Professor Keith Ewing - Bilateral trade agreements and labour standards: initiatives from the US

Introduction
The debate about the social clause and the WTO has been pushed to the margins. But the link between labour standards and trade has not gone away, and is beginning to take a new form. An important recent development is the emergence of labour chapters in bilateral trade agreements to which the United States is a party. Agreements have been concluded with Jordan, Singapore and Chile, and discussions are underway for an agreement with Australia, which is considered elsewhere in this issue. There is also talk of further agreements with other countries including Thailand.

Predictably these agreements come in a standard form, the terms dictated by the Imperial power. And just as predictably, they are being used in a vindictive way. Many countries want access to American markets, but it seems that they have to co-operate diplomatically and militarily to enjoy this privilege. The signing of the US – Chile agreement was postponed because Chile is to be punished for opposing the Americans during the recent invasion of Iraq. New Zealand is not to be invited to take part in the free trade discussions with Australia because Helen Clarke was critical of the Americans.

Building on NAFTA
These agreements represent a turning point in US free trade practice. There are of course other free trade agreements which deal with labour rights, as in the NAFTA side agreement. But the NAFTA agreements were significantly different from the new generation of agreements. It is true that under NAFTA the parties are encouraged to develop their labour laws to a high standard of labour protection. It is also true that under NAFTA the parties commit themselves to a number of labour principles, though these are largely aspirational.

These NAFTA principles are wide ranging and cover matters such as freedom of association, the right to bargain collectively and the right to strike. But there is no external reference point by which these standards can be measured, and no express reference to the ILO. This is perhaps understandable in the context of agreements concluded before the ILO Declaration of 1998, given the fact that many of the international treaties embracing these labour principles had not been ratified by the NAFTA signatories.
Apart from these aspirational measures, NAFTA also has an obligatory part. But this is prefaced by a recognition of the right of the parties to set their own labour standards. The obligatory part is a duty to ensure that these latter standards are enforced, ‘through appropriate government action’. That is to say there is a duty on each country to ensure that legal principles are translated into practice. For this purpose NAFTA supervisory procedure and a dispute resolution procedure have been created, with a number of complaints about non compliance having been made.

A new generation of free trade agreements
The new agreements appear to adopt a much tougher tone. What is significant about these new agreements is that it will no longer be enough for the parties only to comply with their own labour standards. It will be necessary to go a step further. Take for example the US/Singapore Agreement (but the Chile one is identical). By Chapter 17, this provides that the parties to the Agreement reaffirm their obligations as members of the ILO, and the commitments which they have made in relation to the ILO’s Declaration on Fundamental Principles and Rights at Work of 1998.

But there is not just an introduction of an external reference point to determine the substance of labour standards. In place of the vague objectives in NAFTA, there are now harder obligations to ‘strive to ensure that such labour principles and the internationally recognised rights set forth in Article 17.7 are recognised and protected by domestic law’. And although the right of each party to establish its own labour standards is preserved, each party now undertakes to ensure that ‘its laws provide for labor standards consistent with the internationally recognised labor rights set forth in Article 17.7’.

So what does Article 17.7 provide? Predictably perhaps it deals with freedom of association, the right to organise and bargain collectively, the prohibition of forced or compulsory labour, and the protection of children and young people. But curiously it does not deal with discrimination, which is the fourth of the great principles in the ILO Declaration, though it does deal with ‘acceptable conditions of work’. This is defined to mean minimum wages, working time and safety and health at work. The duty to respect these rights is reinforced by an injunction not to depart from them to encourage trade.

The paradox of US free trade agreements
The development of the labour rights agenda in this way is as paradoxical as it is fascinating. The most obvious paradox is that these agreements are being negotiated and signed by the Bush administration, which has not hitherto been known for its warm support of workers’ rights far less trade union rights. Admittedly the first of the present crop of agreements (US/Jordan) was the work of the Clinton administration which perhaps could be said to be moved to some extent by human rights concerns. But it is unlikely that such a charge could be made against Bush under whom the policy expands.

But the growing sophistication of these agreements on the labour rights issue is paradoxical for another reason. The United States has ratified only two of the eight core conventions which underpin the ILO Declaration of 1998, and they have one of the lowest levels of ratification (14) of all ILO conventions. These do not include any of the freedom of association conventions, nor indeed do they include anything of significance among the ‘acceptable conditions of work’ conventions. The USA has not ratified any of the main Conventions dealing with hours of work, safety and health, or minimum wages.

But although the USA has a poor record of ratification of conventions, it is subject to ILO scrutiny at least on the right to organise, the right to bargain collectively and the right to strike. This is because as a member of the ILO it is subject to the jurisdiction of the Freedom of Association Committee to which complaints may be made about the violation of the freedom of association principles. Yet despite its commitment to these principles in the new bilateral trade agreements, the United States has been found to have breached them in a number of key respects in recent years. A third paradox.

The United States and freedom of association
Several major concerns have been raised with the Americans on freedom of association. This is notwithstanding the protection of the right to freedom of association in the US Constitution.

American unions have great difficulty in organising workers in companies which are hostile to the union. In one case which was referred to the Freedom of Association Committee it was complained that union organisers were denied access to the plant and that they were threatened with arrest and imprisonment when they entered the employer’s property. The Committee took a dim view, requesting the government to guarantee such access ‘so that trade unions can communicate with workers, in order to apprise them of the potential advantages of unionisation’.

In a number of States, public sector workers are denied the right to engage in collective bargaining with an employer: indeed it was found that there were only 23 States where the legal position was thought to be reasonably appropriate. According to the freedom of association committee, ‘all public service workers other than those engaged in the administration of the State’ should enjoy the right to bargain collectively, and ‘priority should be given to collective bargaining as the means to settle disputes’ about terms and conditions of employment in the public service.

In other cases, outside the public sector, where collective bargaining is permitted, workers who take part in a lawful strike under American federal labour law can be permanently replaced. This follows a famous Supreme Court decision in 1938 in the Mackay Radio case. This too was found to violate freedom of association principles. According to the Committee ‘if a strike is otherwise legal, the use of labour from outside the undertaking to replace strikers for an indeterminate period entails a risk of derogation from the right to strike which may affect the free exercise of trade union rights’.

These and other failures of the US labour law system have been widely publicised in a damning report by Human Rights Watch, a New York based NGO. And no doubt as a result of these and other failings, collective bargaining density in the United States stands at an appalling 10-12 per cent, even though American unions are the largest and richest in the world. The failings of the American system are brought in to sharp relief when compared with the European Union where, with the exception of Britain and Ireland, collective bargaining density is typically well in excess of 70 per cent.

Conclusion
These are by no means the only problems which have been encountered in recent years by the United States which stands to be condemned of more than paradoxical conduct. The labour chapters of the bilateral trade agreements seem to be another example of ‘do what we say not what we do’. An obligation in these agreements to respect freedom of association is welcome. But it would be even more welcome if the USA were to ratify Conventions 87 and 98, bring its law into line with ILO principles, and take active steps to raise what is the lowest level of collective bargaining coverage in the developed world.

This paradox or ambiguity of the American position will no doubt be seen by some as having exposed unequivocally the real purpose of the social clause in trade agreements. The exercise reeks of protectionism in its motive and in its delivery. Yet whatever the purpose and whoever the author, the use of trade agreements in this way will be seen by others as beneficial. Although the US has a poor record on core international labour standards, these bilateral trade agreements will nevertheless help to raise standards in a number of countries from Australia to Chile to Jordan to Singapore.

These agreements also reinforce the growing trend whereby ILO standards are being used in a variety of ways by a variety of international and national agencies, as well as by corporations, trade unions and NGOs. But the agreements will nevertheless generate a great deal of suspicion, and opinion will be divided on whether the labour chapters in bilateral trade agreements are a good use or an abuse of Imperial power. They are probably both, though it remains to be seen how vigorous Washington will be in responding to complaints about US labour law, as it will be in raising concerns about the standards applied by trading partners.