[Excerpt] Labor provisions in free trade agreements (FTAs)—both in the U.S. and globally—were first included in the North American Agreement on Labor Cooperation (NAALC), the side agreement to the 1994 North American Free Trade Agreement (NAFTA). Since then provisions have evolved from commitments not just to enforce a country’s own domestic labor laws, but also to adopt and enforce core labor principles of the International Labor Organization (ILO). As mandated by Congress through trade promotion authority (TPA), recent U.S. FTAs also subject labor chapters to the same dispute settlement procedures as all other obligations. Some Members view strong worker rights provisions in U.S. FTAs as an important issue and they have raised concerns over FTA partner compliance with labor commitments and the U.S. record of enforcement. These issues were a part of the debate over the Trans-Pacific Partnership (TPP) and in the NAFTA renegotiation

Cimino-Isaacs, Catherine D

English

[Excerpt] Labor provisions in free trade agreements (FTAs)—both in the U.S. and globally—were first included in the North American Agreement on Labor Cooperation (NAALC), the side agreement to the 1994 North American Free Trade Agreement (NAFTA). Since then provisions have evolved from commitments not just to enforce a country’s own domestic labor laws, but also to adopt and enforce core labor principles of the International Labor Organization (ILO). As mandated by Congress through trade promotion authority (TPA), recent U.S. FTAs also subject labor chapters to the same dispute settlement procedures as all other obligations. Some Members view strong worker rights provisions in U.S. FTAs as an important issue and they have raised concerns over FTA partner compliance with labor commitments and the U.S. record of enforcement. These issues were a part of the debate over the Trans-Pacific Partnership (TPP) and in the NAFTA renegotiation.CRS_IF_Labor_enforcement_in_FTA.pdf: 32 downloads, before Oct. 1, 2020

Cimino-Isaacs, Catherine D.

eCommons (Cornell Univ.)

Labor Enforcement Issues in U.S. FTAs

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Federal Publications Key Workplace Documents 
9-6-2018 
Labor Enforcement Issues in U.S. FTAs 
Catherine D. Cimino-Isaacs 
Congressional Research Service 
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Labor Enforcement Issues in U.S. FTAs 
Abstract 
[Excerpt] Labor provisions in free trade agreements (FTAs)—both in the U.S. and globally—were first 
included in the North American Agreement on Labor Cooperation (NAALC), the side agreement to the 
1994 North American Free Trade Agreement (NAFTA). Since then provisions have evolved from 
commitments not just to enforce a country’s own domestic labor laws, but also to adopt and enforce core 
labor principles of the International Labor Organization (ILO). As mandated by Congress through trade 
promotion authority (TPA), recent U.S. FTAs also subject labor chapters to the same dispute settlement 
procedures as all other obligations. Some Members view strong worker rights provisions in U.S. FTAs as 
an important issue and they have raised concerns over FTA partner compliance with labor commitments 
and the U.S. record of enforcement. These issues were a part of the debate over the Trans-Pacific 
Partnership (TPP) and in the NAFTA renegotiation. 
Keywords 
free trade agreements, FTAs, labor issues, enforcement 
Comments 
Suggested Citation 
Cimino-Isaacs, C. D. (2018). Labor enforcement issues in U.S. FTAs (CRS In Focus IFI0972). Washington, 
D.C.: Congressional Research Service. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/key_workplace/2094 
www.crs.gov  |  7-5700 
 
 
 
 
 
September 7, 2018
Labor Enforcement Issues in U.S. FTAs
Background 
Labor provisions in free trade agreements (FTAs)—both in 
the U.S. and globally—were first included in the North 
American Agreement on Labor Cooperation (NAALC), the 
side agreement to the 1994 North American Free Trade 
Agreement (NAFTA). Since then provisions have evolved 
from commitments not just to enforce a country’s own 
domestic labor laws, but also to adopt and enforce core 
labor principles of the International Labor Organization 
(ILO). As mandated by Congress through trade promotion 
authority (TPA), recent U.S. FTAs also subject labor 
chapters to the same dispute settlement procedures as all 
other obligations. Some Members view strong worker rights 
provisions in U.S. FTAs as an important issue and they 
have raised concerns over FTA partner compliance with 
labor commitments and the U.S. record of enforcement. 
These issues were a part of the debate over the Trans-
Pacific Partnership (TPP) and in the NAFTA renegotiation. 
Labor standards are not part of World Trade Organization 
(WTO) rules; in 1996, members reaffirmed the ILO as the 
competent body to deal with labor issues, while denouncing 
the “use of labor standards for protectionist purposes.” 
Limited progress at the WTO led several countries to 
include labor commitments in FTAs. Some countries, 
including the U.S., also include worker rights as eligibility 
criteria for developing countries to receive unilateral trade 
preferences, such as the Generalized System of Preferences. 
U.S. FTAs have set precedents both in terms of the scope 
and enforceability of labor provisions. An ILO report found 
as of 2016, 77 out of 267 FTAs globally included labor 
provisions, compared to 21 in 2005. Unlike U.S. practice, 
the majority of agreements do not subject labor provisions 
to dispute settlement. Most provide a framework for 
dialogue, capacity building, and monitoring, rather than link 
violations to economic consequences, such as trade 
sanctions. In cases where dispute settlement is applicable, 
such mechanisms have been rarely invoked; countries 
largely aim to solve disputes via cooperative consultations. 
Enforcement Mechanisms in U.S. FTAs 
Complaints over U.S. FTA partners’ compliance with labor 
commitments have been brought under five FTA. Among 
these agreements, the provisions subject to dispute 
resolution, procedures, and remedies may differ: 
 NAALC contains 11 “principles” on worker rights, 
subject to separate dispute settlement procedures from 
the main NAFTA text. NAALC aims to settle 
complaints regarding labor enforcement primarily via 
dialogue and consultations, through the national 
administrative offices and at the ministerial level. If 
consultations are unable to resolve a complaint, certain 
issues can be referred to other mechanisms. The full 
spectrum of dispute procedures, including an arbitral 
panel and limited monetary penalties, applies to 
allegations involving three of the 11 principles: a 
“persistent pattern of failure” to enforce “occupational 
safety and health, child labor or minimum wage 
technical labor standards,” where the matter is trade-
related and covered by mutually recognized labor laws. 
Other issues, such as freedom of association and the 
right to organize are limited to ministerial consultations. 
 Dominican Republic-Central America FTA 
(CAFTA-DR) and U.S.-Bahrain FTA labor chapters 
include one provision subject to enforcement—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.” Procedures 
related to labor disputes may include limits on monetary 
penalties. Creation of a labor cooperation mechanism, in 
addition to a capacity building mechanism and labor 
affairs council in the case of CAFTA-DR, were intended 
to oversee review and implementation of the labor 
obligations. CAFTA-DR was the first U.S. FTA to 
include measures in support of labor capacity building. 
 U.S.-Peru and U.S.-Colombia FTAs labor chapters 
reflect provisions required by the “May 10th 
Agreement,” a 2007 bipartisan deal between 
congressional leadership and the Bush Administration. 
The agreement called for: (1) an additional enforceable 
commitment that FTA parties adopt and maintain core 
labor principles of the 1998 ILO Declaration; and (2) the 
same dispute settlement procedures and remedies, 
including potential recourse to trade sanctions, for FTA 
labor provisions as applied to other obligations. A party 
alleging a violation of the provision on ILO 
commitments must demonstrate that failure to adopt or 
maintain ILO principles has been “in a manner affecting 
trade or investment.” A labor action plan was negotiated 
with Colombia, but not subject to dispute settlement. 
Summary of U.S. Labor Disputes 
The Office of Trade and Labor Affairs (OTLA) within the 
U.S. Department of Labor (DOL) receives and reviews 
complaints (termed “submissions”) of alleged violations of 
FTA labor commitments. The DOL consults and 
coordinates with the U.S. Trade Representative (USTR) and 
State Department on labor enforcement issues. Per OTLA, 
allegations in a labor submission must “raise issues relevant 
to the labor provisions in the NAALC or FTA and illustrate 
a country’s failure to comply with its obligations.” If the 
submission is accepted, OTLA undertakes a review and 
issues a public report on its findings, with recommendations 
to the FTA partner to address concerns. OTLA may also 
recommend further actions, including that the U.S. request 
bilateral consultations—if these are unsuccessful, dispute 
settlement may be invoked in certain cases. 
Labor Enforcement Issues in U.S. FTAs 
www.crs.gov  |  7-5700 
Under NAALC, OTLA has received more than 20 
submissions. It has accepted and issued reviews for 12, with 
one under review; all involved Mexico (Table 1). Among 
U.S. FTAs with labor chapters, the OTLA has issued seven 
reviews involving six countries. The Guatemala dispute 
involved the first formal consultations requested by the 
U.S., although submissions under other U.S. FTAs have 
resulted in ministerial or informal consultations. It is also 
the only case to have proceeded through dispute settlement.  
Table 1. Labor submissions reviewed by OTLA 
Source: U.S. Department of Labor. 
Guatemala Labor Dispute 
In April 2008, the AFL-CIO and six Guatemalan labor 
unions filed a complaint alleging that Guatemala failed to 
effectively enforce its labor laws with respect to freedom of 
association, rights to organize and bargain collectively, and 
acceptable conditions of work. The OTLA report in January 
2009 raised several concerns and recommendations. The 
U.S. initiated consultations in 2010, amid concerns 
Guatemala had “not undertaken effective steps to correct 
systemic failures” in labor law enforcement. In August 
2011, the U.S. requested establishment of an arbitral panel. 
It was suspended while the two sides negotiated an 18-point 
labor enforcement plan in April 2013. After Guatemala 
allegedly failed to implement the plan, the panel resumed in 
2014 and issued its decision in June 2017. It found, while 
Guatemala failed to enforce certain laws, the evidence did 
not prove it was “sustained or recurring” and “in a manner 
affecting trade,” and thus did not violate FTA provisions. 
Issues for Congress  
The enforcement of labor provisions has been scrutinized 
by some Members of Congress and labor groups as “slow 
and cumbersome,” and relying “on the political will of 
governments.” They call for greater monitoring and 
oversight of labor practices. Other analysts argue that the 
debate and scrutiny over labor provisions in FTAs, coupled 
with robust consultative mechanisms, have led to greater 
cooperation and helped countries to improve standards. 
U.S. FTA Partner Compliance 
There is a broad debate over the extent to which countries  
comply with labor provisions and the most effective 
approaches to improve compliance. In a 2014 review, the 
U.S. Government Accountability Office (GAO) concluded 
U.S. FTA partners had taken several steps to improve labor 
rights pursuant to FTA obligations; at the same time, some 
concerns were raised over gaps in protections, attributed to 
lack of enforcement capacity and limited public awareness 
of petition processes. Other observers point to the success 
of FTAs in creating new avenues for cooperation on trade-
related labor issues. More broadly, some question whether 
FTAs are appropriate or the most effective vehicles for 
addressing the crosscutting issue of worker rights. Most 
experts agree technical assistance and capacity building are 
critical tools. Among U.S. agencies providing trade 
capacity building, an estimated 40% of the funding went to 
labor issues in FY2016.  
U.S. Track Record of Enforcement 
Some U.S. stakeholders contest the outcome of the dispute 
with Guatemala and question whether FTA dispute 
provisions require reforms. Critics view the number of 
petitions accepted for review, review delays, and only one 
case processed through dispute settlement, as shortcomings 
in U.S. practice. Some experts view the first labor dispute 
as an important precedent and evidence that trade-related 
labor issues are taken seriously by the U.S. government.  
Labor Chapters in U.S. FTAs  
TPP: A New Template? TPP was widely viewed as setting 
new precedents for U.S. FTA labor chapters. Notably, to 
address enforcement concerns, the U.S. had negotiated 
three bilateral labor plans, subject to greater monitoring and 
dispute settlement for the first time. While the U.S. is no 
longer a member, USTR indicated TPP may serve as a 
baseline for proposals in future FTAs, including NAFTA.  
NAFTA Renegotiation. Strong labor provisions are seen as 
a key factor for securing Democratic congressional support 
for a revamped NAFTA. Some Members have called for 
major improvements to labor practices in Mexico, such as 
ending use of so-called “protection contracts.” Mexico has 
expressed it is open to labor standards as agreed in TPP, but 
has resisted any supplemental labor plan. USTR indicated 
NAFTA may include adjustments to FTA language that led 
to the U.S. loss against Guatemala. On August 27, 2018, the 
U.S. and Mexico announced a preliminary agreement on 
bilateral issues, with broad outlines of a labor chapter. It 
appears to reflect key components of TPP and has an annex 
with Mexican commitments to take legislative action to 
protect the right to collective bargaining. Higher-wage labor 
is also a new factor in rules of origin applied to auto trade.   
U.S.-Colombia FTA up Next? U.S. and Colombian trade 
officials met recently to review FTA implementation, with 
a view to potentially “modernize” it. Worker rights and 
unresolved issues from the OTLA report were discussed.  
For more info, see CRS In Focus IF10046, Worker Rights 
Provisions in Free Trade Agreements (FTAs) and In Focus 
IF10645, Dispute Settlement in U.S. Trade Agreements. 
Cathleen D. Cimino-Isaacs, cciminoisaacs@crs.loc.gov, 
7-1173 
IF10972 
Country  Filed Petitions  Status  
Mexico  1994- 
2015 
13 * 1 case under review;  
* 11 reports issued; 8 
ministerial agreements 
Guatemala 2008 1 * Panel decision in 2017 
Peru  2010;  
2015 
2 * Reports issued in 2012 
and 2016  
Bahrain  2011 1 * Consultations in 2014 
Dominican 
Republic  
2011 1 * Report issued in 2013 
Honduras 2012 1 * Monitoring and action 
plan adopted in 2015  
Colombia 2016 1 * Report issued and 
consultations with contact 
points held in 2017 


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