The Existing Labor and Environmental Agreements in NAFTA

As the Ohio Democratic primary approached, Barack Obama and Hillary Clinton pulled out all the stops to secure the few remaining undecided votes in the Democratic Presidential race.  Ohio’s economy has been struggling, and the candidates saw a convenient scapegoat to blame for its industrial decline.  Both candidates vowed to force Mexico and Canada to include labor and environmental agreements into the North American Free Trade Agreement (NAFTA) or risk the US pulling out of the agreement all together. [1] The sharp anti-trade rhetoric had some obvious omissions. NAFTA more than tripled trade between US, Canada, and Mexico and like all barrier reducing trade agreements, has had a beneficial long-term impact on all three economies. [2]  It was supported by politicians and economists of all political leanings, including President Clinton who pushed it through Congress. [3]  But perhaps the most glaring omission in Obama’s and Clinton’s speeches is that NAFTA already includes robust, skillfully crafted labor and environmental agreements. [4]  The same type of agreements they supported in other trade pacts.

After being elected into office, President Clinton renegotiated NAFTA to include agreements on labor and the environment. [5] The two side agreements balance concerns about national sovereignty with effective enforcement of basic labor and environmental standards. [5] They were key to winning over support for NAFTA in the Senate. [6] The North American Agreement on Labor Cooperation (NAALC), the side agreement on labor, marked the first time that reciprocal worker protections were included in a US free trade pact. [7] 

“[W]hile the NAALC’s origins lay in the deep insecurities — and perhaps, to some degree, in the underlying racial tensions — of the American workforce, those more unsavory impulses . . . were rewritten in the language and rhetoric of human rights.” [8]  NAALC provided a solution to negotiators who wanted to include fundamental labor protections into the agreement without jeopardizing the gains in efficiency, productivity, and mobility made possible with free trade pacts such as NAFTA. [9] With the enactment of NAALC, Mexico, Canada, and the US agreed to hold each other accountable for effectively enforcing labor protections within their own borders. [10]  NAALC covers eleven specific areas of labor law, including the right to organize, the right to collectively bargain, and the right to be compensated in case of illness [10]  Claims alleging a violation of these labor standards are heard in a dispute settlement process, which includes consultation, evaluation, and arbitration. [11] The arbitration panel may assess monetary damages against a party, be ordered to improve its enforcement of labor laws, or endure trade sanctions. [12] The process mirrors the non-labor NAFTA dispute resolution process. [13]

The NAALC effectively balances concerns about national sovereignty with the desire to have baseline labor standards.  While it covers eleven specific areas of labor law, it does not create multi-national super law. Instead, it mandates enforcement of existing domestic laws and standards that fall into the specifically referenced provisions.  It creates a multi-national forum where each participating nation may be held responsible for not enforcing the labor laws it has on the books.  The construct is quite effective.  Mexico has a long history of corporatism and has strong labor rights on paper. [14]  The NAALC creates a mechanism where labor rights that previously existed only on paper may now be enforced through a multi-national dispute process. The agreement does not threaten any nation’s ability to self-govern by not imposing a body of multi-national super law.  Yet at the same time, it results in improved labor conditions through stronger enforcement. 

The NAALC was a significant innovation in trade relations. It was so effective in balancing the priorities of all parties, that its construct became a model for future US free trade agreements. [15] Pacts with Chile, Singapore, several Central American nations (CAFTA), and Jordan have provisions that mirror the NAALC. [16] The recently enacted free trade agreement with Peru, which both Barack Obama and Hillary Clinton supported in the Senate, has a nearly identical agreement on labor. [17]  If the agreement is good enough for the trade pact with Peru, than why not Mexico and Canada?

The North American Agreement on Environmental Cooperation (NAAEC) is structured similarly to the NAALC. [18] It requires each nation to enforce its existing environmental standards. [19]  But since negotiators were aware that existing environmental standards in Mexico may be too weak or nonexistent, the NAAEC has several key requirements that each nation must meet.  The NAAEC requires Canada, Mexico, and the US to “assess, as appropriate, environmental impacts” and provide an impact statement to NAFTA, "promote education in environmental matters", and ensure that laws and regulations provide for high levels of environmental protection and . . . strive to continue to improve those laws and regulations."  [20]  The NAAEC has been effective in practice. Immediately after NAAEC’s inception, the Clinton administration failed to provide an environmental impact statement to NAFTA and was ordered to do so by a federal court. [21] 

Like the NAALC, the NAAEC balances concerns about national sovereignty with environmental protection. Since NAAEC is structured in such a way as to only make it possible to mandate enforcement of existing standards, the NAAEC requires a “high level” of domestic environmental protection along with continued awareness. [22] Like the NAALC, the NAAEC has been incorporated into CAFTA, agreements with Jordan, Singapore, Chile, and the recently enacted free trade pact with Peru, which all three leading Presidential candidates supported in the Senate. [23]

The NAALC and NAAEC were a breakthrough in free trade negotiations. They skillfully addressed concerns about national sovereignty, while mandating enforcement of basic labor and environmental standards. Clinton and Obama vow to force Mexico and Canada to include labor and environmental standards into NAFTA. They omit the fact that skillfully crafted labor and environmental standards are already a part of the agreement. This is not only misleading, but dangerous. It threatens the long-term economic health of all three nations and jeopardizes the economic advancement of millions of people. 

Sources:

[1] Dudley Althaus, Nafta is Probably Election-proof, HOUSTON CHRONICLE, March 2, 2008, available at http://www.chron.com/disp/story.mpl/politics/5585149.html (last visited March 20, 2008). 
[2] Id.
[3] Id.
[4] Michael Donovan, Labor Provisions from Nafta to Cafta: Standards That Work, or a Work in Progress, BOSTON COLLEGE LAW SCHOOL, 2005, available at http://lsr.nellco.org/cgi/viewcontent.cgi?article=1001&context=bc/ljawps (last visited March 20, 2008).
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Michael Donovan, Labor Provisions from Nafta to Cafta: Standards That Work, or a Work in Progress, BOSTON COLLEGE LAW SCHOOL, 2005, available at http://lsr.nellco.org/cgi/viewcontent.cgi?article=1001&context=bc/ljawps (last visited March 20, 2008).
[11] Id.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Michael Donovan, Labor Provisions from Nafta to Cafta: Standards That Work, or a Work in Progress, BOSTON COLLEGE LAW SCHOOL, 2005, available at http://lsr.nellco.org/cgi/viewcontent.cgi?article=1001&context=bc/ljawps (last visited March 20, 2008).
[17] Michael Luo, Despite Nafta Attacks, Clinton and Obama Haven’t Been Free Trade Foes, NEW YORK TIMES, February 28, 2008, available at http://www.nytimes.com/2008/02/28/us/politics/28nafta.html?ref=business (last visited March 20, 2008).
[18] Steve Charnovitz, The NAFTA Environmental Side Agreement: Implications for Environmental Cooperation, Trade Policy, and American Treatymaking, Temp. Int'l & Comp. L.J. 257 (1994).
[19] Id.
[20] Id.
[21] Id.
[22] Id.
[23] Supra note 17.

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