DR-CAFTA: A dismal delivery of workers’ hopes

TWN FTA Info: 24 April 2012

Dear friends and colleagues,

Please find below a report on the situation of labour rights in the five Central American and Caribbean countries that signed the Dominican Republic–Central American Free Trade Agreement with the US, which went into effect six years ago.

The report asserts that despite claims that the FTA would lead to an improvement in labour conditions, those improvements have not materialised and abuses continue.

In fact, the region’s labour leaders and other activists continue to be targeted for assassination, while labour abuses – including the violation of the right to freedom of association, illegal dismissals and sackings, forced overtime, ethnic and sexual discrimination, blacklisting and factory closures without going through the requisite processes – have been happening without let up. Employers have also demonstrated a disregard for labour rights, while the governments concerned have demonstrated a weak will, or inability, to ensure that employers complied with the laws.

Notwithstanding the labour chapter in the DR-CAFTA, the presence of other provisions in the FTA such as on intellectual property, services liberalisation, foreign investments and tariff liberalisation are also a cause for concern for their potentially adverse impact on workers’ rights generally, as well as on the rights to food, to water, to education, to health, to a decent standard of living, to work and to development.

The potential costs of the agreement by themselves would outweigh the on-paper gains of legally obliging DR-CAFTA governments to fulfill their labour rights obligations which, the report argues, have themselves not materialised.

Commenting on these concerns, Social Watch director Robert Bissio is quoted as saying the cases prove that even with labour provisions, FTAs such as the DR-CAFTA do not help against anti-democratic processes, repression and a general ‘race to the bottom’ in terms of workers’ rights if there are no real and significant efforts within the country itself to reform the circumstances found therein.

Workers in both the US and in Central America and Dominican Republic may have fought hard to include labour standards in the DR-CAFTA when they became convinced that deal could not be stopped, in the hope that at least it could promote their rights. In the end, however, such an outcome did not come about, Bissio laments.

With best wishes,

Third World Network
131 Jalan Macalister
10400 Penang
Malaysia


Email: twnet@po.jaring.my
Websites: www.twnside.org.sg, www.biosafety-info.net

DR-CAFTA: A Dismal Delivery of Workers’ Hopes

Kuala Lumpur, 20 April (Fauwaz Abdul Aziz) — Late last month, the umbrella coalition of US unions, the UFL-CIO, linked up with major workers groups from Honduras to file a petition with the Department of Labor in Washington, D.C. The petition censured the government of the Central American country over its failure to enforce provisions of the labour chapter of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) with the United States.

The complaint, filed with the Department of Labor’s Public Office of Trade and Labor Affairs (OTLA), lamented that six years after the DR-CAFTA with the US entered into effect, workers in Honduras have seen little meaningful enforcement of the labour rights that the trade agreement was supposed to have shored up.

Since 2006, that agreement has only proven ineffective and the aspirations contained in its chapter on labour violated with impunity, said the workers’ unions in their complaint, according to a press release dated March 29. “There have been repeated and well-documented violations of workers’ rights, and the Honduran Government has utterly failed to address these violations,” AFL-CIO president Richard L. Trumka was quoted as saying.

As early as 2009, it had already become obvious that despite vows by leaders of the US, Honduras and the five other Central American nations that had signed onto the trade agreement to improve labour conditions, those improvements had not materialised and abuses continue. In fact, labour leaders and other activists were continuing to be targets of assassinations, while labour abuses – including the violation of the recognised right to freedom of association, illegal dismissals and sackings, forced overtime, ethnic and sexual discrimination, ‘blacklisting’ and factory closures without going through the requisite processes – were happening without let up. Employers continued to demonstrate a disregard for labour rights, while the governments demonstrated a weak will, or inability, to ensure that employers complied with the laws.[1]

With the petition, the AFL-CIO and the Honduran trade unions were asking that the US government engage the government of Honduras to take all measures necessary to address the legal and institutional obstacles to the effective enforcement of its labour laws, as well as to remedy as fully as possible the individual claims.

But, if previous petitions are anything to go by, there is little hope that any effective action will be taken on the matter; after all, in 2008, the same AFL-CIO had filed a public submission under the same Chapter 16 (the Labor Chapter) of the DR-CAFTA, together with six Guatemalan unions. They jointly declared that the government of the latter had “failed to effectively enforce its domestic labour laws with regard to freedom of association, the right to organise and bargain collectively, and acceptable conditions of work”. After a lengthy review process and consultation with the government of Guatemala, it was decided from January 16, 2009, that there was to be no further action as the Guatemalan government “had sufficiently demonstrated its interest in resolving the issues.”[2]

The only gain likely to be had from the submission by Trumka et al. in March, therefore, is the political space created to present evidence that FTAs such as the DR-CAFTA, and their labour chapters in particular – despite what their proponents claim – offer neither legal nor actual improvement of labour conditions.

At the level of legal obligations, as Bolle has pointed out, there are four models of labour chapters in US-led FTAs. The first model is the 1993 North American Agreement on Labour Cooperation (NAALC) side agreement to the North American Free Trade Agreement (NAFTA). NAALC requires the NAFTA countries (US, Mexico and Canada) generally to enforce their own labour laws and standards, and that enforceable procedures leading to sanctions by a NAFTA partner would only come into play in the event of a country’s “persistent pattern of failure…to effectively enforce its occupational safety and health, child labour or minimum wage technical standards,” (Not enforceable, therefore, are violations relating to, for example, discrimination on the basis of ethnicity, nationality or gender or violations against the rights to organize and collective bargaining) and provided that failure is trade-related and covered by mutually recognised labour laws. The enforcement procedures contained in the side agreement, furthermore, are different than those provided for in the main (NAFTA) agreement, and limits are placed on the fines (‘monetary assessments’) that can be slapped against countries in the event that labour ‘enforcement failures’ occur persistently.[3] Commercial provisions, on the other hand, are fully enforceable under NAFTA (and not merely in the case of persistent failures in the areas of OSH, child labour or minimum wage technical standards).[4]

The second model is the labour chapter of the 2001 US-Jordan FTA,in which technically, all commercial and labour provisions are equally enforceable andsubject to the same dispute resolution procedures.Each country agrees to “not fail to effectively enforce its labor laws ... in a manner affecting trade”.Labour laws are defined as “US internationally recognised workers’ rights,” which Scherer points out is a reference to a list first established in 1984 US trade legislation, from which the prohibition of discrimination is notably missing.[5]If the dispute is not resolved under procedures specified in the agreement, the affected Party shall be entitled to take “any appropriate and commensurate measure”. Butan exchange of letters between the US and Jordan governments over the FTA belies their leaders’ intention not to “expect or intend to apply the Agreement’s dispute settlement procedures to secure its rights under the Agreement in a manner that results in blocking trade.” In other words, both Jordon and the US resolve to tackle any disputes that may arise over violation of labour rights without resorting to trade sanctions, which considerably weakens the legal force of the labour chapter of the agreement.[6]

The third model, under which the DR-CAFTA can be categorised, also includes the US FTAs with Chile, Singapore, Australia, Morocco, Bahrain and Oman. As Scherer et al. note, the labour chapters in these FTAs include only one enforceable provision (while all provisions in these agreements relating to commercial operations are enforceable) that each country “shall not fail to effectively enforce its labor laws… in a manner affecting trade between the Parties,” while no reference is made as to what actions can be taken over the adverse effects of trade on labour. Labour laws are defined as “a Party’s statutes or regulations… that are directly related to” the list of US internationally recognised workers’ rights referred to earlier, effectively limiting the parties’ obligations to enforcing their domestic labour laws.[7] The language of these agreements is also in the manner of non-enforcement: parties shall “strive to ensure” the incorporation into their domestic labour laws the principles of the International Labour Organization Declaration (without reference to the specific core ILO Conventions, of which the US has only ratified No. 105 on the abolition of forced labour and No. 182 on the worst forms of child labour). These FTAs share many of the same processes for labour and commercial disputes, but like the first model, monetary penalties for labour issues are capped while fines for commercial disputes are not. For both labour and commercial disputes, suspension of trade benefits is the “last recourse.” Since the labour chapter’s language is of the nature of non-enforcement, it does not seem likely that any dispute would get that far. The US-Chile and US- Singapore FTAs use fines rather than trade measures.[8]

The fourth model is found in US FTAs with Peru, Colombia, Panama and South Korea, which include fully enforceable commitments that (i) Parties adopt and maintain in their laws and practices the ILO Declaration on Fundamental Principles and Rights at Work, while defining labour violations as those that occur “in a manner affecting either trade or investment between the two countries,” (ii) prohibit these FTAs’ partner countries from lowering their labour standards; (iii) sets new limits on the authorities’ discretion to decide whether or not to enforce laws related to violation of the five core ILO labour standards; and (iv) stipulates the same dispute settlement mechanisms or sanctions for other FTA obligations such as commercial issues.[9]

To summarise, only certain labour provisions in some US FTAs are enforceable, whereas all commercial provisions in all trade agreements are fully enforceable. In Model 1, sanctionable violations relate to persistent failure to enforce OSH, child labour or minimum wage, whereas the right to organise and collective bargaining is not enforceable, while Model 3 FTAs provide as enforceable only that’ each country must enforce its own labor laws, which are defined as “a Party’s statutes or regulations directly related to the list of U.S. internationally recognized worker rights” in a manner affecting trade between the Parties. Model 1 has separate and different enforcement procedures for labour and commercial disputes, while Model 3 has relatively similar procedures for both types of disputes. Both models place caps on fines over labour disputes, while there are no caps on fines for commercial disputes. Labour provisions in Model 4 FTAs are fully enforceable through the same dispute resolution procedures as are available for commercial disputes, but since these relate only to the principles of the ILO Declaration, it may not be held in relation to the details of the Conventions. Only under Models 2 and 4 are all labour provisions enforceable, while both have the same enforcement procedures for labour and commercial disputes and impose no caps on penalties.

As for the actual impact of FTAs such as the DR-CAFTA on the conditions of workers in the six Central American countries after the agreement came into effect six years ago, what eventually unfolded following the signing of an FTA with the US was what brought the Honduran unions to Washington in late March this year.

In a report published in 2009, Washington Office on Latin America (WOLA) said the years from 2006 to 2009 saw virtually no improvements in labour rights practices in the DR-CAFTA countries despite the FTA signed. In fact, six union leaders have been murdered in Guatemala since January 2007, with similar killings of labour leaders since 2005 in El Salvador and in Honduras;[10]in other areas, such as workers’ rights to freedom of association, DR-CAFTA countries have seen dozens of workers being fired for organising – or attempting to organise – unions in their respective places of work, with no action taken against the employers;[11]several incidences of illegal plant closures saw scores of workers being left in the lurch without employment, a final pay-check or severance package;[12]discrimination, sexual harassment and exploitation of immigrant, minority ethnic and indigenous workers continue;[13]there is a growing pattern of sub-contracted labour and other forms of work ‘flexibilisation’;[14]child labour in the DR-CAFTA countries continues despite strict ILO conventions against the practice - according to the ILO, in 2008, 9.9% of all children aged 5-14 work throughout the DR-CAFTA region;[15]labour courts continue to be slow to the extent of impeding justice, while DR-CAFTA governments appear to be promoting more outside-court-settlements rather than improving on the judicial and legal process to ensure workers get what is rightfully theirs under the law;[16]finally, there have been very few labour law reforms due to active opposition from the business sector and recalcitrant governments unwilling or incapable of forcing a change.[17]

With such a dismal impact of the DR-CAFTA’s labour chapter on actual labour conditions in the region, observers and stakeholders have been led to conclude that with the leveraging by the US of its influence during the negotiations, the only space for real improvement lies in the formulation of better national labour laws. But as mentioned above, very few labour law reforms and improvements have actually seen real traction because of the inability, or unwillingness, of governments as well as the opposition from powerful corporate interests.

“The (Honduran) government and corporations have continued to act with impunity, while undermining our most basic rights,” said Francisco Joel López Mejía, Deputy Secretary General of the Independent Federation of Workers of Honduras (FITH), who had travelled to Washington DC to file the complaint.

Evangelina Argueta Chinchilla, a representative of Honduras’s General Workers Confederation (CGT), who also came to Washington DC, to file the petition, said: “We are here in search of justice. For many years our government has neglected workers and even has violated their own promises. They have ignored Honduras’s unions, while dealing openly with corporations. They have passed laws that undermine unions and reduce standards of living.

“We are hopeful that the Honduran government will rectify its action by complying with international labor law.”

Notwithstanding the labour chapter in the DR-CAFTA, the presence of other provisions in the FTA such as on intellectual property, services liberalisation, foreign investments and tariff liberalisation are a cause for concern for their potentially adverse impact on workers’ rights generally, as well as on the rights to food, to water, to education, to health, to a decent standard of living, to work and to development. The potential costs of the agreement by themselves would outweigh the on-paper gains of legally obliging DR-CAFTA governments to fulfil their labour rights obligations – which, as we have seen, have themselves not materialised.

US FTA provisions on intellectual property (IP), for example, have gone beyond the World Trade Organisation’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement to push for higher and stricter IP rules, with controversial implications for access to medicine and farmers’ and farm workers’ rights to livelihood and to food.

Services liberalisation provisions as formulated by US FTAs, meanwhile, threaten to open up sectors such as water, health and education in a way that differs significantly from the agreed-upon General Agreement on Trade in Services structure and makes it more difficult for the regulation of those services in the public interest. FTA partner countries would be under pressure when regulating in the public interest if these can be made to appear to harm foreign investors. In the financial sector, the entry of large foreign banks has seen the gravitation towards wealthy and creditworthy clients, pressuring local banks to survive by abandoning their services to the poorer and higher-risk clientele, endangering access to credit for the poorer segments of the population. After NAFTA, Mexico saw a few years later the collapse of credit to its small farmers, exacerbating their inability to compete and survive in the face of foreign multinational corporations.

Whereas DR-CAFTA stipulations on foreign investments on the whole protect foreign investors from expropriation and ensure ‘fair and equitable treatment’, this may create an obstacle to the effective regulation of foreign investors even to comply with human rights obligations.

Commenting on such issues, generally, and the petition filed by the US and Honduran unions, particularly, TWN’s Latin America coordinator and Social Watch director Robert Bissio said the case proves that even with labour provisions, FTAs such as DR-CAFTA do not help against anti-democratic processes, repression and a general ‘race to the bottom’ in terms of workers’ rights if there are no real and significant efforts within the country itself to reform the circumstances found therein.

Workers in both the US and in Central America may have fought hard to include labour standards in the DR-CAFTA when they became convinced that deal could not be stopped, in the hope that at least it could promote their rights. In the end, however, such an outcome did not come about, said Bissio.

“How much the inclusion of our rights in the treaty was just a way to appease opposition against the FTAs is up for discussion.

“But with a look to the future, when other trade agreements are being negotiated we can remember the case of Honduras and don’t hope that there will be more defence for rights after an FTA than before.

“Actually, it may be worse.”

[1]Washington Office on Latin America (WOLA), “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” May 2009, http://www.wola.org/publications/dr_cafta_and_workers_rights_moving_from_paper_to_practice, 12.

[2]Christoph Scherrer, Thomas Greven, Aaron Leopold and Elizabeth Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” (Brussels: Directorate General External Policies of the Union, 2009), 14.

[3]Bolle, Mary Jane, "Overview of Labor Enforcement Issues in Free Trade Agreements" (2008). FederalPublications. Paper 492, available at http://digitalcommons.ilr.cornell.edu/key_workplace/492, cited also by Scherrer, Greven, Leopold and Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” 4-5

[4]Scherrer, Greven, Leopold and Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” 4

[5]Scherrer, Greven, Leopold and Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” 4

[6]In identical letters in 2001 on labour and environment between Robert B. Zoellick, then-US Trade Representative, and Marwan Muasher, Ambassador of the Hashemite Kingdom of Jordan to the US, assured that their respective “government would not expect or intend to apply the Agreement’s dispute settlement procedures to secure its rights under the Agreement in a manner that results in blocking trade.... [M]y Government considers that appropriate measures for resolving any difference that may arise regarding the Agreement would be bilateral consultations and other procedures, particularly alternative mechanisms, that will help to secure compliance without recourse to traditional trade sanctions.” See Bolle, "Overview of Labor Enforcement Issues in Free Trade Agreements," 4; also Scherrer, Greven, Leopold and Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” 4.

[7]Scherrer, Greven, Leopold and Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” 4.

[8]Scherrer, Greven, Leopold and Molinari, “An Analysis of the Relative Effectiveness of Social and Environmental Norms in Free Trade Agreements,” 4-5.

[9]Bolle, "Overview of Labor Enforcement Issues in Free Trade Agreements," 4.

[10]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 11.

[11]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 14.

[12]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 14-15.

[13] WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 15.

[14]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 16.

[15]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 16.

[16]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 17.

[17]WOLA, “DR-CAFTA and Worker’s Rights: Moving from Paper to Practice,” 18.

source: TWN