Background and Terms of Reference

The Commission for Labor Cooperation and the NCAALC

The Commission for Labor Cooperation is a new international organization created by Canada, Mexico, and the United States under the North American Agreement on Labor Cooperation (NAALC). Along with an agreement on environmental cooperation, the NAALC is one of two supplementary or "side" agreements to the North American Free Trade Agreement (NAFTA). The NAFTA and the two side agreements came into force on January 1, 1994.

The NAALC sets forth Objectives that include promoting 11 basic labor principles, promoting international cooperation, improving working conditions and living standards, and ensuring the effective enforcement of labor laws. Following these objectives, the NAALC countries agree to a set of six Obligations that relate specifically to the effective enforcement of labor law.

The NAALC’s 11 Labor Principles define the scope of the agreement. Covering nearly all aspects of labor rights and labor standards, the principles are ones that the countries are committed to promote but those principles do not establish common laws or standards. However, the countries agree to open themselves up to reviews and consultations among themselves on all labor matters within the scope of the Agreement.

The NAALC is the first international labor agreement linked to a trade treaty. It creates an international discipline on the enforcement of domestic labor law, a major innovation in international labor affairs. In addition to review and consultation, the countries’ obligations on effective labor law enforcement are subject to an Evaluation by an independent committee of experts and, in certain circumstances, to Dispute Resolution by an independent arbitral panel.

The Agreement also establishes an organizational structure. It involves a Commission for Labor Cooperation headed by a Council of Ministers responsible for labor in each nation, and an international Secretariat, located in Dallas, to support the Council. Each government has also established a National Administrative Office (NAO) within each department or ministry of labor to receive communications from the public in that country, provide information, and generally facilitate participation under the Agreement.

Role of the Secretariat

As the permanent staff organization of the Commission, the Secretariat has two main responsibilities. First, it assists the Ministerial Council in carrying out any of the Council’s functions under the agreement, such as supporting an independent Evaluation Committee of Experts or Arbitral Panel, which the Council may establish. Second, the Secretariat prepares both periodic reports and special studies. Periodic reports cover four broad areas: (1) labor law and administrative procedures, (2) the implementation and enforcement of labor law, (3) labor market conditions, and (4) human resource development issues. Special studies can be called for at any time on any matter that the Council considers necessary. This report on the effects of plant closings on workers’ right to organize is the first such special study carried out under the NAALC.

Ministerial Consultations

Under Article 22 of the NAALC any country can formally request consultations at the level of the Council of Ministers to consider any matter within the scope of the Agreement. Ministerial Consultations may address issues pertaining to the enforcement of labor laws, but are not restricted to such issues. Ministerial Consultations are a flexible mechanism by which the countries can engage one another formally, in a cooperative manner, at the highest political level (involving the Secretary or Minister of Labor) on issues of importance relevant to their Agreement.

For most matters arising under the NAALC, Ministerial Consultations are a necessary step before proceeding to independent evaluation and dispute resolution mechanisms. However, matters regarding the enforcement of labor laws related to the first three labor principles (freedom of association and protection of the right to organize, the right to bargain collectively, and the right to strike) can be the subject of only Ministerial Consultations. Such matters cannot be taken further in the evaluation and dispute resolution procedures of the NAALC. As a result, the conduct of Ministerial Consultations is very important for these matters.

To date there have been two Ministerial Consultations completed under the NAALC, one at the request of the United States and the other at the request of Mexico. This study is an outcome of the second consultation. Both consultations have raised issues related to the enforcement of labor law regarding freedom of association and the right to organize a union. Both have originated as public communications that were submitted to and reviewed initially by the respective NAOs of the United States and Mexico. In both cases, the Ministers have concluded their consultations with announcements of follow-up programs involving conferences, workshops, studies, and other measures. In the consultation giving rise to this report, the results included a forum open to the public conducted by officials of the governments.

Current Ministerial Consultation and Secretariat Special Study

Under Article 14 of the NAALC, the Secretariat is authorized to undertake special studies as directed by the Council. This report was directed by the Council as part of its action plan following the Ministerial Consultation initiated by Mexico after review by the Mexican NAO of Submission No. 9501/NAOMEX. The Mexican NAO review was released May 31, 1995. The Ministers announced the results of their consultation on February 13, 1996 (see Appendix A). They called for a tri-national study by the Secretariat on Athe effects of the sudden closing of a plant on the principle of freedom of association and right of workers to organize in the three countries" to be completed within 6months.

Submission No. 9501/NAOMEX was filed by the Sindicato de Telefonistas de la Republica Mexicana (STRM) on February 9, 1995. The submission addressed the closing by Sprint Corporation of its La Conexion Familiar (LCF) facility in San Francisco on July 14, 1994. Sprint closed the LCF operation shortly before workers there were to vote in an NLRB-supervised election for union representation by the Communication Workers of America (CWA). The election had been scheduled for July 22, 1994.

The LCF closing affected 235 workers engaged in "telemarketing" long-distance telephone service to the Spanish-speaking population in the area. The union and employees filed a charge with the NLRB alleging that the closing of the workplace was the culmination of a series of illegal practices by the employer during the organizing campaign and was itself motivated by anti-union animus. The employer argued that the closing was motivated by the fact that the business was losing money and its place in the market.

The regional office of the NLRB, acting as an arm of the General Counsel of the NLRB (which operates independently from the Board itself), issued a complaint in the case after determining that there was enough evidence to take the case to trial before an Administrative Law Judge (ALJ), part of another independent branch in the NLRB structure. In August 1995, the ALJ ruled that the employer committed over 50 unfair labor practices prior to the closing, including threats of plant closing, but that the closing itself was economically motivated. The union and the General Counsel appealed the ALJ decision to the Board.

In December 1996, the NLRB issued a determination on the appeal of the ALJ decision. The Board overruled the ALJ on the plant closing issue, finding that the closing was motivated by unlawful anti-union considerations. The NLRB upheld the ALJ findings on other unfair labor practices committed by the employer. The Board ordered the employer to offer affected workers reinstatement at other operations of the employer and to pay back wages lost because of the unlawful closing.³

In addition to calling on the Secretariat to undertake this study, the Ministers announced that a public forum on the events surrounding this Ministerial Consultation would be held in San Francisco. The forum took place on February 27, 1996. A transcript of the forum is included at the end of this report.

The NAALC does not provide the basis for any rehearing at an international level of the merits of any particular case that has been treated by domestic authorities. This report does not re-examine the originating case, but is devoted to a general examination of practices in all three countries over a period of years on general or systemic issues posed by that specific case, especially as they relate to the administration of labor law.

The Council adopted the following terms of reference for the Secretariat's study:

Effects of Sudden Plant Closings on Principle of Freedom of Association

The Secretariat is instructed by the Council of the Commission for Labor Cooperation to conduct a study on the effects of the sudden closing of a plant on the principle of freedom of association and the right of workers to organize in the three countries: Canada, the United States, and Mexico.

Terms of Reference

What are the primary implications of sudden plant closings for the right to organize a union, and the ability of workers and unions to adjust?

1. How are the principle of freedom of association (including the right to union organization) and the question of workplace closings addressed in the legal system in each country, and how are those laws enforced?
2. What has been the experience in the labor tribunals and the courts with this issue in each country? In particular, how has the question of "intent" been addressed?
3. How is this issue currently being affected by labor market developments in North America and what are the implications for labor market adjustment?
4. What are important issues for future consideration regarding this matter?

Conduct of the Study

The study is to be completed 180 days from February 13, 1996, which is the date it was formally authorized by the Council.

1. The study is to be undertaken and authored by the Secretariat itself, allowing for the use of experts on contract on a limited basis only to provide necessary background information.
2. The study is to be based on existing publicly available information. The Secretariat may take into consideration any relevant information, including any written contributions provided voluntarily by the public. The Secretariat may seek relevant information from appropriate government, business, labor, and academic sources.
3. The Secretariat shall make periodic reports on the progress of the study to the Council.