THE EVOLUTION OF LABOR PROVISIONS

THE EVOLUTION OF LABOR PROVISIONS IN U.S. FREE TRADE AGREEMENTS: LESSONS LEARNED AND REMAINING QUESTIONS EXAMINING THE DOMINICAN REPUBLIC- CENTRAL AMERICA-UNITED STATES FREE TRADE AGREEMENT (CAFTA-DR) Paula Church Albertson * INTRODUCTION The United States negotiates free trade agreements with other countries that must be approved by Congress before the U.S. can be an official party to the agreement. The debate surrounding the labor chapter of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) created a minefield that almost derailed its passage. 1 Some argued that CAFTA-DR would bring new investment that means good jobs and higher labor standards for their workers. 2 Others were certain that CAFTA-DR would * Ms. Albertson is the Deputy Division Chief, Trade Agreement Administration and Technical Cooperation (TAATC) of International Labor Affairs Bureau of the U.S. Department of Labor where she has worked since 1999. The views expressed in this Article are the personal views of the author and do not necessarily reflect the official views of ILAB or the U.S. Department of Labor. 1. Free Trade Agreement, U.S.-Cent. Am.-Dom. Rep., Aug. 5, 2004, Hein s No. KAV 7157 [hereinafter CAFTA-DR], available at http://www.ustr.gov/ trade-agreements/freetrade-agreements/cafta-dr-dominican-republic-central-america-fta/final-text; VICKY GLASS, WASH. OFFICE ON LATIN AM., DR-CAFTA AND WORKERS RIGHTS: MOVING FROM PAPER TO PRACTICE 2 (2009), available at http://www.wola.org/ media/wola_rpt_ WorkersRights_F.pdf. 2. U.S. President George W. Bush, Address in the White House Rose Garden (May 12, 2005), available at http://georgewbush-whitehouse.archives.gov/news/releases/2005/05/ 493

494 STANFORD LAW & POLICY REVIEW [Vol. 21:493 bring deteriorating trade balances, lost jobs, and worker rights violations. 3 On June 30, 2005, the Senate passed CAFTA-DR by a vote of 54 to 45. 4 In the House, the measure passed 217 in favor and 215 against. 5 How did CAFTA- DR respond to the concerns regarding labor? Was it sufficient? Is there more that trade agreements can do to improve labor standards around the world? This Article hopes to address these questions by looking at the negotiation of CAFTA-DR s labor language, examining how this language has been implemented thus far, and exploring how CAFTA-DR incorporated labor rights reporting and technical assistance. First, the Article explores the importance of congressional authorizing language that guides the United States government during its negotiations of free trade agreements. This guiding language has played a critical role in the evolution of labor standards within the context of free trade agreements (FTAs). In part because of the challenging nature of labor issues in trade negotiations, congressional authorizing language establishes a minimum bar for what the free trade agreement language should include regarding labor standards in an FTA. This language has had a serious impact and is reflected in the actual agreement text. Second, the Article looks at the CAFTA-DR s labor chapter text and how it has been implemented thus far. It notes that while the debate rages regarding FTAs effect on labor standards, many of the critical issues have yet to be tested. It concludes that it is premature to declare how effective FTA labor chapters have been. And third, the Article notes that the ideal situation for promoting internationally recognized labor standards goes beyond free trade agreements and incorporates reporting and technical assistance. These elements lead to a better understanding of the challenges to labor law enforcement and help build the technical capacity to do so. Reporting and technical assistance should be included in any analysis of labor and trade, and could be part of congressional authorizing language and the free trade agreement negotiation process. I. NEGOTIATING AUTHORITY CRITICAL TO PROGRESS This Part will look at the negotiating context for a free trade agreement, 20050512.html. 3. LABOR ADVISORY COMM. FOR TRADE NEGOTIATIONS AND TRADE POLICY, REPORT TO THE PRESIDENT, THE CONGRESS AND THE U.S. TRADE REPRESENTATIVE ON THE U.S.-CENTRAL AMERICA FREE TRADE AGREEMENT 1 (2004), available at http://ustraderep.gov/assets/ Trade_Agreements/Regional/CAFTA/CAFTA_Reports/asset_upload_file63_5935.pdf. 4. U.S. Senate Roll Call Votes, Vote Summary on Passage of the Bill S. 1307 (June 30, 2005), http://www.senate.gov/legislative/lis/roll_call_lists/ roll_call_vote_cfm.cfm?congress=109&session=1&vote=00170. 5. Final Vote Results for Roll Call 443, Vote Summary on Passage of the Bill H.R. 3045 (July 28, 2005), http://clerk.house.gov/evs/2005/roll443.xml.

2010] THE EVOLUTION OF LABOR PROVISIONS 495 specifically CAFTA-DR. First, this Part sets out the constitutional requirement that Congress authorize the executive branch to negotiate trade. It looks at how the congressional authorizing language has incorporated labor standards, and how this exact language, in turn, is reflected in the FTA language itself. Second, it briefly notes counterpart negotiating countries traditional resistance to linking the two issues, highlighting the critical role congressional language can play. A. Congressional Authorizing Language The U.S. Constitution gives Congress the power [t]o regulate Commerce with foreign Nations, and [t]o lay and collect Taxes, Duties, Imposts, and Excises. 6 And over the years, Congress has empowered the executive branch, with particular care and specific instruction, to negotiate agreements related to commerce with foreign nations. 7 In 2002, Congress passed the bipartisan Trade Promotion Authority Act (TPA) of 2002. 8 This Act sets out the overall trade negotiating objectives, which include the goal of promot[ing] respect for worker rights and the rights of children consistent with core labor standards of the [International Labor Organization]. 9 In addition, it specifically states that the principal trade negotiating objectives for labor (and environment) are: A) 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; B) 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... 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... ; C) to strengthen the capacity of United States trading partners to promote respect for core labor standards (as 10 defined in section 3813(6) of this title). The CAFTA-DR text that resulted from negotiations conducted under TPA illustrates the important role of congressional authority in shaping FTA text. 6. U.S. CONST. art. I, 8, cls. 1, 3. 7. William Clatanoff, Labor Standards in Recent U.S. Trade Agreements, 5 RICH. J. GLOBAL L. & BUS. 109, 111 (2005), available at http://law.richmond.edu/ global/archives/5.2/art2.pdf ( These are powers that Congress jealously guards, and yet occasionally delegates to the president. ). 8. In addition to CAFTA-DR, between 2002 and 2007 the U.S. signed agreements with Chile, Singapore, Australia, Morocco, Bahrain, and Oman under the TPA. 9. Trade Act of 2002, 19 U.S.C. 3802(a)(6) (2006). 10. Id. at 3802(b)(11)(A)-(C).

496 STANFORD LAW & POLICY REVIEW [Vol. 21:493 CAFTA-DR Article 16.2.1.(a) states, 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. This language should sound familiar. It highlights the link between the congressional authority under which the CAFTA-DR was negotiated and the text in the final agreement, some of which is identical to the negotiating priorities of TPA. In fact, this text is included in all the FTAs the U.S. negotiated under TPA, such as the agreements with Australia, Bahrain, Central America and the Dominican Republic, Chile, Morocco, Oman, and Singapore. 11 While FTAs with Peru, Colombia, Panama and South Korea were still pending approval, on May 10, 2007, the U.S. Congress, under a Democratic majority, worked with the Bush Administration to develop the New Trade Policy with America. The new authorizing language included four new principles: (1) that each party should adopt and maintain in its statutes, regulations, and practices, the rights as stated in the ILO Declaration and its Follow-Up ; (2) that no party can lower its labor standards; (3) that no party can use discretion regarding resources and policy priorities as justification for patterns of action or inaction; and (4) the dispute settlement processes for commercial disputes should be the same as for labor disputes. 12 The U.S. returned to renegotiate text in the Peru FTA s labor chapter, and released the new text on June 25, 2007. 13 The new language reflected the principles outlined in the new trade negotiation authority. It stated, Each Party shall adopt and maintain in its statutes and regulations, and practices thereunder, the following rights, as stated in the ILO Declaration on 11. Free Trade Agreement, U.S.-Oman, art. XVI, 2.1, Jan. 19, 2006, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/oman/asset_upload_file901_8 812.pdf; Free Trade Agreement, U.S.-Bahr., art. XV, 2.1, Sept. 14, 2004, 44 I.L.M 544, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/bahrain/ asset_upload_file73_6297.pdf; Free Trade Agreement, U.S.-Morocco, art. XVI, 2.1, June 15, 2004, 44 I.LM. 544, available at http://www.ustr.gov/sites/default/files/ uploads/agreements/fta/morocco/ asset_upload_file899_3853.pdf; Free Trade Agreement, U.S.-Austl., art. XVIII, 2.1(a), May 18, 2004, 43 I.L.M. 1248, available at http://www.ustr.gov/sites/default/files/uploads/ agreements/fta/australia/asset_upload_file148_5168.pdf; Free Trade Agreement, U.S-Chile, art. XVIII, 2.1, June 6, 2003, 42 I.L.M. 1026, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/chile/ asset_upload_file853_4012.pdf; Free Trade Agreement, U.S.-Sing., art. XVII, 2.1, May 6, 2003, 42 I.L.M. 1026, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/ singapore/asset_upload_file708_4036.pdf. 12. MARY JANE BOLLE, CONG. RESEARCH SERV., OVERVIEW OF LABOR ENFORCEMENT ISSUES IN FREE TRADE AGREEMENTS 4 (2008), available at http://assets.opencrs.com/rpts/rs22823_20080229.pdf. 13. MARY JANE BOLLE & M. ANGELES VILLARREAL, CONG. RESEARCH SERV., PERU TRADE PROMOTION AGREEMENT: LABOR ISSUES 1 (2007), available at http://www.au.af.mil/au/awc/awcgate/crs/rs22521.pdf.

2010] THE EVOLUTION OF LABOR PROVISIONS 497 Fundamental Principles and Rights at Work and its Follow-Up (1998) (ILO Declaration). 14 The Peru FTA also specifically stated, [T]he distribution of enforcement resources shall not be a reason for not complying with the provisions of this Chapter. 15 Congress could hold the latest FTA up to the mirror and again would see much of their authorizing language reflected back in the agreement s text. B. Congressional Authorizing Language Is Critical in the Context of Negotiation An FTA must be negotiated with another country, and those countries that have come under scrutiny for their labor rights practices have resisted any linking of the labor and trade agendas. At the 1996 World Trade Organization (WTO) Singapore Ministerial, developing countries voted down the U.S. proposal for a committee to study the relationship between worker rights and trade. Many nations viewed such linkage as a threat to their comparative advantage with regard to lower labor costs. 16 In 1999 in Seattle, the developed nations wanted to discuss labor standards, and the developing world viewed this as a protectionist mask, proving labor to be one of the most difficult challenges when dealing with world trade. 17 Even an effort supported by the ILO Director General that proposed linking labor standards and exports as part of a labeling program for countries complying with core labor standards was rejected in large part because of opposition from developing countries. 18 CAFTA-DR was no exception, with the Central American countries anything but eager to incorporate labor rights within the main agreement. 19 To illustrate one aspect of the FTA context, it is useful to compare free trade agreements and unilateral trade preference programs. Unilateral trade preference programs are granted from one country to another, and do not require the other country s consent. The U.S. provides trade preferences, such as lower tariffs on imports from designated developing countries. One of the major goals of these types of programs is to promote development in designated developing countries by lowering tariffs on imports from those 14. Free Trade Agreement U.S.-Peru, art. XVII, 2.1, Apr. 12, 2006, available at http://www.ustr.gov/sites/default/files/uploads/agreements/fta/peru/asset_upload_file73_ 9496.pdf. 15. Id. 3.1(b). 16. MARY JANE BOLLE, CONG. RESEARCH SERV., TRADE PROMOTION AUTHORITY (TPA)/FAST-TRACK RENEWAL: LABOR ISSUES 4 (2007), available at http://assets.opencrs.com/rpts/rl33864_20070202.pdf. 17. Editorial, A Turbulent Trade Meeting, N.Y. TIMES, Nov. 28, 1999, at A10. 18. Michael J. Trebilcock & Robert Howse, Trade Policy and Labor Standards, 14 MINN. J. GLOBAL TRADE 261, 261 (2005). 19. Marley S. Weiss, Two Steps Forward, One Step Back Or Vice Versa: Labor Rights Under Free Trade Agreements from NAFTA, through Jordan via Chile to Latin American and Beyond, 37 U.S.F. L. REV. 689, 723 (2003).

498 STANFORD LAW & POLICY REVIEW [Vol. 21:493 countries. FTAs share much in common with unilateral trade preference programs. 20 Both FTAs and unilateral trade preferences include labor standards requirements, a review process to evaluate if the country is meeting the criteria, and the possibility of linking labor rights to tariffs. FTAs, however, are negotiated between two (or more) countries. Although the negotiating countries attitudes may be evolving as far as 21 their interest and willingness to discuss labor rights in an FTA, traditionally, counterpart countries have commonly resisted attempts to link the two. The stage then, for the actual negotiations of a free trade agreement, is set the U.S. enters and labor is not on the other side s agenda. How do U.S. government (USG) negotiators approach labor rights within this paradoxical negotiating context? Why are labor rights included at all? Congressional authorizing language has played a key role in why labor rights have been incorporated into the body of FTAs, setting a minimal bar negotiators must meet. As CAFTA-DR demonstrates, negotiators have also seen that bar as the ceiling, including the text from congressional language with little additional muscle in the final FTA labor chapter text. The congressional mandate, therefore, has played a fundamental role in moving the labor and trade link forward. Whether new United States Trade Representative (USTR) leadership will change this dynamic and go beyond this mandate, or whether other countries firm opposition will continue, remains to be seen. II. TEXT AND PROCESS Once the agreement is negotiated, it is the procedures that the agreements set up and the agencies responsible for overseeing those procedures that provide the meat on the labor chapter s bones. These procedures can be divided roughly into three different phases: the receipt and review of a submission, consultations or council meetings of Labor Ministries, and dispute settlement procedures. This Part will look at each of these sections, focusing on the CAFTA-DR text. It will look at what the CAFTA-DR text established, how it may differ from other agreements, and how some critical issues of interpretation still remain ahead. 20. See, e.g., Trade Act of 1974, 19 U.S.C. 2467(4) (2006); Caribbean Basin Economic Recovery Act, 19 U.S.C. 2701-2707 (2006); Andean Trade Preference Act, 19 U.S.C. 3201-3206 (2006); The Omnibus Trade and Tariff Act of 1984, Pub. L. No. 98-573, 501, 503, 98 Stat. 3018 (1984); see also JENNIFER BAUMERT ET AL., U.S. INT L TRADE COMM N, INTERNATIONAL COOPERATION ON TRADE AND LABOR ISSUES 17 (2008) ( Generally, as defined, the labor provisions of these legislative measures cover... internationally recognized worker rights. ). 21. For a discussion of how developing countries could benefit strategically from realigning their advocacy and strategies towards lining labor standards and trade, see SANDRA POLASKI, CARNEGIE ENDOWMENT FOR INT L PEACE, TRADE AND LABOR STANDARDS, A STRATEGY FOR DEVELOPING COUNTRIES 10 (2003).

2010] THE EVOLUTION OF LABOR PROVISIONS 499 A. Receipt and Review of a Submission This Subpart examines the first phase receiving information regarding another country s possible failure to meet its labor commitments established under the CAFTA-DR. The first phase includes the receipt and review of a submission. Specifically the CAFTA-DR labor chapter, under Article 16.4.3 states: Each Party shall designate an office within its labor ministry that shall serve as a contact point with the other Parties, and with the public.... Each Party s contact point shall provide for the submission, receipt, and consideration of communications from persons of a Party on matters related to the provisions of this Chapter, and shall make such communications available to the other Parties and, as appropriate, to the public. Each Party shall review such communications, as appropriate, in accordance with domestic procedures. In a Federal Register notice on Dec. 2, 2006, the Office of Trade and Labor Affairs of the International Labor Affairs Bureau of the U.S. Labor Department (OTLA) was designated the U.S. point of contact under the labor chapters of the free trade agreements, including CAFTA-DR. As such, OTLA was mandated to receive, determine whether to accept for review, and review submissions on another Party s commitments and obligations arising under a labor chapter or the NAALC. 22 A submission has meant information received from an organization, thus far labor unions or non-governmental organizations, stating that a party to the agreement is not meeting its commitments. The Federal Register notice also provided the criteria for accepting a submission for review, established a six-month review time frame, suggested the issuing of a public report, and listed the steps for the U.S. Department of Labor to follow after the review process. The rules on paper became precedent-setting when, on April 23, 2008, OTLA received a public submission under Chapter 16 (the labor chapter) of CAFTA-DR, alleging the government of Guatemala had failed to enforce its labor laws in five separate cases. The submission, the first and only received on 23 labor issues under any FTA labor chapter, was filed by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and six Guatemalan trade unions, and alleges that the government of Guatemala failed to effectively enforce its domestic labor laws with regard to freedom of association, the right to bargain collectively, and acceptable conditions of work. On June 12, the OTLA accepted the submission for review, stating it had met 22. See Notice of Reassignment of Functions of Office of Trade Agreement Implementation to Office of Trade and Labor Affairs; Notice of Procedural Guidelines, 71 Fed. Reg. 76,691, 76,695 (Dec. 21, 2006). 23. This does not include the submissions received under the North American Agreement on Labor Cooperation, which was a side agreement to, not a chapter of, the North American Free Trade Agreement (NAFTA).

500 STANFORD LAW & POLICY REVIEW [Vol. 21:493 the criteria for acceptance. 24 During its review, OTLA received numerous legal documents from the authors as well as the Guatemalan government, reviewed Guatemalan labor law obligations, and interviewed numerous stakeholders in Guatemala during two visits. On January 16, 2009, the OTLA issued a public report reviewing the 25 allegations in the submission. The OTLA report recommended concrete steps that could be taken by the Guatemalan government to address the problems identified in the report. In addition to the recommendations, the OTLA report stated that: [T]he OTLA in consultation with the Office of the United States Trade Representative and the U.S. Department of State will reassess the situation within the next six months following publication of this report and determine whether further action is warranted, including Cooperative Labor 26 Consultations pursuant to Article 16.6.1 of the CAFTA-DR. The report also stated that OTLA will work closely with the Guatemalan government during this six-month period to address the issues raised in the report, and that the United States government had not made a decision regarding consultations yet. By including a list of concrete recommendations in its report, the OTLA Guatemala report departs from any similar previous reports written under the North American Agreement on Labor Cooperation (NAALC). The NAALC established a National Administrative Office, (NAO), which is now part of OTLA, the office designated to receive submissions under all the free trade agreement labor chapters. Since its inception, there have been thirty-four submissions received under the NAALC. The NAO reports, however, limited their recommendations to initiating or not initiating consultations. The OTLA Guatemala report, however, provided a list of recommendations for the Guatemalan government, and established a six-month period to allow the Guatemalan government to demonstrate its commitment to addressing the issues highlighted in the report. This list of recommendations is a new development in the receipt and review and report process, and is an example of how the actual implementation of the FTA language can evolve through implementation. B. Consultations and Council This Subpart examines the second part of the process established under the CAFTA-DR labor chapter the request for consultations. At the time of the writing of this Article, the U.S. government has never requested consultations 24. See 73 Fed. Reg. 34,793 (June 18, 2008). 25. OFFICE OF TRADE & LABOR AFFAIRS, U.S. DEP T OF LABOR, PUBLIC REPORT OF REVIEW OF OFFICE OF TRADE AND LABOR AFFAIRS (2009). 26. Id.

2010] THE EVOLUTION OF LABOR PROVISIONS 501 under any free trade agreement labor chapter. 27 Therefore, the following discussion regarding how the next steps might unfold is a hypothetical interpretation, based on the FTA texts. The CAFTA-DR labor chapter states that a request for consultations begins when a [p]arty presents a written request to another party s official point of contact at the Labor Ministry. Consultations would then begin promptly. Consultations require that the [p]arties shall make every attempt to arrive at a mutually satisfactory resolution of the matter, taking into account opportunities 28 for cooperation relating to the matter.... If they cannot resolve the matter through consultations, a party could then request that the [Labor Affairs] Council be convened to consider the matter by delivering a written request to the contact point of each of the other [p]arties. The Council consists of cabinet level representatives of the consulting [p]arties or their high-level designees. 29 If the parties have failed to resolve the matter within sixty days of the initial request for consultations, and the matter falls under Article 16.2.1(a), 30 the U.S. could request consultations pursuant to the dispute settlement procedures under Chapter 20 of CAFTA-DR. This is the process as established by the text; however, it has not yet been implemented. There are several aspects to the step-by-step process outlined that have yet to be clearly defined, and which could have a significant impact on the outcome. For example, must all of the steps be taken? The text references a meeting of the Council. Thus far, the Council under CAFTA-DR, consisting of Labor Ministers of the region or their designees, has met once in December 31 2008. Would all the Ministers need to meet regarding a dispute that involved 27. This does not include the submissions received the under North American Agreement on Labor Cooperation, which was a side agreement to, not a chapter of, the North American Free Trade Agreement (NAFTA). 28. CAFTA-DR, supra note 1, art. 16 ( Cooperative Labor Consultation 1) A Party may request consultations with another Party regarding any matter arising under this chapter by delivering a written request to the contact point that the other Party has designated under Article 16.4.3. 2) The consultations shall begin promptly after delivery of the request. The request shall contain information that is specific and sufficient to enable the Party receiving the request to respond. 3) The consulting Parties shall make every attempt to arrive at a mutually satisfactory resolution of the matter, taking into account opportunities for cooperation relating to the matter, and may seek advice or assistance from any person or body they deem appropriate in order to fully examine the matter at issue. ). 29. Id. ( If the consulting Parties fail to resolve the matter pursuant to paragraph 3, a consulting Party may request that the Council be convened to consider the matter by delivering a written request to the contact point of each of the other Parties. 5) The Council shall promptly convene and shall endeavor to resolve the matter, including, where appropriate, by consulting outside experts and having recourse to such procedures as good offices, conciliation, or mediation. ). 30. Id. ( 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. ). 31. BUREAU OF INT L LABOR AFFAIRS, U.S. DEP T OF LABOR, PROGRESS IN

502 STANFORD LAW & POLICY REVIEW [Vol. 21:493 one country? If all countries have to meet, one wonders if this would serve the purpose of the labor chapter or create a huge encumbrance for issues to move forward that only pertain to two countries. Another key question is who makes the final decision to request consultations? The Office of the United States Trade Representative (USTR) has had the primary responsibility for developing and coordinating the implementation of international trade policy, and it is responsible to the President and Congress for the administration of trade agreement programs. 32 Yet the U.S. Department of Labor is the point of contact under all free trade agreements labor chapters. The guidelines in the Federal Register Notice state that the OTLA may make a recommendation at any time to the Secretary of Labor as to whether the United States should request Consultations with another Party pursuant to... Article 16.6.1 of the CAFTA-DR. 33 How these roles are meted out may not matter, but their distribution could have a tremendous impact. As Human Rights Watch notes, the FTAs leave much discretion for the U.S. government regarding when to initiate the steps outlined in the FTA labor chapters, and the criteria for such a decision are subjective: OTLA... may only make nonbinding recommendations to the U.S. Secretary of Labor regarding whether cooperative consultations... are appropriate; whether a council of the parties labor ministers... should be convened in the event that the initial cooperative consultations fail; and whether the formal dispute settlement process should be initiated... the United States enjoys complete discretion in making these decisions though the specific US agency to which these decisions fall is left unclear... Such broad discretion is rooted, in part, in the language of U.S. free trade accords, which gives significant freedom to decide whether to invoke labor rights complaint and dispute settlement systems. For example, agreements establish that a party may request cooperative labor consultation.... 34 While the labor chapter s text has been signed, sealed, and delivered, the step-by-step process by which it will be implemented remains, at the writing of this Article, to be determined. C. Dispute Settlement This Subpart examines the third phase for a labor dispute that arises under CAFTA-DR the dispute settlement chapter. The CAFTA-DR labor chapter IMPLEMENTING CAPACITY-BUILDING PROVISION UNDER THE LABOR CHAPTER OF THE DOMINICAN REPUBLIC-CENTRAL AMERICA-UNITED STATES FREE TRADE AGREEMENT 5, 31 (2009). 32. 19 U.S.C. 2171(c)(1)(A) (2006). 33. Notice of Procedural Guidelines, 71 Fed. Reg. 76,691 (Dec. 21, 2006). 34. CAROL PIER, HUMAN RIGHTS WATCH, A WAY FORWARD FOR WORKERS RIGHTS IN U.S. FREE TRADE ACCORDS 17-18 (2008), available at http://www.hrw.org/sites/default/files/reports/us1008web.pdf.

2010] THE EVOLUTION OF LABOR PROVISIONS 503 establishes a link to the same dispute settlement procedures under Chapter 20 that commercial disputes can access. First, however, the dispute must climb through the review, report, consultations, and possible council meetings processes. The goal of these steps is to provide a nonpunitive way to resolve the issue. As this Subpart discusses, most will agree that in the world of diplomacy, these vehicles should be fully exhausted before opening the door to a dispute settlement process that can lead to punitive action. What happens when a party does not cooperate during these steps and the actions are not taken? The threshold for a labor case to reach dispute settlement under CAFTA-DR is that it must fall under Article 16.2.1(a). This is the only part of the agreement that can go to dispute settlement. It states, 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. How will sustained and recurring, effectively enforce, and in a manner affecting trade be defined? The definition of these terms will determine the threshold for a labor dispute. This threshold will then, in part, determine whether any case related to labor issues will be able to take advantage of this hard fought-for link to the CAFTA- DR dispute settlement chapter. 35 And who defines these terms? If a labor issue reaches an arbitral panel, who will be on the panel? The labor chapter states that the parties will establish a labor roster six months after entry into force of the agreement, and that the members will be appointed by consensus. The experts must have expertise or experience in labor law or its enforcement, international trade, or the resolution of disputes rising under international agreements.... 36 The USTR has begun its search for qualified arbiters and recently issued a Federal Register Notice as part of its search. 37 What if a person is selected with international trade experience in antidumping rather than labor expertise? While this lack of understanding about labor issues does not mean that the listener inherently would not understand the challenges surrounding alleged violations of freedom of association it could. And will the parties be able to agree on the selection of panelists, particularly if there is already a case in dispute? The selection of experts may not draw the 35. These terms are also in the more recently negotiated Peru U.S. Free Trade Agreement, which states in Article 17.3.1: (a) A Party shall not fail to effectively enforce its labor laws, including those it adopts or maintains in accordance with Article 17.2.1, through a sustained or recurring course of action or inaction, in a manner affecting trade or investment between the Parties, after the date of entry into force of this Agreement. Free Trade Agreement, U.S.-Peru, supra note 14, art. 17, 3.1 (emphasis added). Although this agreement does not limit its disputes to this clause, how this clause is defined under a CAFTA-DR dispute could affect how future disputes are viewed. 36. CAFTA-DR, supra note 1, art. 16, 7. 37. Invitation for Applications for Inclusion on the Dominican Republic-Central America-United States Free Trade Agreement Dispute Settlement Rosters, 74 Fed. Reg. 16,908 (April 13, 2009).

504 STANFORD LAW & POLICY REVIEW [Vol. 21:493 same attention as a congressional FTA vote, but issues such as who hears the case may have an important, if less noticed, impact. Experience and understanding of labor rights and the many intricacies and nuances involved in their enforcement are critical for an effective arbitration panelist. This kind of experience would allow the panel to effectively evaluate whether a country has complied with its commitments under a labor chapter. What are the criteria for someone to hear a labor dispute? What are the rules for the procedures of the arbitration? To date, no labor dispute under any of the free trade agreements has reached the USTR. Therefore, this discussion is purely hypothetical. Should a case not be resolved short of dispute resolution, the USTR must decide which cases it will pursue based on priorities. The USTR is a small operation. Entering into the dispute resolution process is a lengthy, involved, expensive process in terms of both personnel and resources. The USTR typically chooses cases to pursue based on a number of factors. These may include cases that could showcase or clarify particular issues, strengthen support of U.S. positions, and/or be cases the USTR believes it can win. Labor disputes could be more difficult to resolve than commercial disputes. 38 Many challenges lie ahead. D. Defining Success in Implementation What is particularly noteworthy is the level of debate about the effectiveness of the language negotiated under CAFTA-DR and other FTA labor chapters without any track record to substantiate the debate. While some claim the U.S. government s efforts at enforcing labor rights provisions of free trade agreements have been abysmal, 39 any conclusion, whether of success or failure, at this point in time is conjecture, based on an absence of evidence. While the focus has been on what can come under these texts, what the labor laws are, and how they relate to labor standards, no one can know how much power any of these tools holds until the process itself unfolds. Groups continue to evaluate the effectiveness of FTA labor chapters, but it is still very early in the process to know the outcomes of the existing FTA labor language, or the impact of any changes to it. Pending interpretation and implementation of existing text may have as much of an impact on the effectiveness of existing chapters as will the text of any future agreements. IV. OTHER MECHANISMS Labor chapters can focus attention on labor standards in trade partner countries as well as provide a critical lever to encourage countries to guarantee workers their fundamental labor rights. The reasons why labor rights are not 38. BOLLE, supra note 12, at 6. 39. PIER, supra note 34, at 20.

2010] THE EVOLUTION OF LABOR PROVISIONS 505 provided to workers in a country, however, go beyond the scope of what any FTA can directly address, and are often rooted in more complex and challenging issues. The underlying causes of why states fail to enforce their labor law or create effective systems are usually more complex, and more structurally entrenched, than a mere lack of will that can be overcome by the proper tariff incentive or sanction in a trade agreement. In developing countries, regulatory failure often occurs because of a lack of will by government elites to enforce labor law, resistance from business owners and managers in implementing regulations, weak civil society and unions that cannot adequately put pressure on the government to enforce and strengthen domestic law, and deep-rooted failures in regulatory capacity that include lack of skills, lack of funds, and high rates of corruption. 40 Problems with labor law enforcement usually reflect larger problems in a country that cannot be addressed exclusively through trade agreements and the threat of increased tariffs. While trade measures can send an important signal, CAFTA-DR also provides an example of the importance of addressing the issue through two other critical mechanisms: reporting and technical assistance. A. Reporting the Context in Which a Future Agreement Could Take Place During the CAFTA-DR negotiation process, several commitments were made to attempt to assess and report on the status of labor rights in the CAFTA-DR countries. Although the effectiveness of these tools has been much debated, the concept and intention are noteworthy. First, the International Labor Organization did a report on the status of labor laws in each of the CAFTA-DR countries. The ILO report attempted to provide an updated and objective study of current labour laws relating to fundamental principles and rights at work in each of these countries. 41 The ILO visited the countries and reviewed previous ILO work to look at the fundamental principles and rights contained in the eight ILO Conventions that deal with freedom of association, the right to collective bargaining, the elimination of all forms of discrimination, abolition of forced labor, and eradication of child labor. It did not look at enforcement, but at the laws. 42 The report also provides a table summarizing the legislation in each country for these different rights. Another report that sprang out of the CAFTA-DR debate is the The Labor Dimension in Central America and the Dominican Republic, Building on Progress: Strengthening Compliance and Enhancing Capacity: A Report of the 40. Kevin Kolben, Integrative Linkage: Combining Public and Private Regulatory Approaches in the Design of Trade and Labor Regimes, 48 HARV. INT L L.J. 203, 224 (2007). 41. Sally P. Paxton, Foreword to INT L LABOUR ORG., FUNDAMENTAL PRINCIPLES AND RIGHTS AT WORK: A LABOUR LAW STUDY COSTA RICA, EL SALVADOR, GUATEMALA, HONDURAS, NICARAGUA, at iii (2003). 42. Id.

506 STANFORD LAW & POLICY REVIEW [Vol. 21:493 Working Group of Vice Ministers Responsible for Trade and Labor in the Countries of Central American and the Dominican Republic, commonly known as the White Paper. 43 To create the White Paper, the Inter-American Development Bank worked with the Vice Ministers of Trade and Labor in the CAFTA-DR countries to do their own analysis of labor issues in the region, including issues of compliance. The White Paper has been criticized by some civil society groups due to limited consultations during its development, and critical issues that were omitted; however, some civil society groups are realizing that it also provides an advocacy tool reflecting commitments to which the governments can be held accountable. 44 During the negotiation of CAFTA-DR, letters were exchanged between Senator Bingaman and the U.S. Trade Representative Robert Portman, committing funds for technical assistance (addressed below) and specifically committing funds to target a program to assist in monitoring and verifying progress in the Central American and Dominican government s efforts to improve labor law enforcement and working conditions. 45 Each year, funds are set aside for the verification of White Paper recommendations. The U.S. Department of Labor is working with the ILO to track progress made on the implementation of the White Paper recommendations. Extensive consultations take place with stakeholders including NGOs, employers, and worker organizations and country implementation plans have been designed to record progress. The baseline Verification Report was published August 15, 2007, and every six months a report verifying progress made is published; the most recent was published in February 2010. 46 Pursuant to section 2102(c) of the Trade Act of 2002, the President is also required to prepare several reports to the Congress related to new free trade agreements. Among these reports are: the United States Employment Impact Review, the Labor Rights Report, and the Laws Governing Exploitative Child Labor Report. The Department of Labor, in consultation with other federal agencies, has been delegated the responsibility for preparing these three reports. Last but not least, section 403(a)(3) of the CAFTA-DR Free Trade Agreement Implementation Act requires the President to report biennially to 43. WORKING GROUP OF VICE MINISTERS RESPONSIBLE FOR TRADE AND LABOR IN THE COUNTRIES OF CENT. AM. AND THE DOM. REP., THE LABOR DIMENSION IN CENTRAL AMERICA AND THE DOMINICAN REPUBLIC, BUILDING ON PROGRESS: STRENGTHENING COMPLIANCE AND ENHANCING CAPACITY (2005), available at http://portal.oit.or.cr/index.php?option= com_staticxt&staticfile=verificacion/white_paper.pdf. 44. GLASS, supra note 1, at 10-11. 45. Letter from Robert J. Portman, U.S. Trade Representative, to Jeff Bingaman, U.S. Senator (June 28, 2005), available at http://www.govtrack.us/congress/record.xpd?id=109- s20050630-4#smonofilemx003ammx002fmmx002fmmx002fmhomemx002fmgovtrackmx002fmdat amx002fmusmx002fm109mx002fmcrmx002fms20050630-4.xmlelementm157m0m0m. 46. The reports are available at http://web.oit.or.cr/index.php?option=com_ docman&task=view_category&itemid=60&subcat=56&catid=123&limitstart=0&limit=25.

2010] THE EVOLUTION OF LABOR PROVISIONS 507 Congress on the progress made by the CAFTA-DR countries in implementing the labor chapter and the White Paper. The President delegated this responsibility to the Secretary of Labor, to be carried out in consultation with the USTR. 47 If done properly, reporting can have the power of a spotlight, focusing pressure and attention on issues that need improvement. For example, some argue that efforts to monitor labor standards in the private supply chain of apparel producers have drawn tremendous attention to problems, improved conditions in some factories and countries, and shown that sunlight is the best disinfectant. 48 Research and reporting can provide a context, charting how problems might be best addressed and monitored over time. Reports conducted by independent organizations, such as the ILO, can provide a critical look at what is and is not in place. Reports published with the imprimatur of governments can provide public commitments that can be used by civil society to hold governments accountable. A combination of the two kinds of reports may be the ideal. While these reports do not in and of themselves ensure progress on labor rights in countries where there are, or may be, free trade agreements, they can provide a useful context for the debate, and a roadmap for work that may need to be done. B. Technical Assistance In support of CAFTA-DR, the Bush Administration committed, in consultation with members of Congress, to substantial funding in the fiscal years from 2005 through 2009 for labor and environment capacity building in CAFTA-DR countries. A total of $57.34 million was appropriated to the U.S. Department of State and USAID in support of labor capacity building from fiscal years 2005 through 2007, with an additional $15 million in FY 2008, and an undetermined amount for FY 2009. 49 In addition to funding specifically dedicated to labor capacity building programs, $21.42 million of Department of Labor funds have been dedicated to child labor programs in the CAFTA-DR region. 50 Areas for labor capacity building in Central America and the Dominican Republic were identified through the White Paper of the Working Group of the Vice Ministers Responsible for Trade and Labor in the Countries of Central America and the Dominican Republic, and include the following six areas: labor law and implementation; budget and personnel needs of the labor 47. BUREAU OF INT L LABOR AFFAIRS, U.S. DEP T OF LABOR, PROGRESS IN IMPLEMENTING CAPACITY-BUILDING PROVISIONS UNDER THE LABOR CHAPTER OF THE DOM. REP.-CENTRAL AM.-U. S. FREE TRADE AGREEMENT 2 (2009). 48. Kolben, supra note 40, at 234 n.200. 49. BUREAU OF INT L LABOR AFFAIRS, U.S. DEP T OF LABOR, supra note 47, at 6, 8-11. 50. Id. at 11.

508 STANFORD LAW & POLICY REVIEW [Vol. 21:493 ministries; strengthening the judicial system for labor law; protection against discrimination in the workplace; elimination of the worst forms of child labor; and promotion of a culture of compliance. 51 Programs implemented by the U.S. Department of Labor, the U.S. Agency for International Development, and the Department of State s Bureau for Democracy, Human Rights, and Labor (State/DRL) follow the White Paper categories. The projects have funded activities such as training hundreds of labor inspectors; providing computers, mobile inspection units, and needed vehicles to Labor Ministries; making information available to millions of workers, employers, and the general public regarding labor laws through billboards, radio, and the internet (www.leylaboral.com); changing court procedures to reduce paperwork and backlog time; training workers and management about occupational safety and health hazards; and supporting union capacity through 52 mentoring and training programs regarding collective bargaining. The technical assistance has had a meaningful impact on the lives of thousands of individual workers. 53 Its impact on a macro level is more difficult to assess. The most successful projects are those that land in fertile ground, where a government or an institution is committed to the project goals before the project begins. The project provides a missing piece of information or technology, or a political boost. The challenge is to determine, or help create, that environment during the planning process. The reporting process outlined above can help to find those areas where technical assistance can have the greatest impact, or areas where there is the greatest resistance and that require additional political will. Technical assistance can provide knowledge and know-how that, when supported by political will, can have a tremendous impact on worker rights. C. Bridging a Divide An added benefit of well-targeted research and technical assistance can be that they provide a road to collaboration after divisive debate, thus promoting development and free trade. Many unions and other civil society organizations in Central America vocally opposed CAFTA-DR, marching in the streets, calling strikes, and delaying ratification. 54 Yet many technical assistance 51. WORKING GROUP OF VICE MINISTERS RESPONSIBLE FOR TRADE AND LABOR IN THE COUNTRIES OF CENT. AM. AND THE DOM. REP., supra note 43, at 14-19. 52. For more information on specific projects, see the fact sheet available at http://www.ustr.gov. 53. U.S. DEP T OF LABOR, LABOR LAW COMPLIANCE: SECURING WORKERS AND EMPLOYEES (2008). The brochure contains stories from workers that have benefited from technical assistance programs. 54. In Guatemala, demonstrations against CAFTA were so large that they forced the Guatemalan Congress to delay its CAFTA vote on ratification. Civil society groups called for a national strike and a referendum on ratification. A survey conducted in 2005 soon after the CAFTA-DR was ratified in Guatemala indicated that sixty-five percent of those surveyed

2010] THE EVOLUTION OF LABOR PROVISIONS 509 programs, born out of the passage of CAFTA-DR, are benefiting some of those same organizations. These programs can help bridge the gaps in historically divided societies that can be exacerbated during fierce debates surrounding the passage of a free trade agreement. By providing assistance to both FTA supporters and the critics, such assistance can help ensure that trade benefits reach more people part of the overall development agenda: Today there is growing recognition that the objectives of development go beyond simply an increase in GDP. We are concerned with promoting democratic, equitable, sustainable development. If that is our objective, then it is natural that we should pay particular attention to the issue of how the plight of workers changes in the course of development; and we should look not only at their incomes, but broader measures at their health and safety, and even at their democratic participation,... Workers rights should be a central focus of a development institution such as the World Bank. 55 D. Future Negotiations The money promised in the Bingaman letter expired in 2009, and no such explicit commitment to similar technical assistance or reporting programs was included during more recent FTA negotiations. In the debate over FTAs and their labor chapters, the role of reporting, assistance, and verification should be part of the discussion, or a roadmap for the negotiation of the FTA itself. Future congressional mandates (as demonstrated already in this Article, a key factor in shaping the final text of FTAs) could mandate that negotiations include an independent analysis of the strengths and weaknesses of enforcement, with the identified weaknesses addressed during the negotiations, and commitments to technical assistance funded as part of the agreement itself. 56 In addition, the agreement could establish an independent vehicle, similar to the ILO benchmarking reports, to measure counterpart government political will to help ensure technical assistance is used where it has the greatest potential to result in systemic and sustainable change. felt that the CAFTA-DR would hurt the country. MATTHEW KENNIS, IRC AMERICAS PROGRAM, DESPITE RATIFICATION, ANTI-CAFTA PROTESTS CONTINUE IN GUATEMALA 1 (2005), available at http://americas.irc-online.org/pdf/commentary/0504guatcafta.pdf. Guatemalan workers receive free legal assistance, tripartite workshops are held to discuss labor standards, and unions receive capacity building assistance as part of the CAFTA technical assistance. This does not mean that the systemic problems highlighted in the submission received under the CAFTA-DR Labor Chapter have been addressed but they are examples on an individual level of increasing dialogue in a divided society. 55. Joseph Stiglitz, Outgoing World Bank Senior Vice President and Chief Economist, Democratic Development as the Fruits of Labor (Jan. 2000), in THE REBEL WITHIN: JOSEPH STIGLITZ AND THE WORLD BANK (Ha-Joon Chang ed., 2002). 56. CENTER FOR AMERICAN PROGRESS, TRADE POLICY 12 (2007), available at http://www.americanprogress.org.