Article | Trade · Global Worker Rights

U.S. Trade Policy Fails Workers

Nine years after workers in the United States and Guatemala joined forces to challenge the failure of the Guatemalan government to abide by the labor chapter of the U.S.-Dominican Republic-Central America Free Trade Agreement, we now have yet more proof that these labor provisions simply do not work. A three-arbitrator panel concluded that Guatemala is in compliance with its labor obligations despite an abysmal labor record, including violence against trade unionists and rampant failure to enforce even the most basic labor protections.

Meanwhile, employers in Guatemala routinely fire and intimidate workers when they attempt to form a union, refuse to bargain in good faith and fail to pay workers what they are owed. For example, three trade unionists were assassinated last year. Workers at the metal company Ternium have been trying to negotiate a contract since 2013, and the employer has refused to come to the table. Bimbo fired 150 workers for union membership and has simply not complied with a court order mandating reinstatement.

The panel’s decision flies in the face of common sense. Guatemala’s failure to protect its workers and enforce its own laws is apparent to nearly everyone except the three arbitrators on the panel. Consider:

This decision drives home the fact that U.S. trade deals do not protect workers. In truth, this failure is by design—labor chapters were not meant to work efficiently or effectively. The much-touted "May 10" deal, which was supposed to improve and strengthen labor chapters in a handful of trade deals, repeats and incorporates many of the failures of CAFTA. For example, CAFTA and "May 10" labor chapters each include the following shortcomings:

Additional Requirements: CAFTA’s labor chapter obligates each party to "effectively enforce its labor laws." However, unlike other chapters, which cover rights that benefit multinational corporations—such as investment—there are additional hurdles to bringing a labor claim that make it difficult to succeed.

  • Sustained or Recurring: For a labor case, the complaint must demonstrate not only that a government is failing to effectively enforce its own labor laws, but that it is doing so through "a sustained or recurring course of action or inaction." The agreement does not define "sustained or recurring," leaving panels to create their own standard. Even though there were multiple documented cases presented where Guatemala did not take action against flagrant labor rights violations, the panel decided this was insufficient. Requiring an excessive amount of documented cases is completely unrealistic when workers have given up hope that they will achieve justice through formal processes. The only reason to include the requirement in the labor chapter is to put a hurdle between workers and their rights. This decision shows just how high a hurdle that is. 
  • Manner Affecting Trade: Under CAFTA, complaining parties must demonstrate that labor violations occur "in a manner affecting trade." The "May 10" deal modified that to "in a manner affecting trade or investment." In both cases, this is a hurdle that most other trade obligations are not saddled with. If a trading country does nothing when workers are not paid what they are owed or labor in unsafe conditions; or are fired, threatened, harassed and even killed when they try to organize to address workplace issues; it artificially drives down the cost of labor. Failure to respond to basic violations benefits employers, who do not have to play by the rules and thereby can price their goods or services at below market rates. This gives them an unfair advantage over goods and services produced under fair and legal labor conditions. The labor chapters in trade agreements should prevent this dynamic; it is why working people fought to have labor provisions included. Yet workers have to prove this affirmatively—a hurdle not placed in front of companies seeking to remedy violations of the financial services or other chapters of the agreement.

Lack of Deadlines: Neither CAFTA nor the "May 10" provisions include mandatory deadlines to ensure that an unresolved labor complaint moves efficiently from the initial public submission toward resolution in a timely manner. As in this case, governments can and do sit on complaints for years. Meanwhile, evidence spoils, witnesses disappear and petitioners lose hope.

Guatemalan and U.S. workers submitted their petition on April 23, 2008, during the George W. Bush administration. The final panel decision was published on June 26, 2017, more than nine years later. The legal maxim "justice delayed is justice denied" is especially fitting here. Even if the United States prevailed in the case, any changes in Guatemalan labor policy would come far too late for the workers who have lost not only their jobs, but in some cases their lives, in the struggle to simply exercise their rights.

Enforcement Is Wholly Discretionary: A related problem is the lack of any requirement to engage in labor enforcement at all. Under both CAFTA and "May 10," there are no mechanism to ensure that submissions receive action, timely or otherwise. Parties "may" request consultations and "may" proceed to dispute settlement but need not do so. As a result, labor issues are only enforced to the extent a government feels like enforcing them. Right now, there are five open labor rights cases under non-NAFTA trade agreements:

  • Bahrain: Filed April 21, 2011 (six-plus years).
  • Dominican Republic: Filed Dec. 22, 2011 (five-plus years).
  • Honduras: Filed March 26, 2012 (five-plus years).
  • Peru: Filed July 23, 2015 (one-plus years).
  • Colombia: Filed May 16, 2016 (One-plus years).

Of the 39 petitions regarding labor rights cases under NAFTA, nine were declined outright and three remain pending (one filed in 2008 and two filed in 2011). The remainder were closed without fully addressing the violations—leaving inadequate laws and enforcement regimes in place.

The AFL-CIO has repeatedly recommended replacing the word "may" with the word "shall." Requiring countries to move to the next enforcement step if a case has not been resolved would ensure that vulnerable workers no longer fall into trade purgatory, forever waiting for a foreign government to act on their behalf. Removing the unfettered discretion to ignore cases would ensure resolution of cases before they go stale.

Violence, Intimidation and Impunity Are Not Identified as Violations of the Labor Chapter: Neither CAFTA nor the "May 10" standard identify the use of threats or force against workers to prevent the exercise of labor rights as a violation of that underlying right.

Violence is a primary reason that Guatemala’s labor laws are not "effectively enforced," so this shortcoming is particularly critical and tragic in this case. The government allows threats and violence against trade unionists to occur without conducting meaningful investigations or prosecutions. This creates a climate of impunity, where workers are afraid to speak out and employers are given tacit permission to violate labor laws. Even under the "May 10" standard, the U.S. government largely ignored the violence issue in its preliminary report on the labor petition against Colombia. In fact, a government official told the AFL-CIO that even murder of union activists does not constitute a violation of a country’s labor obligations. Until our trade agreements make clear that threats and violence to intimidate workers is a trade violation, promises about protecting labor rights are not worth the paper they are written on.

The AFL-CIO, along with its affiliates and allies, has developed a labor chapter for NAFTA that will turn labor promises from marketing campaign to reality. Read these new ideas.

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