The international law gaze: protection of labour rights in free trade agreements: mission impossible?

Abstract

The inclusion of the protection of labour rights in free trade agreements (FTA) and the use of inter-State dispute settlement have been regarded as a paramount expression of the regard of the international trade regime for workers’ rights. The inclusion also responds to a concern: low enforcement of labour legislation in some countries means lower costs for their exporters, which makes them more competitive in international markets. These are the reasons behind the inclusion of provisions aimed at improving such enforcement in FTAs. New Zealand is or will be a party to some of them, such as the New Zealand – Korea Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This is why the panel report adjudicating the first international dispute in this realm, between the United States and Guatemala, under the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR) is of interest to us. (Final Report of the Panel, “In the Matter of Guatemala – Issues Related to the Obligation Under Article 16.2.1(a) of the Dominican Republic – Central America – United States Free Trade Agreement”, 14 June 2017. (U.S v Guatemala).

Is the inclusion of trade & labour provisions (T&LP) a positive development for workers? Yes. Is it enough for them? U.S v Guatemala illustrates that it is not. The text of the CAFTA-DR T&LP and similar provisions in other FTAs might make it difficult to find a violation whose remedy is a better enforcement of the legislation by the exporting country. Is this surprising? Certainly not. There is a political and economic power imbalance between exporters and labour unions in many parts of the world that favours the former in trade negotiations. The text of T&LPs reflect this asymmetry. There is also the issue of sovereignty: how much States enforce their legislation is a matter for them to decide. T&LPs limit this freedom of action, but the limitation is not significant as U.S V Guatemala illustrates. Guatemala prevailed in the dispute at the end: no violation of CAFTA-DR was proven. (at [594]).