A Fast Track for Labor

At the latest Geneva meetings of the World Trade Organization and the International Labor Organization, the Clinton administration and the U.S. labor movement championed greater international scrutiny of forced labor, child labor, and other violations of fundamental workers' rights. This is only the beginning of real linkage between reciprocal open trade and the most minimal of social standards, but it is a start. Can the labor movement and the administration build on it and move toward a general trade policy that truly advances workers' rights in global trade?

Labor activists are divided on how to proceed. They were cheered by the defeat of "fast track" negotiating authority in Congress last November, which would have given the President license to negotiate a hemispheric free trade area and other such deals, subject only to an up or down congressional vote. But fast track will be back after the November elections. At a governmental summit meeting in Santiago, Chile, last April, the United States and 33 hemispheric countries resolved to complete a comprehensive Free Trade Agreement of the Americas (FTAA) by the year 2005.

Hard-line critics of free trade oppose any and all trade agreements, investment agreements, or related instruments of global economic integration. They deride attempts to add labor rights clauses, arguing that they only give fence-sitting legislators an excuse to approve trade pacts that accelerate plant closings, privatizations, and "flexibility" schemes that spiral labor standards downward. The problem with this stance is that economic integration is going forward with or without trade agreements. By 2005, the formality of an FTAA will be practically unnecessary given the pace of de facto economic integration in the Americas and the rush by many governments to implement neoliberal policies unilaterally.

Just saying no leaves social justice advocates at the margins, pure in their denunciations but impotent in changing results. Not having trade agreements might marginally slow trade and investment flows by adding a degree of risk for multinational companies and banks contemplating foreign operations and investments. But they can pay for the risk by demanding lower labor standards in host countries and by violating workers' rights to squeeze out extra profits. It makes more sense for labor rights advocates to pursue realistic proposals to add social dimensions in economic integration that can constrain such abuse. The pause in the trade policy wars provides a time for hard thinking and hard decisions.


An interesting model is NAFTA's labor side agreement, the North American Agreement on Labor Cooperation (NAALC). The original NAALC was criticized as toothless in the fast track debate. But it can be seen as a "first draft" of a labor rights measure in trade agreements. New trade negotiations with Latin American countries, especially considering Brazil's main labor federation's influence in the Mercosur trading alliance, could yield a second draft. Negotiations with Europe could bring a third, developments in the WTO and ILO a fourth, and so on in a continuing, long-range plan to evolve an effective international regime for enforcing labor rights in trade. Such a succession of incremental advances is exactly what brought the European Union's social dimension to a reasonably high level over the past 40 years.

Agreements like NAFTA make inviting targets, because they crystallize all the complaints about the corporate trade agenda. NAFTA exposes the hypocrisy of companies that promised thousands of new jobs thanks to NAFTA, then had massive layoffs. Attacking NAFTA makes for great press, blasting the companies' pro-NAFTA puffery and comparing it to the record of layoffs and plant closings since then. But with or without NAFTA, economic globalization continues. Playing "gotcha" with corporate hyperbole cannot substitute for hard analysis.

Long before NAFTA was even contemplated, Mexico began unilaterally opening its markets and privatizing state enterprises. The strategy of substituting domestic production for imports through subsidies and protectionist measures that served Mexico well for decades was exhausted in the 1980s, no longer sustainable by the domestic market alone in a country that is fundamentally poor. Long before NAFTA, labor-intensive U.S. companies moved operations to Mexico. Long before NAFTA, the Mexican maquiladora plants employed hundreds of thousands of workers in deplorable conditions. In the early 1980s, long before NAFTA, real wages in Mexico plummeted in the wake of a currency devaluation and spurred a new rush to the maquiladora.

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Rather than being a sweeping new instrument of laissez faire, NAFTA created a modest overlay of legality on a process already well underway. And it turns out that its legal obligations are not so binding after all. Requirements for Mexican trucks' access to the United States and for U.S.-based buses and package delivery service in Mexico are ignored.

Stopping trade and investment agreements does not stop trade or investment.

Industrial goods like cement, steel, and brooms, and agricultural products like pork, tomatoes, avocados, and wheat, are still hit with protectionist measures that were supposed to disappear under NAFTA. The privatization of the Mexican chemical industry has been stalled, contrary to NAFTA. Even NAFTA's intellectual property clause, often cited as an example of "teeth," has turned out to be weak and ineffective despite widespread complaints of Mexican noncompliance by U.S. copyright and trademark holders. Meanwhile, NAFTA didn't touch the deeper realities of economic integration, like cross-border migration and central bank coordination.


Stopping trade and investment agreements does not stop trade or investment. It does not prevent other countries from liberalizing their economies, opening up their markets, inviting and facilitating foreign investment, or setting up maquiladoras. Stopping trade deals does not stop U.S. companies from moving operations overseas, or threatening to move as a bargaining ploy. Nor does it stop companies or the countries that welcome them from violating workers' rights to gain an edge in trade. So the bigger challenge is devising achievable means to protect and enhance workers' rights in trade.

Workers and consumers in both developed and developing countries can gain from an open trading system based on natural comparative advantages. But trade must be tempered when it rests on artificial advantages generated by suppressing wages and violating workers' fundamental rights. Many U.S. labor rights defenders argue that we should act unilaterally, judging for ourselves, under U.S. law, whether foreign trade partners respect workers' rights. If they don't, we should impose our own trade sanctions. We should impose retaliatory tariffs, or even ban imports or block World Bank loans, when workers' rights are violated.

As a prod for dialogue on a labor rights-trade linkage, unilateral action by the United States is vital. Sometimes we cannot wait for Prime Minister Mahathir of Malaysia and others who argue that labor rights are a Western imperialist concept to concede on workers' rights in trade. We have to drive concessions by being willing to act alone. But the United States should always invite multilateral solutions with trading partners willing to engage issues of labor rights in trade negotiations.

A feasible, step-by-step strategy for labor rights in trade could win congressional approval in a new fast track bill from liberal Democrats and moderate Republicans -- the same coalition that stopped fast track last November. Just as important, an incremental approach on labor rights allows the Clinton administration to actually obtain a labor rights provision in an FTAA or other agreements. It allows us to engage other countries from a standpoint of mutual interest, not from a standpoint of arrogant U.S. demands that they come up to our supposedly high labor standards.

Indeed, labor rights abuses do not only arise in developing countries. They exist here in the United States too. Mexican, Canadian, and European workers recoil at our right-to-work and permanent striker replacement laws, and the apparently free hand for employers to fire workers who try to organize. Rampant sweatshops and migrant worker mistreatment also run up against international fair labor standards. These features in U.S. labor law and practice -- and lower U.S. wages, too -- attract runaway shops from other developed economies, like Canada's Northern Telecom in Tennessee and Texas, or Germany's BMW and Mercedes in South Carolina and Alabama. So it's not enough that other countries come up to U.S. standards as a condition of entry to the U.S. market. International norms can also raise American standards.


An incremental labor rights approach brings us back to NAFTA's much vilified labor side agreement. During the 1997 fast track debate, critics blasted it as weak for failing to reinstate workers, recognize unions, and sanction companies in the handful of cases brought under the NAALC before then. But they failed to give it credit for breaking ground in a trade-labor linkage by promoting cross-border labor solidarity, mobilizing public opinion, and pressuring companies and governments into actually changing conditions on the ground.

The NAALC sets forth 11 "labor principles" on which the countries commit themselves to effective labor law enforcement. The principles cover labor organizing, collective bargaining, and the right to strike; nondiscrimination and equal pay, prison labor, workers' compensation, and migrant workers' protection; and child labor, minimum wages, and occupational safety and health. These matters include, but also range far beyond, the four-point "core labor rights" often invoked by international labor rights proponents and recently endorsed by the ILO (covering organizing and bargaining, forced labor, child labor, and discrimination).

The agreement then provides an accessible system of cross-border complaints by private parties to scrutinize a country's performance in enforcing its labor law. It sets up a process of public hearings and reports by each other's departments of labor, consultations among ministers of labor, evaluations by nongovernmental committees of experts, and independent arbitration -- with potential trade sanctions -- in matters of child labor, minimum wage, and occupational safety and health.

Instead of devising new epithets, the challenge for labor rights advocates is to exploit the NAALC for creative uses in strategic organizing and cross-border coalition building, thanks to the array of opportunities for public intervention in the process it sets up. Indeed, there are many signs that NAFTA's labor side agreement is starting to get some traction in dealing with workers' rights in trade. Here are some examples:

  • A widely publicized NAALC complaint over pregnancy testing by U.S. multinational companies in Mexico's maquiladora factory zone along the border has already caused several companies to announce an end to the policy. The case is likely to yield the first-ever independent evaluation committee under the NAALC, where a three-person group of nongovernment experts (one from each country) will compare enforcement of pregnancy discrimination and maternity leave policies in the three countries. The committee's recommendations are nonbinding, but they will force a public debate and press governments and employers to respond to the independent experts' report and recommendations.
  • In May, a coalition of Mexican trade unions and farmworker organizations filed a wide-ranging complaint alleging failure of U.S. labor law to protect workers' rights in the Washington State apple industry. The complaint cites the lack of legal protection for farmworker union organizing and bargaining rights, discrimination against migrant workers, widespread health and safety violations, budget cuts in U.S. enforcement agencies like the National Labor Relations Board and the Occupational Safety and Health Administration, and employers' use of threats and intimidation in recent union representation elections at two major apple-packing and apple-shipping plants. With health and safety a key element, the complaint could provide the first arbitration under the NAALC with a possibility of trade sanctions against U.S. agricultural companies that export to Mexico and Canada.
  • In a late 1997 case, state labor authorities in Mexico at first refused to recognize the election victory of an independent union in a maquiladora auto parts plant named Han Young, a Hyundai supplier. A strong, cross-border campaign on the NAALC complaint pressured Hyundai, Han Young, and the government to reverse course and recognize the independent union. The international support campaign continues as workers struggle for a contract.
  • In another recent case, strong-arm tactics by an incumbent government-controlled oficialista union blocked an independent union from winning bargaining rights at an auto parts plant near Mexico City owned by the Connecticut-based Echlin Inc. The resulting NAALC complaint became a key factor in a multinational, multi-union corporate campaign to achieve union organizing and bargaining goals at Echlin sites throughout North America.
  • Heightened international scrutiny of Mexico's tightly run, corporatist labor relations system in several NAALC cases has increased the influence of the independent union sector, which initiated several complaints and in November 1997 formed a new, autonomous labor federation, the National Workers Union (Unión Nacional de Trabajadores -- UNT).
  • A committee of independent experts named by the Mexican government to review union registration and recognition rules in response to a NAALC complaint involving the Sony Corporation surprised everyone by calling for an end to government control of the registration process. Such measures are now included in labor law reform proposals from the new, opposition-led Congress in Mexico.
  • In Canada, the conservative provincial government of Alberta backed off a 1996 plan to privatize occupational safety and health enforcement when labor advocates announced plans to file a NAALC complaint arguing that the government was abdicating its enforcement of labor laws. Unionists credited the threatened NAALC complaint as a decisive factor in the move.
  • Although it was lost under U.S. domestic law, a NAALC complaint involving a Sprint plant closing during a union organizing effort provided an international platform for a corporate campaign among U.S., Mexican, and European telephone workers unions. They pressured the company through public hearings, media campaigns, and challenges to Sprint's bid for mergers and joint ventures in other countries.

The real potential value of the NAALC lies both in these broad knowledge-building, consciousness-raising, coalition-forming effects and in its use as a specific instrument of international scrutiny, public pressure, and embarrassment against companies and governments that violate NAALC principles. Of course, labor rights advocates should hardly be content with the NAALC as it now stands. On the contrary, the NAALC contains several flaws that need correction. All 11 labor principles, for example, not just 3 of them, should be susceptible to the full range of review, consultation, evaluation, and arbitration treatments. A refashioned NAALC could also require a parallel code of conduct making companies, not just governments, accountable for how workers' rights are respected in countries party to a trade agreement.

Under such a "NAALC-plus" formula to improve the social dimension of trade agreements, targeted trade sanctions could be aimed at companies or sectors found to be repeat violators of domestic labor laws. Parent corporations could be made liable for their affiliates' violations of workers' rights under domestic labor laws.

A fast track trade bill incorporating such a "NAALC-plus" program is a realistic means of advancing workers' rights in trade agreements. Independent Mexican unionists credit the NAALC with providing an international forum for their complaints, where before they faced a stone wall domestically.

Whether trade is "free" or conditional, it requires ground rules.

Among trade unionists in Brazil, Argentina, and other Mercosur countries, the NAALC and its complaint mechanisms are regarded hopefully as a model for achieving labor rights in Mercosur, which thus far has only a consultative labor clause with no complaint system.


Whether trade is "free" or conditional, it requires ground rules. Even traditional free traders recognize the need for intellectual property protections, anti-dumping provisions, and reciprocal rules of market access. The complex part of the story is not whether to add labor standards to these rules; that is a straight political choice. The hard part is devising a combination of domestic and international measures to promote the conditions and rules we seek with negotiating partners. Immediate demands for uniform labor standards and a supranational tribunal to enforce them by overruling domestic authorities is a formula for halting, not advancing, progress on a labor rights-trade linkage.

A full-bore attack on NAFTA and the NAALC could perhaps stop fast track and trade agreements in the short run. This could provide a night's worth of celebration, but when we wake up in the morning, wages will still be low in developing countries, companies will still be relocating plants and threatening to relocate, and workers' rights will still be violated both in the United States and abroad -- only with no international scrutiny on labor rights. The alternative is to build measured progress into a new fast track bill. Of course workers and their unions must be ready to again kill a fast track bill that fails to move forward on a labor rights-trade linkage. But they should also be willing to support even a modest improvement in what is really a long struggle to protect workers' rights in international trade.

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