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Free trade agreements and Labour: Much more than a Labour Clause

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RECALCA | 6 Feb 2006

Free trade agreements and Labour: Much more than a Labour Clause

Freely translated by Anoosha Boralessa in March 2015. This translation has not been reviewed by www.bilaterals.org or any other organization or person.

The FTA signed between Peru and the US has 24 chapters. One of these is a labor chapter that is identical to that found in the US-Colombia FTA and the US-Ecuador. On the subject of including this chapter, it is necessary to analyze the impact of signing this Treaty on labor and employment conditions for Colombians. Although this is a cross-disciplinary issue, discussion of its effects on the quantity and quality of labor was demoted in the negotiating process.

Since the 60s, the Colombian government upon the recommendation of International Financial Institutions supported “PANTE Non Traditional Agricultural Export Products”. They constitute the leading industry and the best example of an export-manufacturing model based on low costs of labor, notably women. [1]

Fittingly, flower exporters, one of the sectors that had government support from the time the FTA negotiations started, are seeking to obtain permanent preferential customs to gain access to this country’s market. Today, these preferences are provided under the ATPDEA law, in force from 1991 and expiring this December. It is on the basis of this law that Colombian flowers enter the US without having to pay customs. But in the 14 years ATPDEA has been in force, the economic benefits of exporting have not translated into better employment condition for the 94, 000 employees cultivating flowers. On the contrary: 65% are women and while their workload has increased, they are paid on average the minimum wage (180 USD).

From the 1990s, the Colombian government introduced flexi-work to implement a policy of reducing labor costs as a formula for competing in “free trade.” This measure was also accompanied by inadequate and inefficient inspection and control of how labor laws were being applied. As a result rights were cut back and wages reduced for both male and female workers.

Instead of generating employment and growth, this policy has resulted in increasing unemployment and growing poverty in our countries together with more serious impacts for female workers who on average have higher rates of unemployment, lower salaries and remain for the most part responsible for domestic unpaid and unrecognized work. This duplicates their working day.

To conclude, it is inefficient to introduce in an FTA a labor clause that seeks to protect labor rights and to prevent competition based on over-exploiting the labor force, when this was precisely the formula that our countries have applied to compete in the international market.

Contrary to the slogan that the government paper uses: “100 questions on FTAs: more work, better quality of life”, the foregoing indicates that although the FTA may generate employment in some export sectors, the jobs created are poor quality, stripping employees of rights or guarantees. On the other hand, laws protecting US foreign “investment” (as defined under the treaty), produce enormous disadvantage, jeopardize, weaken or eliminate entirely, industry sectors and the national agriculture. It also abolishes a State’s power to legislate to guarantee labor rights, should some national law on this matter be deemed to violate the Treaty.

As for the contents of a labor clause or labor chapter, the Colombian government paper affirms that the labor chapter seeks to ensure high standards of protection for each party, namely, to protect all employment rights provided under our legislation including international agreements. Contrary to this pledge, the draft chapter that stuck to the letter of the CAFTA-DR signed by Central America and the Dominican Republic and the US-Chile FTA, apart from prohibiting violations of the most basic protections such as the prohibition on child labor and forced labor, fails to even seek to protect labor rights, not even those provided in national laws.

Despite the evidence of discrimination against women in the free trade model, the labor clause and the labor chapter in the Andean FTA excluded essential labor rights that are internationally recognized. These include non-discrimination in employment and occupation, as provided in the ILO Convention C111. It does not require states to apply their domestic legislation on these matters. In response to this omission, the US NGO Human Rights Watch claims that taking this approach will permit discriminatory practices to continue to be documented in the Andean region.

And although this chapter provides the obligation to guarantee that female and male workers have access to tribunals to enforce domestic labor law, in practice, this law protects an ever-decreasing number of female and male workers in the export sectors that have an employment contract. This is by the increasing tendency to deslaboralizacion, that is, to avoid creating an employee- employer relationship through subcontracting - such as Cooperativas de Trabajo Asociado. [2]

As anticipated, one of the aims of the chapter is not to improve the employment conditions. It only refers to implementing “Cooperation Mechanisms and Developing Capacities” that aim to strengthen the institutional capacity to monitor and regulate employment, objectives that are unsupported by political will and with limits imposed by foreign investment protection, will remain on paper.

Regarding the Labor Chapter’s provisions on dispute resolution mechanisms, they first require exhausting political channels through negotiation and conciliation before legal channels can be turned to. These legal channels would provide some form of sanction. This stage has never been reached in cases filed by countries such as Chile, Jordan and Mexico that have an FTA with the United States.

Furthermore, it is clear that this mechanism is inefficient as workers (both male and female) and organizations are excluded from making a claim against enterprises in the event of a treaty breach and from infringing “free trade”. This is because only governments that can initiate this process. On the other hand, a US enterprise could claim damages and losses against the Colombian State before administrative tribunals, if it has not complied with the employment law on “fundamental labor rights” (as recognized under the Treaty) and it is on account of this negligence that it caused damage.

The dish of lentils in the FTA is signing some Cooperation Agreements through which some resources are allocated to the modernization of the state systems and the control and supervision of the Ministry of Labor.

Echoing the declarations of pivotal trade unions, we consider that including a labor chapter in an FTA does not guarantee the rights of female and male workers; that the only way to protect “labor with rights” is by not signing it and continuing with legislation that takes into account international labor treaties and for the Colombian state to undertake to dismantle discrimination against women and advance human, economic, social and cultural rights.