada, resulting in the Canada– U.S. Free Trade Agreement (CUSFTA). The spread of regionalism in the developing world was to contribute to the shift in policy, when Mexico entered into negotiations with the U.S. and Canada, which resulted in the North America Free Trade Agreement (NAFTA).
This surge in regionalism served as a warning that unless GATT was revised, the organisation of world trade could be divided into regional trading blocs. This no doubt led to the successful completion of the Uruguay Round. This completion significantly broadens the coverage of the multilateral trade system and should increase the role played by the rule of law in the conduct of world trade. From all indications, regionalism may well have provided a stimulus to multilateral liberalisation.2
8.2.2 RTAs as Laboratories for the Multilateral System
The issue of whether a regional trade agreement could act as a pilot project for the multilateral system in an area is dependent on how best the policies formulated are put into practice and the fastest way to achieving that goal. The experience of the multilateral system has shown how slow and awkward it can be to negotiate separately with more than 100 countries. Some authors have argued that the costs of negotiation rise with the number of countries involved so that it is easier for a smaller group of countries to negotiate an agreement.3 With a common policy, they can then enter multilateral negotiations as a group. Regional integration in effect reduces the number of countries participating in multilateral negotiations since the number of policy proposals submitted is few and allows for in-depth deliberations. This would probably increase the efficiency of the negotiations and make a satisfactory worldwide agreement more likely. The experience of the EU is a notable example. It is worthwhile to note from the onset that the regional experiment will only succeed if the political will is there and the economic framework is right.
In addition, the adoption and implementation of policies at the regional level will enable regional partners to learn by doing or gain experience through a trial and error basis. This could then serve as a testing ground for implementation at the multilateral level. The experience gained at the governmental level will help to adapt to new policies and practices and create the enabling environment to implement multilateral agreements. Furthermore, the success of implementation at the regional level could act as motivation for the multilateral system to follow. In effect, RTAs could provide testing grounds or test laboratories for the multilateral system.
A way to determine whether the regional models like European Union or NAFTA have acted as laboratories in the past or could serve the multilateral system in the future could be examined from a general standpoint.
220.127.116.11 General Standpoint
The European Union has been hailed as a model in achieving liberalisation and, although not a perfect model since the EU aims at achieving not only economic integration but also political integration, nevertheless provides a yardstick that could measure the influence of RTAs on the multilateral trading system. The EU has shown how trade liberalisation in its entirety can be achieved, e.g. free movement of goods, services, capital, natural and legal persons, and the parallel enforcement of competition rules. The European Court of Justice is also an indication of how important the enforcement of rules and adherence to the rule of law is taken. This helps achieve harmonisation and promote mutual recognition.
The EU portrays a more balanced institution and shows how unequal economic partners could harmoniously work together in achieving their goals and are able to bargain on the same level. In short, the EU is an example of how level the playing field could be made. A notable example is how poorer members of the EU have been able achieve higher standards and the rapid acceleration of income growth by the adoption of minimum standards and mutual recognition.
The NAFTA agreement, though not a completely perfect model since in its present form it cannot accommodate many new members, shows how countries with unequal economic development could work towards liberalisation and the reduction in tariffs to the benefit of their economies, although some critics see the union dominated by the largest economy, the United States of America.
The examples of the EU, NAFTA, and other regional agreements are case studies for the multilateral system. In spite of the shortcomings of RTAs and the legal controversy surrounding their compliance with Article XXIV of the General Agreement on Tariffs and Trade (GATT), RTAs are examples in that they help facilitate the mobility of both capital and labour. The proliferation of regional trade agreements has helped to enhance the competitiveness of open economies and to provide labour market flexibility, by bringing countries at various levels of economic development together. The EU with the admission of ten East European countries in 2004 took this process further.
8.3 The U.S. Trade Act of 2002
On 6 August 2002, President George W. Bush signed the United States Trade Act of 2002 into law.4 The Trade Act provides the President with trade promotion authority to negotiate new trade agreements with United States trading partners. The Trade Act stipulates that the U.S. Congress can only vote up or down on any trade agreement that the President sends to Congress and that Congress could not amend the agreement. The authority that Congress gave the President is sometimes referred to as “fast track” authority as it is meant to streamline approval of trade agreements. The relevance of this Act is the link that it creates for the promotion of the ILO core labour standards by establishing a link between trade and workers’ rights.
Although non-discrimination is not mentioned in the definition provided in the Trade Act, it should be noted that the Trade Act provides protection in three other areas described as “acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health”.
The Trade Act of 2002, Section 2102 provided details of 17 principal negotiating objectives for agreements signed under the fast-track authority. Among these objectives are provisions on labour and the environment. The Trade Act of 2002, section 2103 provides that the principal negotiating objectives of the United States with respect to labour and the environment are
to ensure that a party to a trade agreement with the United States does not fail to effectively enforce its environmental or labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the United States and that party after entry into force of a trade agreement between those countries;
to recognize that parties to a trade agreement retain the right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other labor or environmental matters determined to have higher priorities, and to recognize that a country is effectively enforcing its laws if a course of action or inaction reflects a reasonable exercise of such discretion, or results from a bona fide decision regarding the allocation of resources, and no retaliation may be authorized based on the exercise of these rights or the right to establish domestic labor standards and levels of environmental protection;
to strengthen the capacity of United States trading partners to promote respect for core labour standards …;
to strengthen the capacity of United States trading partners to protect the environment through the promotion of sustainable development;
to reduce or eliminate government practices or policies that unduly threaten sustainable development;
to seek market access, through the elimination of tariffs and nontariff barriers, for United States environmental technologies, goods, and services; and
to ensure that labor, environmental, health, or safety policies and practices of the parties to trade agreements with the United States do not arbitrarily or unjustifiably discriminate against United States exports or serve as disguised barriers to trade.5
Pursuant to Section 2102 of the Trade Act of 2002, the President of the United States is obligated to prepare a number of reports to the U.S. Congress such as a United States Employment Impact Review, Labor Rights Report, and Laws Governing Exploitative Child Labor Report. These reports are submitted to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. These reports are issued under authority from the President by the United States Department of Labor in consultation with the U.S. Secretary of State and the United States Trade Representative. The reports are to describe the entire relevant legal framework, including national laws and international conventions and practices for the protection of workers’ rights, including the administration of labour law, labour institutions, and the system of labour justice of a signatory country.
The relevant sections of the Trade Act of 2002 are, for example, Section 2105(c)(5), which requires the President to review and report to Congress on the impact of future trade agreements on U.S. employment, including labour markets. This Section provides that the President shall
review the impact of future trade agreements on United States employment, including labor markets, modeled after Executive Order 13141 to the extent appropriate in establishing procedures and criteria, report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on such review, and make that report available to the public.
The Trade Act of 2002, under Section 2102(c)(8) on labour rights, also requires that the President shall
[i]n connection with any trade negotiations entered into under this Act, submit to the Committee of Ways and Means of the House of Representatives and the Committee on Finance of the Senate a meaningful labor rights report of the country, or countries, with respect to which the President is negotiating.
Finally, the Trade Act of 2002 Section 2102(c)(9) on laws governing exploitative child labour provides that the President shall
with respect to any trade agreement which the President seeks to implement under trade authorities procedures, submit to the Congress a report describing the extent to which the country or countries that are parties to the agreement have in effect laws governing exploitative child labor.
Since 2003, the United States Department of Labour, in consultation with the Secretary of State and the United States Trade Representative, has issued eight reports on the United States Employment Impact Review pursuant to section 2102(c)(5). Under section 2102(c)(8) on Labour Rights Reports, nine reports have since 2003 been issued. Pursuant to section 2102(c)(9) on Laws Governing Exploitative Child Labour, nine reports have been issued.
The fact is that countries that have entered into FTAs with the United States are aware that such reports would be issued about their compliance with their national laws and international conventions could act as a preventive mechanism to ensure observance (and the recent report of the ILO CEACR is evidence of the efforts that such countries are making towards compliance with the CLS). In the writing of such reports, the United States officials would have to enter into dialogue with the government officials of signatory countries. To this extent, a greater degree of collaboration is required by the signatory countries, thus creating the opportunity to use trade policy to help workers and influence and monitor labour rights in these countries.
8.4 Implications of NAALC on Labour Rights Protection in North America
In 2002, the Office of the United States Trade Representative (USTR), in its report on NAALC during its eighth anniversary, stated:
The NAALC has contributed to transparency and public debate on labor law and enforcement issues that, to a large extent, did not exist before. In fact, neither bilateral nor trilateral cooperative efforts to improve worker rights were nearly as pronounced as they have been since NAFTA and the NAALC.6
With this assertion, the USTR painted a positive picture of the impact of the NAALC on labour relations in North America. The report further stated that the NAALC is a unique tool for tripartite cooperation, which aims at promoting labour standards, compliance with labour laws, and the enforcement of those laws in each of the signatory countries.
Further to the 2002 report, the 2004 report on “NAFTA at ten” again stated the important role of the NAALC, in that the side agreement has added a social dimension to the main agreement. The report listed two main achievements: (1) how the enforcement of labour laws in the signatory countries has been greatly enhanced and (2) how the agreement has helped establish institutions and created a formal process through which the public can raise concerns about the enforcement of labour law directly with governments.7
The USTR stated further that through NAALC, more than 50 trilateral cooperative programmes have been carried out. These include conferences, seminars, technical exchanges focusing on labour relations, occupational safety and health, workplace equity, and workforce development.8
The role of the NAALC in ensuring protection of labour rights in North America has received mixed results. Some authors claim that the NAALC is important in the provision of innovative and potentially effective means of ensuring that workers’ rights in the NAFTA signatory countries are protected whilst at the same time facilitating the expansion of trade among the signatories.9 Others have concluded that the NAALC has not in effect achieved the intended results whilst acknowledging that the process should not entirely be discredited.10 The reviews of the NAALC raises the questions as to whether the NAFTA side accord has had any impact in North America and, if so, whether the process, even with its deficiencies, could constitute “an important first step” in the provision of an effective and efficient means of workers’ protection under a multilateral approach.11 Before we discuss this, we first examine labour enforcement under NAALC and review some of the submissions filed with the NAOs.
8.5 Labour Enforcement Under NAALC
8.5.1 NAALC: The Dispute Resolution Process
The aim for the different investigating and consulting apparatus, as already stated above, is to ensure that each Party complies with its duty to enforce its own domestic law. However, the monitoring process is not intended to be adversarial. Article 20 of the Agreement states that the Parties “shall make every attempt through cooperation and consultations to resolve any matter” arising under the Agreement.12 Foremost, the responsibility for resolving disputes falls on the three NAOs. In this respect, Article 16(3) states that “[e]ach NAO shall provide for the submission and receipt … of public communications on labor law matters arising in the territory of another Party. Each NAO shall review such matters, as appropriate, in accordance with domestic procedures.”13 In spite of the article couched in political language, the role of the NAOs is clear: they are required to accept and, if appropriate, investigate allegations that another Party is not enforcing its domestic labour law as required by the Agreement.
The NAOs’ jurisdiction to investigate such allegations is expansive, covering all matters relating to “labor law”, as defined by the Agreement.14 The decision whether to accept a submission is left to the discretion of each NAO.15 For example, in the case of the United States NAO, a submission is accepted when a complaint is filed: (1) which relates to labour law matters in another Party’s territory and (2) where a review would further the objectives of the Agreement.16 The United States NAO, through the Agreement and U.S. regulations, is given broad discretion in its determination of whether an investigation of Canadian or Mexican enforcement of labour laws is appropriate in a particular case.
Should an NAO decide that a complainant has adequate ground for bringing a complaint, it may conduct an investigation to determine whether the allegation(s) have merit.17 Each NAO, in so doing, follows the procedures established by its own country. In the case of the United States, the investigation may include hearings and written submissions.18
Article 21 of NAALC permits an NAO as part of its investigations to seek assistance of the NAO in the country being investigated regarding the requested country’s labour law, administration of those laws, and labour market conditions in the country.19 The rationale behind this provision is to encourage consultations between the different NAOs. This provision permits the NAO conducting the investigation to seek all the necessary information to enable it to determine whether the country under investigation is enforcing its domestic laws in an effective manner. The NAO consulted is under obligation, when requested, to promptly provide any publicly available data or information relating to its domestic laws, procedures and policies, proposed changes to its laws, and any clarifications and details requested.20
In the event of the completion of its investigation the NAO determines that the Party under investigation failed to comply with its obligations under the Agreement, the NAO may recommend consultations by the Ministerial Council under Article 22 of the Agreement.21 The Agreement still at this high level seeks to resolve complaints in an amicable way through consultation and cooperation among the Parties.22
In case the ministerial consultations do not arrive at a resolution or if the Council of Ministers determines that it would be helpful to call on outside expertise to assist in the resolution of the issue at the centre of the dispute, the Agreement provides that any Party may request the creation of an ad hoc Evaluation Committee of Experts (ECE).23 The ECE should be comprised of three members, all experts in labour matters or “other appropriate disciplines”, which are independent of all three signatories and the Secretariat.24
Article 23(2) of NAALC states the aim of the ECEs as follows:
The ECE shall analyze, in the light of the objectives of this Agreement and in a nonadversarial manner, patterns of practice by each Party in the enforcement of its occupational safety and health or other technical labor standards as they apply to the particular matter considered by the Parties under Article 22.
Under Article 23, the ECE is only to be convened in a matter that is trade related, covered by the signatories’ mutually recognised labour laws. Where a matter has been previously dealt with in an ECE report “in the absence of such new information as would warrant a further report”,25 the NAALC stipulates that no ECE should be convened. However, for the ECE to carry out its duties under Article 23(2), it is entitled to solicit information from the Secretariat, each Party’s NAO, organisations outside that have relevant experience, and the larger public.26
Article 25 sets out the timeline for the issuance of reports by an ECE. It states that an ECE must issue its report 120 days after its establishment. The report is to include details of its investigation, its conclusions, and any recommendations it chooses to make. The report is then to be given to the Ministerial Council in a draft form. When the countries involved in the dispute have had the opportunity to respond to the draft report, the ECE may modify its report and publish the final report.27
Upon the publication of the final ECE report, the Agreement also provides that the parties consult each other. Should the succeeding consultations not bring about a resolution of the matter, either Party may call for the establishment of an Arbitral Panel, which the Council has to approve by a two-thirds vote.28 The Arbitral Panel is to consist of five members who are drawn from rosters of experts maintained by the Commission.29 The Parties in the dispute are to appoint a chairman within 15 days, and the chairman should not be a citizen of either Party.30 The four other openings on the Panel are filled by each Party selecting two members who are citizens of the other country31.
The NAALC has procedural rules similar to that of the WTO dispute settlement system. In the case of the NAALC, the Parties at least have the right to one hearing before the Panel. They also have the prospect of making initial and rebuttal written submissions (Fig. 8.1).32 The Panel is expected to present its initial findings 180 days after it has been convened. The report should contain the Panel’s findings of fact and its determination as to whether there has been a persistent pattern of failure by the party complained against in enforcing its labour laws.33 In so doing, the Panellists may submit separate opinions on issues should they not arrive at a unanimous decision.34 The Party complained against can submit written comments on the Panel’s initial report within 30 days after the presentation of the initial report.35 The Panel, after consideration of the complaining Party’s written comments, can reconsider its findings, request the views of the Party that filed the complaint, or make any further examination that it deems fit on its own initiative or based on the request of the disputing Party.36
In making its final determination as to whether a Party complained against has been effective in enforcing its labour laws, the Panel under Article 49(1) is supposed to give the particular country broad discretion. Article 49(1) states that for the purposes of this Agreement
A Party has not failed to “effectively enforce its occupational safety and health, child labor or minimum wage technical labor standards” or comply with Article 3(1) in a particular case where the action or inaction by agencies or officials of that Party:
(a) reflects a reasonable exercise of the agency’s or the official’s discretion with respect to investigatory, prosecutorial, regulatory or compliance matters; or
(b) results from bona fide decisions to allocate resources to enforcement in respect of other labor matters determined to have higher priorities.
This definition at the Panel stage rules out a finding of persistent failure to enforce labour standards when there is evidence that a country has exercised reasonable discretion in public policy decisions regarding resource allocation. The Agreement does not state what would constitute reasonable exercise of a Party’s discretion.
Should a Panel determine that there has been a persistent pattern of failure, the Agreement under Article 38 similar to other good dispute settlement mechanisms contains provisions for the enforcement of Arbitral Panel rulings. The Agreement states that “the disputing Parties may agree on a mutually satisfactory action plan, which normally shall conform with the determinations and recommendations of the panel”.37 In case the Parties are not able to agree on a mutually satisfactory action plan within 60 days of the final report, or the complaining Party is of the view that the other Party has not fully complied with the agreed upon action plan, the disputing Party may request the reconvening of the Panel.38
In the reconvened Panel, the Panel is to determine whether the plan proposed by the Party complained against is sufficient to remedy the failure. If the Panel is of the view that the plan is not sufficient, the Panel is to establish a new plan and may, where it deems fit, impose a monetary enforcement assessment against the offending Party.39 In essence, the monetary assessment is a fine against the Party complained against “to improve or enhance the labor law enforcement in the Party complained against, consistent with its law”.40 If however the Party complained against fails to pay the monetary assessment, the complaining Party can suspend trade benefits to the Party complained against under NAFTA.41
Even though the Agreement allows for sanctions, the nature of the Agreement is not to punish Parties that violate the Agreement but to seek a solution through consultations and cooperation among the signatories. This approach tends to be more political, which although can be frustrating to a complainant in the private sector is well-suited to resolving issues among nation-states.42 It is generally acknowledged that litigation, especially a prolonged one, as could be the case in a dispute between two states is detrimental to the maintenance of friendly relations. This invariably is also detrimental to conducting business with its attendant effects on economic prosperity. In maintaining long-term economic and political relations, the process under NAALC, even if in the strict legal sense does not resolve a child labour or minimum wage dispute, is good in terms of the long-term benefits of increasing the welfare of workers through increased economic activity. The major argument is that trade tends to be a means to achieving the level of economic development that will make parents send their children to school and also make industry pay better wages.
Box 8.1: Resolution of Disputes: North American Agreement on Labor Cooperation (NAALC)
Phase I: Ministerial Consultations
Phase II: Evaluation Committee of Experts (ECE) (300 days)
Draft Report (120 days) submitted shall be for the consideration by the Council (30 days).
The Final Evaluation Report shall be presented to the Council (60 days), should be published (30 days).
Parties shall present written responses to ECE’s recommendations (90 days).
Final Report and Parties’ written responses shall be considered at the next regular session of the Council.
Phase III: Arbitral Panel (540 days)
If there is no resolution in a regular session, Parties may request in writing more consultations (60 days).
If Parties fail to resolve the matter, any Party may request a special session of the Council (20 days).
If Council cannot resolve the matter within 60 days, the Council may convene an Arbitral panel (180 days to present an Initial Report after the last panellist is selected).
The Parties may submit within 30 days written comments on the Panel’s Initial Report.
Final Report shall be made 60 days after the presentation of the Initial Report. If in its Final Report the panel determines a “persistent pattern of failure to effectively enforce …” the Parties may agree on an Action Plan consistent with the recommendations of the panel.
Review of implementation: if Parties do not agree on an Action Plan or on whether it is being fully implemented, the panel can be reconvened (60–120 days; 180 days). If the panel determines that the Plan has not been agreed/fully implemented, a “monetary enforcement assessment” can be imposed (90 days after the panel has been reconvened).
The possible remedies for enforcement of the 11 labour provisions are a set of seven steps in three distinct “levels of treatment” (step I: initial acceptance and investigation by the NAO, step II: Ministerial consultations, step III: after the ECE has conducted its investigation, it issues different recommendations for each labour principle, as shown in Table 8.1).
NAALC labour principles and levels of treatment
NAO Review & Report
Optional Ministerial Consultations
Evaluation Committee of Experts (ECE)
Council Review of ECE Report
Post-ECE Ministerial Consultations
Fines or Suspension of NAFTA Benefits
Freedom of association/right to organise a union
Right to bargain collectively
Right to strike
Prohibition of forced labour
Migrant worker protection
Child labour protection
Minimum employment standards (minimum wage)
Safety and health
8.5.2 Review of Selected Cases
This section examines some of the labour disputes brought under NAALC to determine the effectiveness of the dispute resolution under NAFTA. The NAALC labour proceeding is more designed as a fact-finding and dispute avoidance proceeding than as a dispute settlement proceeding. It does not give binding decisions. Under NAALC, when a conflict occurs, the NAO may request consultations with NAO as long as the subject matter of the dispute is covered under the NAALC.43 Even though the NAALC is intended to resolve all disputes through negotiation, a party that is not satisfied may request additional proceedings.
As at September 2013, 37 submissions had been filed under the NAALC.44 Out of these, 23 were filed with the U.S. NAO.45 Twenty-one of these submissions involved allegations against Mexico and two against Canada. In Mexico, nine submissions had been filed and involved allegations against the United States. In the case of Canada, six submissions had been filed, with three of them allegations against Mexico and four against the United States.
Out of the 23 submissions filed with the U.S. NAO, 18 involved issues of freedom of association and 9 of the submissions concern issues of the right to bargain collectively. Two of the submissions concerned the use of child labour, one raised issues of pregnancy-based gender discrimination, three involved the right to strike, six concerned minimum employment standards, and eight raised issues of occupational safety and health. Four submissions filed with the U.S. NAO were withdrawn by the submitters before hearings were held or the review process was completed. The U.S. NAO has held hearings on ten submissions, and eight of these submissions have gone on to ministerial-level consultations. The U.S. NAO has rejected the review of seven submissions.46
The five submissions accepted by the Mexican NAO have resulted in ministerial-level consultations, and one submission accepted by the Canadian NAO has also resulted in ministerial-level consultations. Three submissions have been declined for review by the Canadian NAO.47
Below, we review some of the cases filed with the NAOs of the three signatories to NAALC. Only some of the cases that were accepted for review are discussed here.48
18.104.22.168 U.S.A. OTLA (Formerly NAO)
U.S. NAO Submission No. 2005-03 (HIDALGO) (October 14, 2005)49
On 14 October 2005, the Federación de Trabajadores Vanguardia Obrera de la Confederación Revolucionaria de Obreros y Campesinos (FTVO-CROC), with support from the U.S. Labor Education in the Americas Project and the Washington Office on Latin America, filed submission 2005-03 with the OTLA. The submission alleged that the Government of Mexico had failed to fulfil its obligation under Article 3 of the NAALC for not effectively enforcing its labour laws with respect to freedom of association and protection of the right to organise, the right to bargain collectively, and the right to strike.
The FTVO-CROC further alleged that the Mexican government did not effectively enforce the country’s labour laws in that it failed to conduct required on-site inspections to detect and remedy labour law violations with respect to forced labour, child labour, minimum employment standards, discrimination at the workplace, and occupational safety and health, and also under Article 5 of NAALC concerning fair, equitable, and transparent labour tribunal proceedings.50
The aim of the FTVO-CROC submission was to acquire collective bargaining rights for workers at the Rubie’s de Mexico (Rubie’s) facility in the State of Hidalgo in Mexico.
The OTLA accepted the submission for review on the grounds that the allegations raised issues on labour law matters in Mexico and that the review of the submission would further the purposes of NAALC.
The findings of the OTLA were that
Even though the FTVO-CROC not always followed proper legal procedures in its representation of interested workers at Rubie’s, nevertheless there were problems with the way Mexican labour authorities handled the process. The report also stated that there were a number of problems concerning the administrative procedures for allowing the registration of collective bargaining agreements and rights. The OTLA highlight a number of areas of concern, such as, rejection on technical grounds of union petitions; unjustified deals as a result of ineffective communication between federal and state labour authorities, and lack of transparency on how to recognise unions and collective bargaining agreements.
The OTLA found that the Mexican government failed to conduct the period checks from 1998 to 2005 as stated in the Federal Labour Law.
Though inspections were eventually conducted in May 2005, there were inconsistencies between federal and local labour authorities in the processes and application of the country’s labour laws.
Whilst the allegation on discrimination was not substantiated, the OTLA found that pregnancy testing was used as part of the employment application process at the company till July 2005.51
The OTLA, pursuant to Article 21 of NAALC, recommended consultations between the OTLA and the Mexican NAO on the issues that had an impact on the enforcement of labour laws in addressing the issues raised in the submission under Articles 3 and 5 of the NAALC.
The recommendation of the OTLA was that:
Measures should be taken to comply with procedural requirements under Mexican labour law, and also measures taken to prevent unjustified delays and to improve coordination between federal and state authorities in respect of the administration of labour justice procedures;
There was the need for transparency in the union representation process, which includes the creation of a publicly available registry of unions and collective bargaining agreements;
That the Mexican government should devote resources to the periodic inspection of workplaces so that the labour law violations as stated in the submission would be adequately addressed.
U.S. NAO Submission No. 2003-01 (PUEBLA) (September 30, 2003)52
This submission was filed on 30 September 2003 by the U.S.-based United Students Against Sweatshops (USAS) and Mexican-based Centro de Apoyo al Trabajador (CAT). The submitters were later joined by the Canada-based Maquiladora Solidarity Network (MSN).
The NAO accepted to review the submission on 5 February 2004, and it related to issues on the labour laws in Mexico. The NAO agreed to review as it felt it would further the objectives of the NAALC. The submission raised the following issues: freedom of association and the protection of the right to organise, the right to bargain collectively, occupational safety and health, and minimum employment standards. Further issue was respect to access for workers to fair, equitable, and transparent labour tribunal proceedings.
The submitters alleged that in 2000 and also in 2003, management and government officials were informed about the workers’ rights violations at the Matamoros Garment S.A. de C.V. and Tarrant Mexico S.R. de C.V. manufacturing factories in the Mexican state of Puebla.
The workers in both factories made efforts at forming unions, but they were informed that they had union representation, which they did not know about. Based on their belief that the so-called existing unions were not acting in their interest, the workers made efforts at forming separate or independent unions. In their attempts to file their unions’ registration, the Local Conciliation and Arbitration Board of Puebla, their registration petitions were denied.
Upon review of the submission, the NAO found that there was an overall lack of knowledge and transparency about legal requirements, the processes that are required for filing complaints, how the government goes about its inspection processes and reporting requirements, and government assistance available to workers.
In the course of the review process, the requests by the U.S. NAO under Article 21 of the NAALC to hold consultations with the Mexican NAO consultations were declined. The U.S. NAO thought such consultations were beneficial for the general public in the state of Puebla and in Mexico as a whole, on how to improve outreach efforts as a way of educating workers, employers, and government officials and how to improve transparency on legal requirements.
The NAO ruled that pursuant to Article 22 of the NAALC, there was the need to hold ministerial consultations between the two governments on issues of freedom of association, minimum employment standards, and occupational safety and health.
U.S. NAO Submissions No. 940001 and 940002 (HONEYWELL & GENERAL ELECTRIC) (February 14, 1994)53
The two cases were filed separately in 1994 but were eventually reviewed together by the U.S. NAO. The two cases involved allegations of deprivation of workers of their right to be represented by unions of their choice. On 14 February 1994, the International Brotherhood of Teamsters (IBT) filed a complaint against Honeywell with the United States National Administration Office (U.S. NAO) (Submission No. 940001). On the very same day, the United Electrical, Radio and Machine Workers of America (UE) filed a separate submission with the U.S. NAO against General Electric. In both cases, the unions’ complaint alleged that workers had been dismissed for union activity. Under the Mexican Constitution, Mexican Federal Labour Law, and ILO Convention 87 (Mexico is Member of the ILO), such discrimination is illegal.54
The IBT submission was, in respect of events, relating to the Honeywell factory in Mexico. According to IBT, Honeywell fired approximately 23 production workers, almost all of whom had expressed an interest in joining the Union of Workers of the Steel, Metal, Iron and Related Industries. In their submission, the IBT stated that the workers were made to sign resignation forms to collect their severance pay; in so doing, the workers were made to waive their ability to file claims protesting the dismissals against Honeywell.
In the General Electric case, the UE submission was in relation to allegations on freedom of association and the right to organise (Submission No. 940002). According to the union, General Electric used different intimidating tactics, such as the dismissal of approximately 11 employees in order to restrict the workers from organising an independent union. Further to this, the UE submission also contained allegations concerning health and safety standards and the failure of the company to pay the workers for overtime work, as stipulated by law.
On 15 April 1994, the U.S. NAO gave notice that the submissions had been accepted for review. The U.S. NAO held public hearings on 12 September 1994 and issued its report on 12 October 1994. In its findings and recommendations, the U.S. NAO, regarding the scope of its jurisdiction, stated that “… the NAO is not an appellate body, nor is it a substitute for pursuing domestic remedies”. Importantly, it stated its purpose as follows: “Rather, the purpose of the NAO review process including public hearing, is to gather as much information as possible to allow the NAO to better understand and publicly report on the Government of Mexico’s promotion of compliance with, and effective enforcement of, its labor law through appropriate government action, as set out in Article 3 of the NAALC.”
In its findings, the NAO acknowledged the dearth of practical knowledge in each of the three signatory countries about the legislation of the other countries on the right of freedom of association and the right to organise. The NAO recommended that the three countries work together to develop cooperative programmes, such as educational seminars and programmes on the rights of association and organising. The NAO concluded that it would not recommend ministerial consultations on these matters under Article 22 of the NAALC.
U.S. NAO Submission No. 940003 (SONY) (August 16, 1994)55
On 16 August 1994, four workers’ rights and human rights organisations, headed by the International Labor Rights Education and Research Fund (ILRERF) filed a submission with the U.S. NAO.56 The submission concerned the operations of a subsidiary of the Sony Corporation in Mexico and involved allegations concerning freedom of association and the right to organise. The U.S. NAO accepted the submission for review and held a public hearing on 13 February 1995. The four organisations alleged that (1) workers were dismissed in retaliation for union organising activity, (2) a union delegate election was flawed since there was insufficient notice of election and an open vote rather than secret ballot, (3) workers protesting the election in front of the plant were dispersed by police using physical force, (4) a petition for registration of an independent union was rejected by a labour tribunal on improper and hyper-technical grounds, and (5) the Mexican government violated its obligations under the NAALC and under ILO Conventions 87 and 98, which guarantee freedom of association and the right to collective bargaining.57
On 11 April 1995, the U.S. NAO issued its report. The NAO, in conducting its review, “considered whether Mexico promoted compliance with, and effective enforcement of, its labor laws that guarantee the right of association and the right to organize freely and prohibit the dismissal of workers because of efforts to exercise those rights (Article 3); whether Mexico ensured that persons have appropriate access to, and recourse to, tribunals and procedures under which labor laws and collective agreements can be enforced (Article 4); and whether Mexico ensured that its tribunal proceedings for the enforcement of its labor law are fair, equitable and transparent (Article 5)”.58
The U.S. NAO found that the Mexican authorities failed to adequately enforce their labour laws. The NAO also found that (1) it may have been because of union organising activities that workers discharges may have occurred, (2) allegation of police violence and other incidents during the strike raised important questions concerning the enforcement of Mexican labour law, (3) internal union activities were questionable, and (4) the Mexican authorities may have used “technicalities” to frustrate the organising efforts of independent unions.59 The U.S. NAO concluded its report, stating:
Given that serious questions are raised herein concerning the workers’ ability to obtain recognition of an independent union through the registration process with the local CAB, and as compliance with and effective enforcement of the laws pertaining to union recognition are fundamental to ensuring the right to organize and freedom of association, the NAO recommends that ministerial consultations are appropriate to further address the operation of the union registration process.60
Further to the NAO report, Mexico accepted the U.S. request for consultations. U.S. Secretary of Labor Robert Reich and Mexican Secretary of Labour Santiago Onate agreed on an implementation agreement, which was signed on 26 June 1995. The two parties agreed to implement a series of activities to educate all the parties on labour laws dealing with union registration.61 It was also agreed that officials from the Mexican Department of Labour and Social Welfare would meet with Sony representatives and plant and local labour authorities to further discuss the case.62
On 29 March 1996, in a letter addressed to the U.S. Secretary of Labor, the submitters in the case subsequently requested that the ministerial consultations be reopened. They based their argument on the fact that the problems raised in the original submission continued. The Secretary of Labor declined to reopen ministerial consultants but directed the NAO to conduct a follow-up review of the issues raised in the submission, and a related Mexican Supreme Court Decision, and submit a report to him. The NAO conducted the follow-up review as directed, and a report was issued on 4 December 1996.
The NAO in its follow-up report reviewed the current situation of the workers involved in the union organisation efforts as reported in Submission No. 940003 and also initiatives in Mexico to change its labour law. In the report of 4 December 1996, the NAO on the situation of the workers wrote that it had learned from a representative of one of the submitting organisations that the workers dismissed remained unemployed. With respect to the initiatives to changes in the Mexican labour law, the NAO commissioned a study to ascertain the implications of the decisions of the Mexican Supreme Court in two cases. Based on the NAO’s review by the legal experts, the follow-up report concluded:
The two Supreme Court decisions, the Principles of the New Labor Culture, and the proposal for changes to the Federal Labor Law indicate that potentially significant developments continue to take place in Mexico in a wide range of labor matters, including labor legislation, labor-management relations, labor-government relations, and within labor organisations themselves. The extent of the impact of the developments discussed above, however, remains to be seen.
22.214.171.124 Mexico NAO
Mexico NAO Submission No. 9803 (DECOSTER EGG) (August 4, 1998)63
On 4 August 1998, the Mexican Confederation of Labour (CTM) filed a submission alleging labour law violations in the United States, which was accepted by the Mexican NAO. The submission was in respect of alleged ineffective enforcement of labour law at the DeCoster Egg Farm in Turner, Maine, USA. The submission alleged that the Mexican workers at the farm did not receive the same legal protections as U.S. workers in terms of general working conditions. The petitioners alleged that failure by the U.S. government to guarantee the enforcement of laws designed to protect them has led to serious violations of their rights with respect to minimum employment standards, elimination of employment discrimination, prevention of occupational injuries and illnesses, and compensation in cases of occupational injuries and illnesses.
On 3 December 1999, the report issued by the Mexican NAO addressed matters relating to the effective enforcement of U.S. labour law based on the submission received. The petitioners alleged that the violations were in respect of five of the principles included in Annex 1 of the NAALC, namely protection of migrant workers (principle 11), minimum employment standards (principle 6), elimination of employment discrimination (principle 7), prevention of occupational injuries and illnesses (principle 9), and compensation in cases of job-related injuries and occupational illnesses (principle 10).
The NAO in its report recommended that ministerial consultations be held and stated the purpose of the consultations as follows:
After reviewing Mexican Public Communication 9803, the Mexican NAO, pursuant to Article 22 of the North American Agreement on Labor Cooperation, recommends that the Secretary of Labor and Social Welfare of Mexico request Ministerial Consultations with the Secretary of Labor of the United States. The purpose of the Ministerial Consultations will be to obtain further information on the steps that the U.S. Government is taking to ensure that Mexican migrant agricultural workers enjoy the same legal protection as its nationals; and that they enjoy the respect of their rights in matters of: minimum employment standards; elimination of employment discrimination; safety and health (prevention and compensation for job-related accidents and illnesses). [sic]
On May 18, 2000, a ministerial agreement was signed between the U.S. Labor Secretary and the Mexican Secretary of Labor and Social Welfare. Under the agreement, the U.S. Department of Labor agreed to host a public forum on June 5, 2002, in Augusta, Maine, which was co-sponsored by the State of Maine Department of Labor. Government officials, employer representatives, educators, legal counsellors, advocates, and other service providers in Maine discussed working conditions and treatment of migrant and agricultural workers in the state of Maine. Consistent with the ministerial agreement, U.S. and Mexican labour officials explored ways of promoting and protecting the rights of migrant and agricultural workers in the United States.
Mexico NAO Submission No. 9501 (SPRINT)64
On 9 February 1995, for the first time a Mexican trade union filed a complaint against the United States. The trade union—the Independent Union of Telephone Workers of the Republic of Mexico, which was working closely with the Communication Workers of America—coordinated in filing this complaint. The submitters accused the United States for failing to promote NAALC principles relating to freedom of association and the right to organise. The complaint arose as a result of the dismissal of 235 workers in the context of their campaign to organise a union by the Communication Workers of America at a Sprint Spanish language telemarketing facility in California. The submitters further claimed that Sprint’s subsequent closure of the facility’s operations was to prevent the union from being formed. The complaint also raised the issue of the slow pace of the National Labor Relations Board (NLRB) reviews and the low level of fines available under U.S. law.65
The case was the first effort to use the NAALC as a new tool to address the problems. The intention then was not only to benefit Mexican workers in protecting them from American social dumping but also to benefit American workers through public awareness of the inadequacies in the enforcement of the United States labour law.
The submitters sought the reinstatement of the 235 workers and a mandate that Sprint comply with U.S. labour laws by allowing workers to organise freely. The Sprint management denied the allegations on the ground that the closure of the facility was based solely on economic reasons and was in no way related to the union activity.