United States
ORGANISATIONS
AFL-CIO
Thea Lee
Introduction
The AFL-CIO believes that the overriding long-term goal of U.S. trade policy should be to improve the living standards of all citizens of countries which are parties to a trade agreement. Improving living standards for working people helps to create a solid economic middle class that promotes political stability. In the U.S., legislation such as the Fair Labor Standards Act has provided the basis for widespread prosperity. In the new global economy, it is necessary to extend these basic human rights of the workplace to the international arena.
The AFL-CIO's overall assessment of the NAALC is that for the first four years of its existence, it has failed to bring about substantial improvement in worker rights and standards in the three NAFTA countries. The NAALC, thus far, has been ineffective in promoting the concerns of workers beset by stagnant wages and job insecurity, which have been exacerbated by economic integration in North America.
NAFTA Silent on Worker Rights
The original NAFTA, negotiated by Presidents Bush and Salinas and Prime Minister Mulroney in 1992, rejected any linkage between international trade in goods and services and international labor rights and standards. While providing detailed rules and extensive protections for the rights of investors, the original NAFTA was silent on issues concerning workers - despite the fact that "to promote respect for worker rights" is an explicit, Congressionally mandated objective in the negotiating authority under which the NAFTA was negotiated.
Linking labor rights to international trade agreements has been a principle objective of the AFL-CIO for decades. The linkage has been present in U.S. law for some time. During the 1980's, Congress conditioned eligibility for certain trade benefits under the Generalized System of Preferences, the Caribbean Basin Initiative and the Overseas Private Investment Corporation on whether foreign governments met labor standards and respected labor rights or in some cases, were "taking steps" to achieve these goals. In the 1988 Trade Act, amendments to section 301 define denial of internationally recognized worker rights as an unreasonable trade practice - subject to trade sanctions.
Side Agreement Negotiated
In an October 4, 1992, speech in North Carolina, candidate Bill Clinton acknowledged that:
If you look at the experience of the maquiladora plants, those who have moved to Mexico, right across the border, there is certainly some cause for concern. We can see clearly that labor standards have been regularly violated.
Clinton concluded that, "we need a supplemental agreement which would require each country to enforce its own environmental and worker standards." Clinton promised to solve NAFTA's failure to address worker rights by negotiating a side agreement with strong "dispute resolution powers" and "effective remedies."
The final product of negotiation, the North American Agreement on Labor Cooperation (NAALC) establishes a number of structures to monitor labor issues in North America, as well as to address complaints about the non-enforcement of labor law in any of the three NAFTA countries.
The Agreement establishes a Commission for Labor Cooperation that is made up of a Ministerial Council that will meet at least once a year, and a Secretariat to assist and provide technical support to the Council. Among other activities, the Secretariat prepares background reports on labor law, market conditions, and training issues in the three countries and undertakes studies on a wide range of labor issues.
The Agreement also calls upon each country to establish a National Administrative Office (NAO) at the federal government level to serve as a contact point for the other countries, to receive submissions from the public on labor law matters, and to coordinate tri-national labor cooperative activities.
The first objective listed in the NAALC is to "improve working conditions and living standards in each Party's territory." It is a laudable objective, but the NAALC, in its present form, has little potential to improve living standards in North America.
1. The NAALC contains no agreement on adherence to internationally recognized worker rights. The NAALC simply commits each nation to "effectively enforce" its domestic labor laws.
Labor laws which are inadequate to protect the rights of workers do not qualify for any corrective action at all. The NAALC has no leverage to improve labor laws at the state, provincial or federal levels. The silence of the NAALC on upward harmonization of labor laws constitutes a serious flaw.
2. The second objective in the NAALC is to promote a list of labor principles. Unfortunately, the NAALC creates a three-tier system in which only three areas of labor standards are subject to dispute settlement. This is unacceptable.
A remedy which can eventually lead to a sanction may only be sought if a nation has shown a persistent pattern of failure to effectively enforce its labor laws with respect to occupational health and safety, child labor, or minimum wage. In addition, the non-enforcement must involve mutually recognized labor laws and be trade-related.
Five areas are subject only to ministerial consultations and review by a committee of independent experts: protection of migrant workers, forced labor, employment discrimination, equal pay for men and women, and compensation in cases of work accidents or occupational diseases. There is no requirement for action beyond producing a written report.
Three crucial areas of international labor rights can only be the subject of consultations at the ministerial level (the right to freely associate and organize a union, the right to bargain collectively, and the right to strike) - with no requirement for action beyond consultations.
Freedom of association is the bedrock liberty upon which trade unions are built, and is crucial to a democratic society. It affirms the right of citizens to form and join organizations of their own choosing, hold meetings and speak about economic injustice without fear of reprisal. This fundamental freedom is simply not protected by the NAALC because of its weak enforcement provisions. Without the rights to bargain collectively and to strike, workers have minimum leverage in determining wages and conditions of employment.
3. Even in the areas subject to dispute settlement, the consultation and dispute resolution procedures are so lengthy and tortuous as to discourage complaints and petitions. The process between receiving a complaint to the release of a written report by the NAO can last up to 180 days. If there is no resolution, ministerial consultations may take place, but there is no time frame for such consultations. If there is no resolution, an Evaluation Committee of Experts (ECE) may be called upon.
The period of time from when the ECE is established to final resolution (with possible withdrawal of trade benefits) could last as long as 1,225 days - more than three years. In other words, if the case involved a country's non-enforcement of its child labor laws, and the entire course of consultation and dispute resolution were implemented without resolution, the underage child worker would be an adult before a final remedy was imposed.
The Mexican Commerce Secretary, Jaime Serra Puche, who helped to negotiate the agreement, said, "The time frame of the process makes it very improbable that the stage of sanctions could be reached." At a business conference at the American Enterprise Institute (October 1993), USTR General Counsel, Ira Shapiro stated that "we made it difficult to get to sanctions."
4. The remedies are ineffective. If the case involves one of the three labor standards that can proceed to remedy, following the findings of the independent panel of experts, two of the three labor ministers must vote to convene an arbitration panel. If the arbitration report also finds non-enforcement of a country's labor laws, the guilty government would be given 60 days to begin an agreed-upon plan of enforcement. If the country does not comply, the arbitration panel can levy a fine of up to .007 percent of the total trade in goods between the three countries. The fine is paid by the offending country to itself into a fund dedicated to improving enforcement of its own labor laws.
The offending government will be given six months to begin enforcement and pay any fines. If it refuses to comply, penalties can be assessed by imposing duties, quotas or investment limits based on the amount of the fine if the case is against Mexico or the U.S. If the case is against Canada, the Labor Commission created by the NAALC must file suit in the Federal Court of Canada.
In effect, Canada has opted out of the enforcement provisions of the NAALC, making any remedies asymmetrical and nonreciprocal. For most of the first four years of NAFTA, the NAALC only applied to federal government workers in Canada. Even now, a complaint from the private sector must come from a province that has ratified the NAALC.
The provisions in NAFTA governing intellectual property stand in stark contrast to this long and tortuous process. Not only is immediate action possible in the case of intellectual property rights violation, but pirated goods stopped at the border.
NAALC Four Year Experience
Cooperation:
The dominant theme of the NAALC is cooperation. The NAALC has encouraged information exchanges, data development, and coordination to enhance mutual understanding of the laws and institutions governing labor. It has also fostered transparency in the administration of labor law in the territory of each country. Sunshine and exchange of information is important to the establishment of labor market institutions that provide for the equitable distribution of the benefits of trade.
Although the NAO organized several seminars on aspects of labor law, participation has been limited, the media coverage minimal, and cabinet level officials absent.
Direct company representation has been absent from the beginning. According to the Labor Secretariat Executive Director, John McKennirey, in a Bureau of National Affairs interview August 6, 1997, to date, business and industry groups have offered little input into the efforts of the Secretariat.
Ten NAO Submissions: To date, nine submissions have been filed with the U.S. National Administrative Office (NAO) under the NAALC, alleging violations of labor law in Mexico. One submission has been filed with the Mexican NAO alleging labor law violations in the United States. Following is a summary of the current status of the ten submissions.
1. Honeywell -- In 1994, the U.S. NAO accepted complaints from the Teamsters Union on labor law violations at a Honeywell plant in Chihuahua.
2. GE -- The United Electrical Workers (UE) also complained of violations at a GE facility in Juarez.
Following public hearings, the U.S. NAO issued a Public Report of Review, concluding that the information gathered on the two submissions did not establish that the Government of Mexico failed to promote compliance with or enforce the specific laws involved. Accordingly, the NAO did not recommend ministerial consultations on the matters presented in these two submissions and essentially threw out the two complaints over the firing of maquiladora workers for union organizing efforts.
3. Sony -- A complaint filed with the NAO by the Coalition for Justice in the Maquiladoras (CJM), the International Labor Rights Fund (ILRF) and others, charged that a subsidiary of Sony Corporation stifled union organizing in its plants in Nuevo Laredo, and denied workers the basic right of freedom of association.
Subsequent to hearings, the U.S. NAO concluded in April 1995 that (1) the allegations of intimidation were credible, (2) the Mexican authorities had the legal right and obligation to assist the applicants to remedy alleged technical defects in their petition for registration, and (3) that serious questions had been raised as to the workers' "ability to obtain recognition of an independent union through the registration process."
The U.S. NAO recommended that the U.S. Secretary of Labor consult with his Mexican counterpart, and consultations were held by U.S. and Mexican officials in May and June 1995, leading to an agreement for a series of steps intended "to better explain and improve union registration procedures and certification." It also called for Mexican labor authorities to meet with Sony workers, management, and labor officials to "explain the legal remedies available to the workers" to secure registration for their union. However, the agreement failed utterly to correct the abuses clearly identified by the U.S. NAO investigation, and instead, simply promised further study and dialogue among the governments.
The submitters in the case subsequently requested that the Ministerial Consultations be re-opened, arguing that the problems raised in the original submission continued. The NAO conducted a follow-up review of the issues raised in the submission, and in a related Mexican Supreme Court Decision, and a report was issued on December 4, 1996.
Although the U.S. NAO found that Sony had denied its workers the right to form a union, and that the Mexican government had "persistently failed to enforce its own laws" in this area; the only remedy imposed was ministerial consultations and a series of seminars. The workers fired and beaten for attempting to organize an independent union have not been rehired; Sony continues its abusive, anti-labor practices, and neither the government of Mexico nor the company has been assessed any monetary fines.
4. GE -- was filed by the United Electrical, Radio, and Machine Workers (UE) against a subsidiary of the General Electric Corporation in Mexico. The UE withdrew the submission prior to the completion of the review process.
5. Sprint -- In February 1995, the Union of Telephone Workers of the Republic of Mexico asked the Mexican NAO to investigate Sprint Corp. for closing a San Francisco subsidiary, the subject of a union organizing campaign.
Francisco Hernandez Juarez, Union of Mexican Telephone Workers General Secretary, in his complaint, said that Sprint's mass firing of 235 Latino telemarketers in July 1994 occurred one week before a representation vote by the Communication Workers of America. He asked the Mexican NAO to declare that Sprint cannot establish itself in Mexico until it reinstates the fired U.S. workers and agrees to recognize workers in both countries when a majority of workers in a bargaining unit vote to unionize.
"Sprint's action epitomizes decades of increased attacks by corporations on workers' rights," said CWA President Morton Bahr. The signatories to NAFTA "are in a unique position to tell these companies in no uncertain terms that more trade agreements will never fly unless there are improved protections for workers, their jobs and their rights."
Then - U.S. Labor Secretary Reich agreed to hold consultations, the result of which was a public forum in San Francisco in February 1996. This forum gave the workers fired by Sprint a public platform to voice their complaints. A Sprint official scheduled to testify at the forum did not appear. The NAALC Labor Secretariat also conducted a study of the effects of sudden plant closings on the right of workers to organize in all three countries.
On December 27, 1996, the NLRB ordered Sprint to reinstate the dismissed workers and awarded them back pay. The Sprint Corporation has appealed this decision to the U.S. Federal Courts.
6. Federal Workers -- was submitted by three labor rights/human rights groups: the International Labor Rights Fund (ILRF), Human Rights Watch/Americas, and the Mexican National Association of Democratic Lawyers (ANAD, the Spanish acronym). The submission raises issues of freedom of association for Federal workers and questions the impartiality of the labor tribunals reviewing these issues. An NAO report, recommending ministerial consultations on the status of international treaties and Mexican constitutional provisions protecting freedom of association, was issued on January 27, 1997.
The Departments of Labor of Mexico, Canada and the U.S. agreed to exchange sufficient publicly available information to permit a full examination of the issues. This included a seminar open to the public, held in Baltimore on December 4, 1997. The seminar was structured to avoid meaningful exchange among participants of the three countries, and public comments were limited to the end of the day, after the time the conference was scheduled to end.
On December 3, 1997, the submitters filed a request for consideration on the ground that the some of the issues raised in the original submission were not adequately addressed in the NAO report. As of the end of January 1998, the NAO is still considering the request.
7. Maxi-Switch -- was presented to the U.S. NAO by the Communications Workers of America (CWA), the Union of Telephone Workers of Mexico, and the Federation of Goods and Services Companies (FESEBS) of Mexico. This submission raises issues of freedom of association for workers attempting to organize a union at a facility owned by Maxi-Switch, S.A. de C.V., in Cananea, Sonora, Mexico. The company produces and markets high-tech keyboards for computers and computer games and is owned by Silitek Corporation of Taiwan. In accordance with its guidelines, the NAO scheduled a hearing to be held in Tucson on April 18, 1997. On April 16, the submitters informed the NAO that the issues raised in the submission had come to favorable resolution and the submission was withdrawn.
8. Gender Discrimination -- was filed by Human Rights Watch, ILRF, and the National Association of Democratic Lawyers (ANAD) of Mexico). The submission raised the issue of gender-based discrimination in Mexico's export processing (maquiladora) industry. It claimed that companies, many of which are subsidiaries of U.S. companies, regularly require female job applicants to verify their pregnancy status as a condition of employment and deny employment to pregnant women. Additionally, the submission includes allegations that some maquiladora employers mistreat and discharge pregnant employees in order to avoid payment of maternity benefits.
Following hearings in Brownsville, Texas, the NAO issued its report on January 12, 1998. The NAO found that post-hire pregnancy discrimination occurs and is in violation of Mexican law, but is subject to redress in the appropriate tribunals. It is apparent that there is a lack of awareness among many women workers as to their rights under the law and that they lack trust in the institutions responsible for enforcement of these laws.
The NAO report recommends ministerial level consultations for the purpose of ascertaining the extent of the protections against pregnancy-based gender discrimination afforded by Mexico's laws and their effective enforcement by the appropriate authorities. Because this case involves gender discrimination, without resolution at the ministerial level, it is possible that the dispute resolution process could go as far as a report written by an Evaluation Committee of Experts.
9. Han Young -- was filed by the Support Committee for Maquiladora Workers, ILRF, ANAD, and the Union of Metal, Steel, Iron, and Allied Workers Union (STIMAHCS) of Mexico. The submission raises primarily freedom of association issues involving workers at a maquiladora plant in Tijuana, Mexico. The complaint claims that workers at the plant who attempted to organize a union were intimidated and threatened by the company and some of the workers were fired. In addition, the effort to defeat the organizing effort occurred with the cooperation of local government authorities and unions associated with the government. The responsible labor tribunal (Conciliation and Arbitration Board) overturned the results of a representation election in which a majority of the workers indicated they wished to be represented by their union (STIMAHCS).
On December 16, 1997, STIMACHS won a second union. The company, however, continues its refusal to recognize the union. The submission also raises issues of failure by Mexico to enforce its laws on safety and health, wages, dismissal from employment, and profit sharing. A public hearing is scheduled to be held in San Diego on February 18, 1998.
10. ITAPSA -- was filed December 15, 1997, by the Echlin Workers Alliance, which includes unions from the U.S. and Canada. Twenty-four other organizations are cited as concerned organizations. The submission claims violation of freedom of association at the ITAPSA processing plant in Ciudad de los Reyes, Mexico. It states that when workers at the facility attempted to organize an independent union, they faced intimidation and harassment from the company and the existing union, the CTM, including threats of physical violence and job loss. Approximately 50 workers have been subjected to retaliatory discharge for their support of the independent union. The submission also claims that the representation election that was held following the organizing drive was flawed and plagued by irregularities that occurred at the instigation of the ITAPSA management and the CTM. The submission further claims that Mexican government authorities are aware of the situation and have taken no remedial action.
The NAO has until February 13, 1998, to decide whether to accept the submission for review.
Assessment of NAALC Dispute Resolution
Of the ten cases filed under the NAALC, most involved the first, most important right of freedom of association and the right to organize an independent union; however, the outcome for workers has been very disappointing. To date, the NAALC has failed to promote "compliance with, and effective enforcement by each party of, its labor law"; and organizing by independent unions continues to be squashed by government authorities.
In the first two important cases that set the tone for future submissions, the submitting unions went to great expense to bring witnesses to Washington, D.C., only to have very strict time limits be placed on their comments. Compounding this problem was a lack of simultaneous translation. Prohibitions on media coverage severely restricted any possible "mutual understanding" between the countries concerning issues raised in the submission. In fact, the NAO first published a guide to the NAALC process in December 1994, twelve months after its establishment.
In cases where the NAO confirmed charges brought in the submissions, the outcomes have not helped the workers. For example, in the Sony case, the NAO report found that the company had denied its workers the right to organize, and that the Mexican government had "persistently failed to enforce its own laws" in the area. Nonetheless, no concrete remedies or financial sanctions have been imposed, and the company and the government have failed to change their behavior.
In another case, leaders of an independent union drive at Maxi-Switch in Sonora were fired. Even though the independent union was successfully registered as the legal bargaining agent, the independent union leaders were not reinstated. This pyrrhic "victory" provides little incentive to other workers to use the submission process in the NAALC. There is no measure of justice when workers lose even when the NAO substantiates their claims.
In the Sprint case filed in Mexico, following ministerial consultations, the NLRB ordered Sprint to reinstate the dismissed U.S. workers and award them back pay. Sprint has appealed the decision to the U.S. Federal Courts, and thus far, the workers have not been reinstated. This is another example of an NAO determination in favor of workers, where the decision, so far, has not helped the workers.
Kate Bronfenbrenner, Director of Labor Education Research at Cornell University, conducted research for the NAAL Labor Secretariat as part of a larger study on U.S. labor law following ministerial consultation on the Sprint case. Dr. Bronfenbrenner's research "suggests that NAFTA has both increased the credibility and effectiveness of the plant closing threat for employers and emboldened increasing numbers of employers to act upon that threat." The Labor Secretariat's larger study gave short shrift to these important findings - only one and ½ pages of a 110 page report, and delayed the release of the report nine months after the findings were first submitted.
The first obligation in the NAALC demanded that each country provide for high standards in its labor laws and "continue to strive to improve those standards." To date, the submissions filed, and the evidence of the absence of high standards in national laws and practices uncovered in the hearings indicate that this first obligation has not been met by the operation of the NAALC.
For example, one of the procedural guarantees of member countries is that the labor tribunal be impartial and independent. Members of the tribunal may not have any interest in the outcomes of the issues that come before them. In Mexico, the right to freedom of association has been repeatedly denied by local labor tribunals (CAB's). Members of these tribunals, in many instances, have an interest in denying recognition of an independent union, and therefore, are in violation of the obligations of the NAALC. Thus far, the NAALC dispute resolution process has not been able to convince the Mexican government to change this situation.
Recommendations
For the first four years of its existence, the NAALC has failed to achieve its stated goals with respect to worker rights and standards in the three NAFTA countries. The NAALC could be improved in the following ways:
1. The NAALC must be part of the NAFTA itself. The dispute process of the NAALC must be part of the dispute resolution mechanism of the NAFTA. The labor rights spelled out in the NAALC should not be given any lesser protection than that for investment or intellectual property rights.
2. It must be possible for submissions involving all eleven principles covered by the NAALC to move to the final stage of dispute resolution and be subject to possible sanctions.
3. The NAALC must address the issue of raising labor standards if a country's labor laws are inadequate.
4. The U.S. NAO process should be improved. It should be neither cumbersome nor costly to have a submission accepted by the NAO. If the NAO agrees to accept a submission, hearings should be mandatory. Media, including radio and TV should be allowed to cover and report on the hearings. The time frame of the NAO dispute process needs to be shortened.
5. As part of the submission process, if a company is alleged to have violated the law, that company should be required to participate in the hearings. Offending companies should be penalized.
Communication Workers of America
Morton Bahr, President
Based on the experience of the Communications Workers of America (CWA), the NAALC has failed to live up to its goals. In particular, our experience with the submissions process has demonstrated that NAALC's enforcement mechanisms are insufficient to achieve its stated objectives of "improv[ing] working conditions and living standards in each Party's territory"; "promot[ing]...the labor principles set out in Annex 1", or "promot[ing] compliance with, and effective enforcement by each Party of, its labor law."
The fundamental rights of workers include, as the NAALC recognizes, the right to freedom of association and protection of the right to organize. However, because the NAALC relegates protection of these rights to the third tier of its enforcement structure, there is no effective remedy for workers whose rights are violated. The two cases in which CWA was involved demonstrate the NAALC's failure in this regard.
Sprint/La Conexión Familiar
On July 14, 1994, Sprint Corporation violated U.S. labor law when it closed La Conexión Familiar (LCF), a telemarketing subsidiary, in order to stop a union organizing drive. CWA pursued the available remedies under U.S. law by filing an unfair labor practice charge with the National Labor Relations Board (NLRB). During its investigation, the NLB cited Sprint for more than 50 violations of U.S. law-violations to which Sprint admitted-including spying on and harassing union supporters and threatening to shut the plant if workers unionized. Despite these findings, a U.S. District Court refused to order Sprint to reinstate the workers who had been fired.
In February 1995, the Union of Telephone Workers of Mexico (Syndicato de Telefonistas de la Republica Mexicana, STRM) filed a complaint under the NAALC. In response, the U.S., Mexican, and Canadian labor secretaries consulted and agreed to a three-part program: 1) a public hearing; 2) a special study on the effects of sudden plant closings on the principle of freedom of association and protection of the right to organize in the three countries; and 3) updates by the U.S. labor secretary to the Mexican labor secretary on the case. No stronger action could even be considered in the case because the right to organize is included in the lowest tier of labor rights under the NAALC.
The public hearing was held in February 1996 in San Francisco, with testimony from fired LCF workers, officials from the STRM, and others. Sprint did not send representatives to these hearings. While the hearing brought public attention to Sprint's conduct, it brought no remedy for the fired workers or substantive resolution to STRM's complaint.
The second step of the response to the complaint was the release of the Commission's study, Plant Closings and Labor Rights, in June 1997. The report failed to address even the most basic issues regarding plant closings and worker's rights. In fact, the Sprint/LCF case was not even mentioned among the examples cited in the report. The report was essentially a summary of existing labor law, an overly rosy view of how that law is administered, especially in the U.S., and recommendations that address bureaucratic issues, not the real needs of workers.
While the NAALC complaint was in process, LCF workers continued to seek justice under the U.S. legal process. In December 1996, the NLRB issued an order for Sprint to rehire the illegally fired workers and pay them back wages and benefits. Sprint appealed the decision and in December 1997, the U.S. Court of Appeals for the D.C. Circuit ruled against the LCF workers.
The LCF case is a clear example of the failure of NAALC. The fired workers waited for a resolution of their legal case for more than three years. When the case finally made its way through the U.S. court system, the workers were denied justice, despite findings of massive labor law violations. In this case, the U.S. clearly failed to enforce its own labor laws and clearly violated labor rights recognized by the NAALC. Nevertheless, no further remedy is available to them under the NAALC.
Maxi-Switch
CWA was involved in another NAALC complaint, filed against a company operating in Mexico, Maxi-Switch. Although the Maxi-Switch case seemed headed for a positive resolution when the Mexican government issued an order to enforce the workers' rights, the order has yet to be implemented.
Maxi-Switch is a Taiwanese manufacturer of computer keyboards and electronic games. When workers at a plant in Cananea, in the state of Sonora, organized an independent union, plant managers threatened union activists, fired four union leaders, and physically assaulted a female union activist. In October 1996, CWA filed a complaint under the NAALC charging that Mexico failed to enforce its labor laws when confronted by Maxi-Switch's anti-union actions. The complaint also charged that the Mexican government colluded with the Confederation of Mexican Workers (CTM) to create "phantom unions"; when the workers sough organization, the company and state government claimed they already had representation, even though no workers in the plant were aware of such "representation" and they were denied access to the CTM "contract" covering them.
The complaint was filed on behalf of Union of Telephone Workers of Mexico (Syndicato de Telefonistas de la Republica Mexicana, STRM), and the Federation of Unions of Goods and Services Companies of Mexico (FESEBS). The NAO scheduled a public hearing for April 1997. The hearing was canceled two days before its scheduled date because the Mexican government agreed to recognize the independent union that Maxi-Switch workers had organized.
Although the threat of public hearings and questions raised by the U.S. NAO played a part in persuading the Mexican government to change course, the workers' rights were protected because of the moral force of their case, not because of the provisions of the NAALC. Had the Mexican government not recognized the independent union and the hearing taken place, no further remedy would have been available for the workers whose rights had been violated.
In fact, as of January 1998, fired Maxi-Switch workers have not been reinstated and a contract has not been negotiated with STRM. Because the CTM representative refused to sign the Mexican government's order recognizing the union, the company refused to implement it. STRM has gone to court to enforce the order; the outcome of the case is still pending.
Recommendations
We recommend the following to help achieve the NAALC's goals of improving working conditions and living standards:
* Eliminate NAALC's three-tier division of labor rights and afford the labor rights currently recognized under the third tier-freedom of association, the right to organize, the right to bargain collectively, and the right to strike-the same scrutiny and remedies afforded to labor rights recognized under the first tier.
* Adopt an enforceable Code of Conduct under the NAALC modeled on the existing OECD Guidelines for Multinational Enterprises and ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.
* Require an annual Labor Information Audit for businesses operating in two or more NAFTA countries to report their terms and conditions of employment for all employees.
* Provide labor rights the same level of protection under NAFTA as property rights:
- Allow private rights of action for workers, unions, and others to bring legal actions in domestic courts against corporations which operate in two or more NAFTA countries and violate the NAALC.
- Allow targeted trade sanctions (i.e., loss of favorable NAFTA trade benefits) against businesses found liable under domestic law for violations of NAALC labor principles and/or a Code of Conduct created under NAALC.
Human Rights Watch/Americas
Joel Solomon, Research Director
Human Rights Watch took no position on the North American Free Trade Agreement. Similarly, we did not take a position on the recent fast track debate in the U.S. Congress. Our interest in the NAALC relates to the promotion and protection of labor rights. We comments on the NAALC relate to the indirect benefits of the accord, the NAALC's failure to provide direct benefits, and limitations we have experienced to date.
Regarding the indirect benefits of the NAALC, Human Rights Watch recognizes that, particularly in Mexico, public attention to labor rights issues is very positive. For decades, the government of Mexico has used a combination of political and legal mechanisms to limit the development of unions independent of the ruling Institutional Revolutionary Party (PRI). To the extent that the NAALC leads to public awareness in Mexico about longstanding labor rights problems, we find the accord positive. In fact, in Submission 9601, we clearly saw such benefits. Similarly, Submission 9701 has helped increase public awareness in Mexico regarding the serious labor rights problems we raised in the petition.
Given that there are no clear guidelines for public reports of review issued by national administrative offices, the indirect benefits of the submission process are not necessarily as strong as they could be. In Submission 9601, the USNAO's public report of review failed to consider several key aspects of our complaint, and it failed to explain how it came to some of the conclusions that it reached. Rather, NAALC suffers from a lack of political will on the part of the Mexican government to improve its labor rights situation.
The way to deal with these problems is not to abandon the NAALC but to find ways to ensure that the labor rights principles enshrined in the accord are respected in practice, not just on paper, and to maximize the indirect benefits of the NAALC.
Lawyer's Committee for Human Rights
Elisa Massimino, Director, Washington Office
"Our comments consist of an excerpt from our 1996 report In the National Interest, a quadrennial report on human rights and foreign policy. One chapter of this report deals specifically with international legal regimes to promote worker rights, in which (...) we address the NAALC, offering a critique and some concrete suggestions for improvement."
ENFORCING LABOR RIGHTS THROUGH THE NORTH AMERICAN AGREEMENT ON LABOR COOPERATION
The North American Agreement on Labor Cooperation (NAALC), although less than perfect, represents the first time a regional trade agreement has made a major commitment to the promotion of labor principles. The NAALC also marks the first time the United States has committed itself to imposing monetary sanctions to enforce a labor agreement. In addition, in sharp contrast to the General Agreement on Tariffs and Trade (GATT), the NAALC permits third party, non-state participation in the dispute resolution process.
Despite the merits of the NAALC, it is a second-best alternative because of its failure to expressly tie enforcement to the ILO core rights conventions. The NAALC rejects the use of international standards in favor of requiring countries to enforce their own domestic labor laws. Although the NAALC should eventually be amended to tie enforcement through trade sanctions to ILO core rights, in the interim, the current NAALC framework should be strengthened.
The NAALC, as stated above, requires each country to comply with its existing domestic labor law. Therefore, there is no pressure to push labor standards upward. However, if parties ratified ILO conventions and made them a part of domestic law, they would effectively harmonize their labor standards and would be required to comply with international labor rights.
Under Article 52 of the NAALC, the parties may agree to amend the NAALC at anytime. The United States could begin this process by establishing an inter-agency committee, chaired by the Department of Labor, to review deficiencies in the agreement with an eye toward amending it. The following recommendations to amend the text of the agreement would improve its effectiveness in promoting labor rights.
The NAALC has three levels of review: Ministerial consultations, the Evaluation Committee of Experts (ECE) and arbitral panels. Only arbitral panels may recommend the imposition of trade sanctions. Notably, of all 11 labor principles specified in the agreement, only allegations of failure to enforce occupational health and safety, child labor and minimum wage standards are subject to arbitral review, and thus the possibility of trade sanctions. Issues involving "technical labor standards" other than the above three principles-prohibition of forced labor, minimum employment standards, non-discrimination, equal pay for men and women, and protection of migrant workers-are only subject to consultations and review and rulings by the ECE. Disputes surrounding "industrial relations"-freedom of association, collective bargaining and the right to strike-are restricted to the consultation process.
Because compliance with industrial relations laws poses particular difficulties in the NAALC member countries, the limited scrutiny given to industrial relations is a serious deficiency in the agreement. During the NAALC negotiations, no rationale for distinguishing between industrial standards and technical standards was given; rather the omission of industrial standards from the two higher levels of review was a political compromise. All three levels of review for all 11 labor principles would greatly strengthen the effectiveness of the agreement. At a minimum, it is necessary to submit all 11 labor principles to ECE review.
The time required to move a dispute through the dispute resolution process from initiation of a complaint to sanctions for noncompliance is exceedingly lengthy, potentially as long as three years. During this time, the party alleged to be in violation has continual opportunities to consult with other parties and obtain a political accommodation. Therefore, the threat of trade sanctions is greatly diminished. Cutting down on the number of procedures would expedite and improve the dispute resolution process.
Article 49(1)(a) and (b) provide gaping loopholes for parties to escape obligations to enforce their national labor laws. The article reads:
A Party has not failed to "effectively enforce its occupational safety and health, child labor or minimum wage technical labor standards" or comply with Article 3(1) [specifying general obligations to enforce domestic labor laws] in a particular case where the action or inaction by agencies or officials of that Party:
(a) reflects a reasonable exercise of the agency's or the official's discretion...; or
(b) results from bona fide decisions to allocate resources to enforcement in respect of other labor matters determined to have higher priorities.
Removal of this general exception to the heart of all obligations under the agreement and specific enumeration of any exception to compliance are needed to effectively promote core labor rights in the NAALC member countries.
Under Article 23(3)(a) of the NAALC, in order to send a dispute to an ECE, an allegation must involve a trade-related matter. There is little justification for this requirement. The NAALC is a labor cooperation agreement, not a trade agreement. Furthermore, the ECE reviews do not subject parties to trade sanctions. Removal of this provision would enhance the number and type of cases which can be brought for review, thus promoting the protection of labor rights.
WORKER RIGHTS
The environmental side agreement to NAFTA establishes a tri-national advisory committee, the Joint Public Advisory Committee (JPAC). The JPAC, comprised of business people, NGO's and academics, provides scientific, technical and other information to the secretariat. The secretariat is required to present its annual program and budget to the JPAC. A tri-national committee is better able to facilitate coordination and to take proactive measures than the purely domestic National Administrative Offices (NAOs), whose primary function is to react to submissions alleging non-enforcement. The establishment of a tri-national advisory committee modeled after the JPAC would serve to improve the NAALC in a similar fashion.
The Secretariat has only 15 professional staff members, and its budget of $2 million is less than a quarter of the budget of the secretariat for the environmental side agreement. It therefore cannot effectively investigate and monitor labor developments through the three NAALC members. Increased financial resources are needed to strengthen the Secretariat. In addition, the Secretariat lacks autonomy. It is unable to propose or initiate an examination of labor issues in member countries. Instead its actions are directed by the council, comprised of labor ministers or their representatives.
Under the agreement, only regular council meetings are required to be open, and only one regular meeting is required each year. In addition, the NAALC does not provide a right to initiate a complaint to the council as is permitted under the environmental side agreement. Rather, the right is provided only by the domestic NAO and the complaint procedure begins and ends within the purely inter-agency process. Moreover, the consultative process is almost completely secretive, leaving the public unaware of why conclusions were drawn. Finally, outside information may be used by an arbitral panel only "provided that the disputing Parties so agree and subject to such terms and conditions as such Parties may agree."1 This provision effectively allows one party to keep out any relevant information from an NGO or other source. Greater transparency is needed for this process to operate effectively.
International Union of United Automobile, Aerospace & Agricultural Implement Workers of America
Steve Beckman, International Economist
The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) is pleased to have the opportunity to contribute our comments for the review of the North American Agreement on Labor Cooperation (NAALC). As active participants in the debate over the North American Free Trade Agreement (NAFTA) and the NAALC during their negotiation and legislative consideration, we have closely followed the operation and effectiveness of the NAALC. The NAALC's objectives and obligations provide one standard for reviewing the agreement. However, because the UAW believes that the NAALC itself is flawed, we will comment on the gap between the experience under the NAALC and what we believe should have been accomplished for North American workers as part of the trade agreement.
Overall, it is the UAW's view that the NAALC has failed North American workers. There has been no substantive change in inadequate government policies concerning worker rights and standards and companies that violate laws and International norms are not subject to economic sanctions. The NAALC structure, separate from the NAFTA trade agreement, has been demonstrated to be ineffective in promoting the concerns of workers in the economic integration process and ensuring that workers' interests are given the same weight as the interests of owners of capital.
The first objective listed in the NAALC is to "improve working conditions and living standards in each Party's territory." Sadly, for all too many workers, the past four years have produced reductions in working conditions and living standards. In Mexico, average inflation-adjusted wages have fallen dramatically since the NAALC went into effect, adding to the already excessive poverty level there. In the U.S. and Canada, millions of workers have seen their living standards deteriorate as economic integration in the region progressed. The hardship has been particularly intense for those with the lowest incomes and the least education.
In its four years, the structure and procedures of the NAALC have failed to focus attention on this serious problem facing workers and have provided no mechanism to reverse the trend or to press for national governments to take the necessary measures to do so. The Commission for Labor Cooperation, headed by the ministerial Council, has failed to generate either the needed regional discussion of the negative impacts of economic integration on workers, or detailed proposals to address the dislocation that has occurred. This is a serious failing of the NAALC.
The second objective in the NAALC is to promote a list of labor principles, the first of which is freedom of association and protection of the right to organize. The choice for the first principle was not arbitrary; it was chosen because it is the most fundamental right of workers. In the past four years, nearly all of the petitions that have been subject to National Administrative Office (NAO) reviews involve violations of this principle, the inadequacy of national laws to protect the ability of workers to exercise these rights and the lack of enforcement of the national laws that exist. The results of the petition process have left the affected workers without redress and the government policies that permitted the violations to occur remain unchanged. Certainly, the agreement has been ineffective in promoting this basic principle.
In the area of NAALC obligations, the agreement is, by and large, sufficiently general and limited to carrying out the procedural aspects of national law so that governments can, for the most part, point to their compliance. However, the first obligation listed demands of each Party that it provide for high standards in its labor laws and regulations and that it "continue to strive to improve those standards." The petitions filed, and the evidence of the absence of high standards in national laws and practices contained in them, indicate that this obligation has not been met by the operation of the agreement. Further, we cannot find any measure that shows an improvement in standards has been achieved under this agreement. U.S. labor laws remain ineffective in protecting the rights of American workers and Mexican workers are facing intense political pressure to "reform" (i.e., diminish the effectiveness of) labor laws that, in the past, provided a modicum of protection. The three NAFTA governments have not used the NAALC to make progress in strengthening their health and safety laws to protect workers on the job. Instead, independent, unannounced inspections are becoming less frequent and "voluntary" compliance, left up to employers themselves, is becoming more common. These are serious failings in the operation of the NAALC.
One of the procedural guarantees included as an obligation of the NAALC is that labor tribunals be impartial and independent. They may not have any substantial interest in the outcome of issues that come before them. In Mexico, the right to freedom of association has been denied by local labor tribunals, Conciliation and Arbitration Boards (CABs). Members of these tribunals, we believe, in many instances have an interest in denying recognition of an independent union; therefore, the procedure for union registration and certification violates the obligations of the NAALC. To our knowledge, the Mexican government has made no effort to modify this process or to ensure that interested parties are not involved in deliberations that come before the CABs.
The main obligation included in the NAALC is for each government to "promote compliance with and effectively enforce its labor law through appropriate government action." As should be clear already, the UAW does not believe that the national laws in place in the three NAFTA countries adequately assure that workers are able to exercise the rights included in the NAALC's principles, as incorporated in and interpreted by internationally recognized standards, such as the relevant conventions of the International Labor Organization (ILO). This alone would require that the NAALC demand improvements in existing national labor laws rather than simply compliance and enforcement. Further, the objectives of the agreement should have included the establishment of higher standards in all three countries. A mechanism to achieve these improvements should have been adopted as a central part of the NAALC. The UAW proposed such a mechanism when the labor provisions were being negotiated. We expressed our disappointment when the NAALC was reached that national laws were to be the standard for compliance and enforcement. We believe that experience with the agreement has borne out our concerns.
The process for the review of petitions by the NAOs is of particular concern for the UAW. Experience to date has exposed many areas that must be changed if workers are to gain even the smallest measure of relief from this process. First and foremost, the restriction of the full review process to cases involving only three of the principles covered by the NAALC is unwarranted and unacceptable. As freedom of association is the most basic right of workers, and as most of the petitions filed have involved violations of this right, it is simply a travesty that the only "remedy" in such cases is ministerial consultation. The failure of the NAALC to meet the test of promoting the rights of workers is nowhere more apparent than in this limitation. The UAW strongly believes that it must be possible for petitions concerning all the labor principles included in the NAALC to move to the final stage of dispute resolution. The rights to organize and bargain and to strike must also have equal protection in the NAALC, as should the other labor principles that the agreement excludes from such procedural steps.
It is an affront to workers in NAFTA countries that the NAALC makes the pretense of providing them with adequate relief when their national governments' compliance with and enforcement of their (in many instances inadequate) national laws fall short of what is required. All that has been provided is an opportunity for the top labor law enforcement officials of those national governments to talk. The aggrieved workers have received no relief from this process in the four years of the NAALC's existence and they can expect none in the future from more talking. The UAW believes that, to be effective, the NAALC process must be conducted as part of the dispute resolution mechanism of the NAFTA trade agreement itself. To withhold access for some (and, to this point, most) petitioners to the already limited dispute resolution procedures of the NAALC is unacceptable.
There are additional problems with the way in which the U.S. NAO has decided to conduct its reviews of petitions. In most cases, the public airing of the violation of worker rights and standards is the only potential benefit available to petitioning workers. To effectively achieve this limited objective, public hearings should be required for all cases and the company that is involved in the alleged violation of the law should be required to appear at the hearing. In addition, public coverage, including radio and television crews, must be allowed to record and report on the hearings. This would allow a full discussion of the issues in the petition, with all parties given an equal opportunity to state their views and respond to questions.
The UAW further believes that the agreement's provisions for the assessment of penalties, if and when that ever occurs under the NAALC's excessively cumbersome procedures, should be changed to impose the burden on the companies that have violated the rights of workers rather than shifting the cost to the governments. The remedy for violations of the rights of workers should go to the workers hurt by the violation; otherwise, they receive no remedy at all from the process.
To rectify some of the deficiencies of the NAALC we have described would require renegotiation of the agreement itself. If the three governments are truly serious about improving workers' living standards and working conditions and promoting advances in the principles included in the NAALC, they will undertake such negotiations immediately. In the absence of such negotiations, the promises contained in the NAALC will continue to ring hollow for workers in the U.S., Canada and Mexico.
Some of the problems of the operation of the NAALC identified here can be resolved by the action of a single government. We hope and expect that these actions will be taken in the interest of fulfilling more of the potential of an inadequate agreement.
The UAW looks forward to examining other comments, the reports that will be transmitted to the Secretariat and the final Council report. This review process should shed additional light on the needs and concerns of North American workers and on the many and varied changes in the operation of the NAALC and in the NAFTA itself that must occur for the linkage between worker rights and trade to be a force for a better life for all of the region's workers and their families.
International Association of Machinist and Aerospace Workers
R. Thomas Buffenbarger, International President
Like many other labor organizations, when NAFTA was debated by the U.S. Congress, the IAM raised several objections. Among our many concerns was the failure of NAFTA to include what is commonly referred to as "core labor standards." Against our protest, NAFTA was implemented without adequate provisions to ensure that signatories to the agreement recognize, adopt, and effectively enforce internationally recognized labor standards. Sadly, instead of incorporating core labor standards into NAFTA, "side agreements" were executed creating the NAALC.
At the time, we argued in various public forums that the NAALC would be a woefully inadequate mechanism for ensuring the recognition and effective enforcement of internationally accepted labor standards. Nothing that has occurred in the past four years justifies a change in our position.
The NAALC was created to achieve at least two fundamental objectives: "to improve working conditions and living standards in each party's territory," and "to promote essential labor standards." The current conditions that exist in signatory countries, including the failure at real enforcement of internationally recognized labor standards, leads us to the conclusion that the NAALC has not been a success - far from it.
Working conditions and living standards have not improved in any of NAFTA's three signatory countries. NAFTA has exacerbated wage stagnation and, in some cases, added to a downward pressure on real wages in the United States and Canada. In addition, good-paying manufacturing jobs have been shifted to Mexico and there has been a real weakening of workers' bargaining power in both countries. At the same time that more manufacturing jobs have moved to Mexico, conditions for the Mexican worker have declined:
...The number of unemployed workers doubled between mid-1993 and mid-1995, to nearly 1.7 million. Additionally, there were 2.7 million workers employed in precarious conditions in 1996. To make ends meet, many families were forced to send their children - as many as 10 million - to work, violating Mexico's own child labor law. An estimated 28,000 small businesses in Mexico have been destroyed by competition with huge foreign multinationals and their Mexican partners. Real hourly wages in 1996 were 27% lower than in 1994 and 37% below 1980 levels. Of the 1995 working population of 33.6 million, 19% worked for less than the minimum wage, 66% lacked any benefits, and 30% worked fewer than 35 hours per week. During three years of NAFTA, the portion of Mexican citizens who are "extremely poor" has risen from 32 to 51%, and 8 million people have fallen from the middle class into poverty." (The Failed Experiment: NAFTA at Three Years, Economic Policy Institute, et.al., June 26, 1997, p. iii.)
It should be no surprise that the NAALC has made little or no difference in improving conditions of work for people in each of the signatory countries over the past four years. A long dispute resolution process and inadequate remedies plague the framework of the NAALC. One of the most egregious of these weaknesses involves the categorization of some violations as "technical labor standards," where the only sanction available is a "consultation and/or exportation evaluation process."
This huge loophole, which could include such issues as employment discrimination, prevention of occupational injuries and illnesses, minimum employment standards, and so forth, eliminates the chance for an effective remedy. In addition, fundamental sets of labor principles like the freedom of association and the protection of the right to organize, the right to bargain collectively, and the right to strike are only eligible for "consultation." The inherent weakness in the NAALC's framework enables signatories to continue their violations of core labor standards without any effective consequences from the NAALC.
Our criticisms of NAALC echo that of other groups. As our brothers and sisters at the Canadian Labor Congress have stated, "...the evidence remains that Mexican workers do not enjoy their rights and the Mexican state does not have the capacity nor the will to remedy this situation." The International Confederation of Free Trade Unions concluded, "fierce resistance to attempts to organize trade unions by employers colluding with local officials, remain a major cause for concern at Mexico's maquiladora plants." Last but not least, the AFL-CIO Public Policy Department concluded "the side agreement approach was designed not to work. The U.S. and Mexican officials in charge of negotiating the side agreement are on record as saying that it is extremely unlikely that sanctions would ever be applied..."
Given the inadequacies based on the ineffectiveness of the NAALC, the IAM agrees with other organizations that such important rights can not be relegated to entities that gain their authority through "side agreements." Only when real labor clauses calling for effective enforcement of core labor standards are contained in the basic agreement, can the objectives that the NAALC should be pursuing be achieved. Indeed, the deficiencies of the NAALC can only be rectified if there is renegotiation of the agreement itself.
Based on the aforementioned, the IAM believes that the NAALC has failed and has not made any real and lasting impact on the lives of workers in any of the signatory countries.