Annex 5: Public Comments

United States

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.

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.

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.)

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.

International Labor Rights Fund
Pharis Harvey, Executive Director
Terry Collingsworth, General Counsel

The NAO is Implementing Effectively the Limited NAALC Provisions.

The ILRF believes that the NAO is doing an effective job of implementing the NAALC. You and your staff are to be commended for getting up to speed quickly on the issues, and pushing to achieve results under the narrow constraints of limited relief available under the NAALC. We have been very pleased with the observable progress made in the level of inquiry conducted at hearings and through written inquiries. Most recently, at the hearing on NAO Submission No. 9701, your questions of the witnesses showed a high level of understanding of the practical realities for the young women working in the maquiladora sector in Mexico. Your questions also reflected that you and your staff did extensive research and preparation before the hearing. We also commend the NAO's willingness to address rapidly the extraordinary problems we've faced in the Han Young case (No. 9702). In short, the ILRF is very enthusiastic about the quality of work done by the U.S. NAO within the narrow mandate provided by the NAALC.

The NAALC is Fatally Flawed Due to the Lack of Effective Enforcement Mechanisms.

Our concerns are focused on the general lack of concrete, measurable progress made in improving enforcement of labor laws following a NAALC proceeding. The right to associate is the most fundamental right for workers. If workers have the ability to organize free and independent unions, they have a voice in the setting of the terms and conditions of their employment. Most of the NAALC cases filed against Mexico have raised issues of freedom of association, and have emphasized the corrupt system of state-sponsored unions in Mexico under the dominance of the PRI. The sole remedy under the NAALC for violation of the fundamental right to associate, no matter how pervasive or frequent, is Ministerial Consultations under Article 22. Such consultations have been held with Mexico specifically on the right to associate in at least four of the cases filed to date, yet systematic change has not occurred. New violations are occurring constantly. As the New York Times editorialized on December 6, 1997, "It seems likely the Nafta labor office will find that the Han Young case violates the labor agreement. But that will be of little help to Mexican workers. Such violations carry no penalty, only the possibility of consultations between the Mexican and American labor secretaries."

The lack of significant progress on the question of the right to associate highlights the fundamental flaw with the NAALC: it relies upon the commitment of each member of NAFTA to enforce its own domestic labor law within its territory, thereby assuring that the labor law enforcement process would remain unchanged. "Consultations" are not sufficient to deter the significant economic incentive companies have to exploit workers. Indeed, not a single company involved in any NAALC case has appeared to testify at a NAO proceeding. The companies have no concern about an adverse outcome. And the Mexican government is loathe to crack down on General Motors or Sunbeam, two companies specifically cited by witnesses at the hearing on case No. 9701 for engaging openly in illegal pregnancy testing to screen employees and applicants, for fear the companies will seek a more employer friendly location.

The structure created by NAALC does not necessarily require that labor law enforcement would not be improved. The problem remains one of unexercised discretion, which is why most critics of the NAALC process insist that the clear solution is mandatory, enforceable standards. The Ministerial Consultations held to date in response to previously filed petitions challenging non-enforcement of Mexican labor law have not resulted in concrete, measurable improvement simply because the U.S. has not provided adequate incentives to encourage change (or sufficient penalties for failing to improve enforcement). Nothing in the NAALC would prevent, for example, the U.S. from linking financial assistance to Mexico with improved enforcement of labor laws.

The potential effectiveness of the NAALC was dramatically demonstrated recently with respect to action taken following the filing of the Han Young case (No. 9702). President Clinton raised the issue in discussions with President Zedillo, and the Mexican government took immediate action to enforce the law and protect the rights of the individuals who had sought to form an independent union. While this shows that consultations can lead to action, it also demonstrates the nature of discretionary authority. It should not take Presidential intervention to persuade Mexico to honor its specific obligation under NAALC to enforce its labor laws.

Recommendations for Strengthening the NAALC.

The ILRF ultimately calls for a renegotiation of NAFTA based, among other things, on Mexico's failure to honor its obligations under the NAALC. Any new trade agreement should include a strong labor provision that is central to the agreement, rather than relegated to a side agreement. Short of this, the following are concrete steps that could be taken immediately to strengthen NAALC:

1. The U.S. Secretary of Labor should launch a major initiative to develop a Code of Conduct for companies operating in the NAFTA countries that would basically extend the NAALC obligations to companies and secure from them a commitment to respect the laws of the NAALC countries they operate in. The Code would not be a completely new venture. It could be modeled on the Codes already recognized by the U.S., Canada and Mexico in the Organization for Economic Cooperation & Development (OECD) Guidelines for Multinational Enterprises and the ILO's Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Polity. Any Codes could also be based on the work, encouraged by the Clinton Administration, of the Apparel Industry Partnership. This particular approach is a good example of the potential for discretion used in the service of worker rights. The Apparel Industry Partnership initiative grew out of the No Sweat movement, was supported by the Clinton Administration, and greatly benefitted from the perception that former Secretary of Labor, Robert Reich, was a strong supporter. Likewise, a public campaign by the Clinton Administration to promote improved conditions for workers in the maquiladoras through Codes of Conduct could have a significant impact on the situation.

2. Most of the allegations of labor law violations in the maquiladoras concern multinational firms, many based in the U.S. This signals that a major problem rests with developing an effective way to regulate the companies' employment practices. Interestingly, in its December 17, 1997 submission to the NAO, the U.S. Council for International Business objects to the petitioning process adopted by the NAO and expresses concern that companies are being specifically named in the petitions. The Council views NAALC as extending obligations only to governments. The ILRF must emphasize that employers violate the labor laws; governments are expected to enforce the law. Many of the problems expressed with the NAALC process would be solved simply if U.S. firms operating in Mexico respected the law.

   In order to have a basis for monitoring the activities of companies, particularly those in the maquiladora sector, more information is needed on a regular basis. In the context of the initiative discussed in option A, the U.S. Secretary of Labor should encourage agreement to require an annual Labor Information Audit by businesses operating in two or more NAALC countries, conducted by independent monitors. The audits could require the companies to report information pertaining to all their operations, whether under their own corporate form or through subsidiaries, joint ventures or other business forms, and an obligation to inform accurately themselves of the following information: a) location, b) total number of employees, categorized by job classification and pay grade, c) wages paid for each job classification and/or pay grade specified by form of payment (i.e., hourly, daily, weekly, monthly, etc. or average wages for piecework), d) total benefits provided to all individual or group of employees, present unionization status of any employees specifying the name of the union, number of represented employees, status of, and a copy of the most recent, collective bargaining agreement, affiliation of union with any central labor body or confederation, and e) some record of employment practice that might violate the law in one or more NAALC countries.

3. Rather than intervening in a single case as occurred in the Han Young example, President Clinton should initiate formal discussions with President Zedillo and negotiate for a process to improve Mexico's compliance with its NAALC obligations. There are numerous opportunities for leverage in U.S. - Mexico discussions. What's lacking is a clear indication that the U.S. places a high priority on improving labor law enforcement in Mexico. There is no question that strong public sentiment that NAFTA was a failure led to the denial of fast track negotiating authority for the President. See, e.g., The Failed Experiment: NAFTA at Three Years, a joint study by The Economic Policy Institute, the Institute for Policy Studies, the International Labor Rights Fund, Public Citizen's Global Trade Watch, the Sierra Club, and the U.S. Business and Industrial Council Educational Foundation (June 26, 1997). Much of this sentiment was based on the perception that U.S. companies are flocking to Mexico precisely because labor is cheap and labor laws are not enforced. Working people in the U.S. do not want to see a failed model expanded. The alternative vision, that NAFTA would improve economic conditions for workers in all participating countries, can only be realized if Mexican workers are paid enough to become consumers and can greatly enhance domestic demand in Mexico, providing sustainable support for the currently fragile Mexican economy. This should be a priority for the Clinton Administration.

4. Following reasonable efforts to get companies to comply with the labor laws of the NAFTA countries, those refusing to comply must be subjected to legal liability. This can be accomplished by repealing Article 43 (Private Rights) of NAALC preventing a right of action under domestic law against another Party on the ground that that Party has acted in a manner inconsistent with their Agreement and adding an express private right of action allowing workers, unions and other groups to bring legal actions against corporations, operating in two or more NAALC nations, in domestic courts for violations of NAALC's principles. Further, make parent and/or partner corporations fully liable for NAALC violations of subsidiaries or joint ventures thereby eliminating corporate veil defenses against these violations. Finally, permit targeted trade sanctions (i.e., the loss of favorable NAFTA trade benefits) against businesses found liable under domestic law for violation of NAALC labor principles and/or a Code of Conduct created under NAALC.

Conclusion.

The vision of NAFTA leading to increased economic prosperity can only be realized if worker rights are made a key component of the agreement. We hope you and other members of the Clinton Administration can give serious consideration to our recommendations.

United States Council for International Business
Abraham Katz

The U.S. Council for International Business (USCIB) is a business policy making association dedicated to promoting an open system of world trade, finance and investment. As such, it represents American business interests in the major international organizations, including the International Labor Organization (ILO) and the Organization for Economic Cooperation and Development (OECD), and before the Executive and Legislative Branches of the U.S. Government. The U.S. Council is the business association most concerned with international labor policy issues including worker rights and trade in the United States.

These comments have also been endorsed by the international labor affairs group of the National Association of Manufacturers.

The Cooperative Purposes and Functions of the NAALC Should Be Emphasized Over the Review and Dispute Resolution Procedures

The NAFTA is a trade agreement between three neighboring countries on the North American continent made for the purpose of lowering tariffs for the mutual benefit of Canada, Mexico and the United States. Beginning with the two memoranda of understanding between the United States and Mexico on labor matters during the NAFTA negotiations, the very title of the NAFTA labor side agreement-the North American Agreement on Labor Cooperation-and the words found in the Preamble and Articles 1, 11, and 20, the NAALC clearly exhibits an intent to pursue cooperative activities on labor and employment matters. As such, the NAFTA and the NAALC are agreements between friendly, not antagonistic parties.

Each country's National Administrative Office and the NAALC Executive Secretariat deserve much credit for a wide range of information exchange and cooperative programs on labor and employment issues. Unfortunately, the value of these cooperative activities is undermined by the highly visible emphasis on handling complaints and individual cases. Regrettably many of the complaint submissions focus on specific incidents of alleged improper conduct of individual employers rather than whether a signatory country is effectively enforcing its labor and employment laws. The submissions are filed, and accepted by the NAO, even before domestic administrative and judicial procedures have been exhausted. Thus the NAO often looks at the wrong behavior - individual company behavior in specific instances - rather than the issues addressed by the NAALC - effective enforcement of national laws. And by its conduct the NAO encourages a public misconception about the purpose of the NAALC and feeds unrealistic political expectations.

Overall, the USCIB believes that the implementation of the NAALC has unduly emphasized the compliance and effective enforcement of labor law obligations of the NAALC over positive cooperative activities. As a consequence, it sets the wrong tone and focus. We think that it would be more constructive and in keeping with the positive relationship between the three trading partners, as reflected in the NAFTA and the NAALC, if the primary emphasis were on cooperative labor programs on labor issues such as those listed in Article 11, Cooperative Activities, of the NAALC. Based on the USCIB's business-to-business program on human resources and labor relations best practices with CONCAMIN-the Mexican employers' federation-the public has much to contribute to facilitate achievement of the purposes of the NAALC.

In sum, the principal function of the Executive Secretariat and the NAOs should be to consult and exchange information, through technical assistance, joint research projects and training programs, on the labor matters covered by the labor side agreement.

Implementation of the Review and Dispute Settlement Procedures Should Occur Only in Exceptional Circumstances in a Problem Solving, Cooperative Environment

As stressed above, implementation of the NAALC is intended to occur on a cooperative basis. Clearly, recourse to the labor side agreements' consultation, evaluation and dispute settlement procedure is intended to be an exceptional circumstance.

The application of agreed labor principles under the NAALC should be contrasted with the application of worker rights under the Generalized System of Preferences (GSP). Under the GSP, trade preferences are unilaterally granted by the United States under any conditions that it deems appropriate, and are not contractual in nature. Under the GSP, therefore, the United States has wide discretion with respect to the acceptance of cases for review and determinations of whether preferences should be withdrawn.

In contrast, under the NAFTA, the trade benefits are contractual in nature between close trading partners subject to agreed conditions. Unlike the application of worker rights under the GSP, the substance of each country's domestic law is not affected by the agreed labor principles under the NAALC. Only in a "worst case" scenario, i.e., involving a persistent pattern of failure of one of the parties to effectively enforce its domestic labor law, should NAALC's dispute resolution procedures be invoked. This is significant jurisdictional restraint that is not present under the GSP.

The acceptance of a public submission under the U.S. NAO procedures should be an exceptional act. A party under the NAFTA should not be in a worse position than it would be under a GSP-like procedure. Given the spirit of the NAALC, public submissions should only be accepted after domestic procedures have been exhausted and, when accepted, result primarily in joint studies and in technical cooperation and assistance.

As a threshold matter, there can be no question of the effective enforcement of any of the Parties' labor law until domestic administrative and judicial remedies have been exhausted. To accept for review submissions that have not been so exhausted would make meaningless Articles 3, Government Enforcement Action, and Article 4, Private Action, and Article 5, Procedural Guarantees. On their face, Articles 3 to 5 are intended to assure a right to domestic remedies through fair and effective enforcement procedures.

To accept prematurely submissions for review undercuts they very purpose of the NAALC which is to build cooperation and to ensure that there is compliance and effective enforcement of each Party's labor laws. Under the practice of the U.S. NAO, it appears that there is virtually no written submission that the U.S. NAO will not accept.

Parallel NAO proceedings run the risk of inappropriately influencing or compromising the outcome of domestic proceedings that have not run their course. This is not just an employer concern. At a tri-national seminar in Monterrey, Mexico on union certification practices as a follow-up to ministerial consultations in the third case filed with the U.S. NAO, a U.S. National Labor Relations Board (NLRB) official stated that he was very uncomfortable with Mexican NAO proceedings in a U.S. plant closing case because the administrative law judge decision finding no unfair labor practice on the part of the employer was on appeal before the NLRB. He was concerned about undue international political influence on a domestic proceeding.

Whether there has been effective enforcement of labor and employment law is a highly subjective judgment that cannot turn on the results of one or two factual circumstances. Public submissions should not be accepted if they do not contain evidence of a persistent pattern of non-enforcement involving similar facts and circumstances.

The obligations of the NAALC apply to the three signatory countries, not to companies or their employees. Yet, although companies are not parties to the NAALC, they are targets of the proceedings. The cases are known by company names-GE, Honeywell, Sony, and Sprint-when the issue in all the cases has been the effective enforcement of law in Mexico or the United States. In the OECD and the ILO, it has been the consistent practice to not name companies in disputes because they are not parties. This practice should be followed under the NAALC.

The USCIB believes that public hearings as means of gathering information is too confrontational and not in keeping with the purposes of the NAALC. Instead, more informal means in the spirit of cooperation should be employed. Indeed, neither the ILO nor the OECD permit hearings under the procedures of their supervisory machinery, but seek, instead, to resolve matters through investigation, exchange of information and dialogue.

Finally, in keeping with the cooperative spirit of the NAALC, where a violation is found, emphasis should be placed on cross-border technical assistance to improve enforcement before application of fines or withdrawal of trade benefits.

Conclusion

Implementation of the NAALC should not serve as a barrier to achieving an open and fair trading system between Canada, Mexico and the United States. Given the positive, cooperative nature of the NAALC, neither Mexico nor Canada should be in a worse position under the U.S. NAO's procedures than they would be under other U.S. trade laws.

In view of the cooperative character of the NAALC, the critical litmus test of the operation and effectiveness of the NAALC is whether cooperation has succeeded in meeting the objectives of Article 1 of the NAALC. If tri-national cooperation has led to this result, then it is a testament to the operation and effectiveness of the NAALC.

INDIVIDUALS

Jerome I. Levinson
American University

1. Pursuant to the invitation for Public Comments on the North American Agreement on Labor Cooperation (NAALC), I submit this Comment to the Secretariat, Commission for Labor Cooperation.

2. Any assessment of the "operation and effectiveness" of the NAALC must start with why, to begin with, a NAALC was thought to be necessary. The rationale for the NAALC was set forth by then Governor Bill Clinton, the 1992 candidate of the Democratic Party for President of the United States. In his October 4, 1992 speech at North Carolina State University, at Raleigh, North Carolina, Governor Clinton conditioned his approval of the North American Free Trade Agreement (NAFTA) upon the negotiation of additional provisions which would assure worker rights and environmental safeguards.¹

3. Nora Lustig, the foremost historian of the Mexican economic reforms has observed that the motivation for the NAFTA on the part of Mexico was not so much to open the American market to Mexican goods. Mexico already was assured favorable tariff and customs terms for its exports under the so-called Maquiladora program, initiated in the decade of the Sixties. Rather, Mexico sought to attract foreign direct investment (FDI) as part of an export led strategy of development that reversed decades of previous reliance upon import substitution industrialization.²

4. Pursuant to that objective, the NAFTA committed Mexico to eliminate previously existing restrictions on investment: Chapter 11 of the NAFTA, which deals with investment, prohibits limitations on ownership, use of local content, transfer of technology or nationality of senior management of enterprises; Chapter 17, in effect, required Mexico to reconstitute its intellectual property legal regime to conform to U.S. standards.

5. The NAFTA, then, as negotiated by the Bush Administration, was more than a trade agreement; it was, as well, an agreement that governed investment. What made Mexico different from other countries as a jurisdiction for FDI was not only its physical proximity to the U.S.; it was the fact that by neglecting worker rights (and environmental considerations), the NAFTA appeared to be weighted excessively in favor of capital. It eliminated previously existing obstacles to FDI but left in place a labor relations system which was designed to assure a compliant labor force precisely in order to be able to attract FDI.³ That is what created the impression that American workers would be placed at an unfair disadvantage in competing with Mexican workers for investment capital.

6. Candidate Bill Clinton, in the 1992 Raleigh speech, explicitly recognized this imbalance in the NAFTA. In that speech, Governor Clinton noted the risks involved in the NAFTA as negotiated by the Bush Administration:

"For a high wage country like ours, the blessings of more trade can be offset at least in part by the loss of income and jobs as more and more multi-national corporations take advantage of their ability to move money, management and production away from a high wage country to a low wage country. We can also lose incomes because those companies who stay at home can use the threat of moving to depress wages, as many do today."⁴

7. Bill Clinton explicitly acknowledged the problem posed by Mexico's non-enforcement of core worker rights, such as the right of free association:

"...[I]f you look at the experience of the maquiladora plants, those who have moved to Mexico right across the border, there is certainly cause for concern. We can see clearly there that labor standards have been regularly violated."⁵

8. Clinton therefore concluded that, "we need a supplemental agreement which would require each country to enforce its own environmental and worker standards. Each agreement should contain a wide variety of procedural safeguards and remedies that we take for granted here in our country, such as easy access to the courts, public hearings, the right to present evidence, streamlined procedures and effective remedies."⁶

9. The criteria by which the "operation and effectiveness in light of experience" of the NAALC must be judged is whether it has met the conditions stated by Candidate Bill Clinton in his October 4, 1992 speech at Raleigh, North Carolina.

10. Specifically, has the NAALC assured (i) that Mexican workers would be enabled to exercise their rights of free association and collective bargaining; (ii) procedural safeguards, as Clinton guaranteed in his Raleigh speech it would, to enable Mexican workers to exercise the rights guaranteed to them by Article 123 of the Mexican Constitution?

11. The writer was the lead lawyer for Mexican workers of Magneticos de Mexico (MDM), a subsidiary of the Sony Electronic Corporation, a U.S. company which is a subsidiary of the Sony Corporation of Japan. The workers had attempted to form an independent union, that is one not affiliated with the Mexican Confederation of Workers (CTM), the largest and best known trade union confederation in Mexico. The CTM is closely affiliated with the governing political party, the Institutional Revolutionary Party (PRI).

12. Four Non-governmental organizations filed a submission on behalf of the MDM workers with the USNAO under the provisions of the NAALC. The MDM submission alleged a failure of the Government of Mexico to enforce its own law and constitution guaranteeing the MDM workers their right of free association. The submission alleged that (i) the MDM workers were dismissed by MDM because of their attempt to form an independent union and (ii) the Conciliation and Arbitration Board (CAB) at Ciudad Victoria had wrongfully denied the petition of the MDM workers to register their union. CABs are a form of labor tribunal; registration of a union with a CAB is a requirement of Mexican law for a union to be able to lawfully act on behalf of its members.

13. The MDM Submission was the first test of the NAALC, which utilized the entire process, for an alleged violation of the right of free association. The rights of free association, collective bargaining, and the right to strike, often referred to as industrial relations, are among the labor principles incorporated into the NAALC, but they are not subject to the dispute settlement procedures of the NAALC, which could, potentially, result in sanctions against an offending Party: Mexico, the U.S. and Canada. Consultation at the Ministerial level is the only available remedy for an alleged violation by one of the Parties to the NAALC of industrial relations.

14. The significance of the MDM Submission (NAO Submission # 940003) is that it (i) exposed the anatomy of now MNCs, the CTM affiliated unions and the CABs operate in Mexico to assure that Mexican workers cannot, effectively, exercise their right of free association and (ii) demonstrated that the NAALC is not an effective instrument for addressing the problem.

15. We need go no further than the USNAO's own courageous Report on the MDM consultation:

"In the end, despite pursuing every legal means of redress, the attempts to register an independent union failed...[t]he time consumed by the initial denial, and subsequent CAB denial of registration caused irreparable harm. Interested workers who signed the original petition were subsequently dismissed from their employment and remain unemployed to date...It appears that such dismissals were intended as punishment and a warning to other Sony workers...[T]he labor representative on the CAB generally represents the incumbent or majority union -in the instant case a CTM affiliate. Therefore at least one member of the CAB had a competing interest with the independent union seeking registration."⁷

16. In October 1997, at the Han Young Korean-owned factory in Tijuana, Mexico, workers "voted overwhelmingly" to oust the CTM affiliated union and form an independent union but, according to the New York Times, "a Government labor board [CAB] has refused to announce the results." An observer from the AFL-CIO, reports the Times, stated, "[t]he Government is trying to swindle this election." (Id). The Han Young plant is one of Mexico's 2,700 border assembly plants, called maquiladoras, which assemble imported parts for re-export tax free: "Not one of these plants has an independent union, labor experts say," notes the Times.⁸

17. The Mexican government, a Party to the NAALC and the NAFTA, could not be sanctioned for depriving workers at MDM of their constitutional right of free association. The CABs continue to exist with their current composition and acknowledged conflict of interest. The Han Young workers are as much victims of this system as are the MDM workers who lost their jobs for trying to organize an independent union.⁹ The commitment, which candidate Clinton made to American workers in his October 4, 1992 Raleigh, North Carolina speech that he would not place them in competition with Mexican workers unable to exercise core worker rights such as freedom of association, remains unfulfilled.

18. The NAALC is a true reflection of the ambivalence of the Clinton Administration with respect to worker rights. Ambassador Mickey Kantor, the chief U.S. negotiator, with the approval of President Clinton, relegated worker rights, and environmental commitments, to side agreements, with no legal bridge to the main trade and investment agreement. They acceded to the demands of the Mexican authorities and the MNCs, eliminating the possibility of sanctions against companies or a party to the NAALC, meaning Mexico, for failure to enforce the rights of free association, collective bargaining and the right to strike.

19. Yet, the OBLIGATIONS part of the NAALC, Article 5, Procedural Guarantees, explicitly states that ...[e]ach party shall ensure that its administrative, quasi-judicial, judicial and labor tribunal proceedings are fair, equitable and transparent." Paragraph 4 of the same Article states that, "[e]ach party shall ensure that tribunals conduct or review of such proceedings are impartial and independent and do not have any substantial interest in the outcome of the matter."¹⁰

20. In one of the seminars that arose out of the MDM Consultation, one of Mexico's leading labor law authorities, an attorney representing employers, acknowledged the conflict of interest on the part of CAB labor members who are themselves affiliated with CTM affiliated unions. (CABs are made up of labor and employer members, with a Government Representative to break tie votes; the union members of CABs are almost invariably associated with unions affiliated with the CTM). As the USNAO Report on the MDM consultation noted, the conflict of interest on the part of the union representative of the CABs is evident.

21. The Clinton Administration, however, has never invoked Article 5, Paragraph 4 of the NAALC and confronted the Mexican authorities on this issue. Even if they did, it is not clear what remedy they could employ if Mexico, as it has evidently decided to do, ignored its obligations under the NAALC to constitute "independent" labor tribunals in which the members do not have an interest in the outcome of the matter under consideration.

22. Withdrawal from the NAALC by the U.S. would have no effect on the NAFTA. As previously noted, there is no legal bridge between the NAALC and the NAFTA. There is no consequence for Mexico in the NAFTA for a violation by Mexico of provisions of the NAALC. This, of course, is in striking contrast with a possible violation by Mexico of NAFTA Chapters 11 or 17, investment and intellectual property, which are integral parts of the NAFTA. Such violations would be subject to the dispute settlement provisions of the NAFTA, including the possibility of trade sanctions and fines and, even, in the case of intellectual property, seizure of the offending property.

23. Nor did the Clinton Administration, in the MDM Submission, maximize the possibilities of the Consultation process. The Secretary of Labor, Robert Reich, settled for academic seminars rather than insist upon a Ministerial-level Consultation on the substantive issues: the abuse of the registration requirement for unions by the CAB involved, and the inherent conflict of interest in the composition of the CABs.

24. In an excess of diplomatic niceties, Secretary Reich agreed that the seminars would examine the practices in regulating unions of all three Parties to the NAALC. The seminars, consequently, diluted the focus upon the practice of Mexico in using the CABs as the primary means of denying Mexican workers the right of free association and collective bargaining. The denial of those rights is the crux of the labor relations problem in Mexico. If then candidate Clinton's 1992 Raleigh speech had any meaning at all, that was the issue which the NAALC had to redress. The failure of Mexico to assure that right, indeed, in continuing to deny it, is the full measure of the failure of the NAALC. No amount of diversion to other purported purposes of the NAALC can obscure that dismal failure.

24. What we have, then, in the NAALC, is a commitment, in principle, on the part of the Clinton Administration to worker rights, but an unwillingness to do anything concrete to implement that principle which might risk the displeasure of the Mexican authorities, or, of the MNCs. This approach is not unique to the NAALC. It is characteristic of the weak to non-existent implementation of the Congressional mandate to use the "voice and vote" of the U.S. in the Bretton Woods institutions-the World Bank and the IMF-as well as the Regional Development Banks, for the purpose of promoting worker rights in these institutions and their borrower member countries.

25. The NAALC, then, must be understood as a missed opportunity, the opportunity to lay down a marker as to the U.S. vision of an international trade and investment regime which elevates worker rights to the same level of importance as the protection of corporate property rights. An effective commitment to worker rights would have introduced some minimal element of balance, now missing, in that trade and investment regime. It should now be evident on the basis of the experience with the NAALC that the only way to accomplish that objective is to incorporate worker rights into the main body of any future trade and investment agreement.

26. The NAALC illuminated the realities of the Mexican labor relations system. The Bronfenbrenner Report on The Effects of Plant Closing or Threat of Plant Closing on the Right of Workers to Organize, commissioned by the Labor Secretariat of the NAALC, is the first attempt to quantify the effect of the NAFTA on this important subject. Unfortunately, it did not receive the attention or publicity that it deserved.

27. The fate of the Bronfenbrenner report is symptomatic of the limitations of the NAALC. The Secretariat and the Commission for Labor Cooperation do not appear to want to confront the labor issues that are inherent in the NAFTA and NAALC relationship. Those issues are inevitably controversial; there is no way to avoid the fact that what occasioned the NAALC were the labor practices in Mexico. Ignoring the abuses of core worker rights in Mexico that continue to this day, as illustrated in the Han Young case, simply will not do.

28. On balance, the NAALC does more harm that it does good. It creates the illusion that something is being done to implement a commitment in Mexico to worker rights, particularly the most basic of all worker rights, the right of free association, when this is not the case. Consequently, it misleads the public and inhibits the development of an effective public policy with respect to worker rights. A commitment to core worker rights should be incorporated into the NAFTA, even if this involves the re-negotiation of the NAFTA. Experience with the NAALC demonstrates that this is the only way that MNCs and the Government of Mexico will take seriously such a commitment.

James W. Platner
Cornell University School of Industrial and Labor Relations

I would like to strongly encourage improved collaboration and increased consideration within NAALC of working conditions and work practices as reflected in occupational and environmental health and safety (OESH) outcomes. OESH initiatives must move away from reaction to catastrophes and fatalities and towards anticipation, control, audit, and continuous improvement. This is critical given the ultimate objective of sustainable economic development. While harmonization of regulatory standards is one aspect of such an initiative, human resources development and training of plant level practitioners, labor involvement and whistleblower or collective action protections, and sharing of information and strategies are critical.

Russell E. Smith
Washburn University, School of Business

..."I am submitting a copy of a short paper, "An Early Assessment of the NAFTA Labor Side Accord," which I prepared for the meeting of the Industrial Relations Research Association 49th Annual Meeting in January 1997 in New Orleans and which appeared in the Proceedings of that meeting."

An Early Assessment of the NAFTA Labor Side Accord

The NAFTA Labor Side Accord, properly called the North American Agreement for Labor Cooperation (NAALC) (CLC 1993), was one of the conditions set by U.S. President Bill Clinton for his support of the North American Free Trade Agreement (NAFTA). Finalized in September 1993, the NAALC paved the way for the final approval of NAFTA by allowing the Clinton administration to claim that it had addressed the flaws in the original NAFTA in the labor area and by giving political cover to congressmen who needed such cover (Grayson 1995:144-150). Essentially an inter-governmental cooperation mechanism, the NAALC was greeted with skepticism by those who had hoped for explicit and enforceable labor standards, although it was later embraced by some active observers and participants as a useful worker rights, political, and organizing tool (Compa 1995; Robinson 1995; Herzenbert 1996). The national labor movements of the three countries did not support the NAALC; the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) and the Canadian Labor Congress (CLC) continued to oppose NAFTA, while the Confederation of Mexican Workers (CTM) supported it.

While the NAALC in its final form did not include explicit labor standards nor a real enforcement mechanism, it did include (1) a broad charge for cooperation and consultation; (2) a list of eleven labor principles; (3) a set of NAALC institutions including the trilateral Commission for Labor Cooperation (CLC) and the three National Administrative Offices (NAOs); and collective bargaining are not themselves mutually exclusive. Indeed, bargaining often continues during the course of a strike, albeit sporadically. Thus to make the leap that LeRoy makes and say that longer permanent replacement strikes are inconsistent with U.S. labor policy seems rash and unwarranted. LeRoy's implicit suggestion that the government return to data gathering of a sort that would allow further investigation into this question seems entirely reasonable. His other proposals, though, should probably wait for the added support that better data might lend them.

Each of these refereed papers makes a valuable contribution to the existing literature and helps focus attention on issues of great concern to both labor and management. Sexual harassment, the exponential growth of employment arbitration, and the use of permanent replacement strikers are all compelling subjects. The authors whose work appears here have each drawn attention to these problems in a way that guarantees lively debate and further inquiry.

Three Years of the NAALC

In the three years of the NAALC, substantial progress has been made in establishing its basic structures and processes, as documented in the reports of its institutions covering 1994 (Otero 1995; U.S. DOL 1995a), 1995 (CLC 1995), and 1996 (CLC 1996a, 1996b, 1996c). In 1994 the NAO in the United States was established at the beginning of the year, and cooperative activities, already established under Mexico-U.S. and Canada-Mexico bilateral agreements and merged under the NAALC, continued under the auspices of the NAALC (U.S. DOL 1995b). The first submissions under the consultation mechanism were filed in the United States and were accepted for review, with one reaching the level of ministerial consultations.

In 1995 the secretariat of the Commission for Labor Cooperation was inaugurated in September with its seat in Dallas, cooperative activities continued, and the first CLC annual report was issued (CLC 1995). The secretariat undertook three studies, including a comparative labor law study, a comparative labor market study, and a study of best practices in manufacturing, as authorized under the NAALC (Art. 14). The first submission was received and accepted by the Mexican NAO, which like the third submission of 1994 at the U.S. NAO, reached the level of ministerial consultation. Both ministerial consultations resulted in work plans of further research and conferences.

In 1996 activities continued and intensified. Highlights included two new submissions under the NAALC consultation mechanism, suggesting continuing interest within the nongovernmental organization (NGO) and labor communities in the use of the consultation process in spite of a lack of concrete results and a surge of activity from the CLC secretariat in Dallas. Both new submissions, filed in the United States against Mexico, were accepted for review. Activities at the secretariat include conferences, publications, and other materials, along with modern electronic communication devices such as e-mail addresses and a website. The CLC bulletin, Labor in NAFTA Countries, came out three times in 1996 and is a useful source of information on NAALC documents, structures, principles, and programs. Each issue juxtaposes labor market and economic data from official sources from the three countries, a contribution in itself, and information is given on upcoming conferences.

High Labor Standards in North America: Can NAALC Be the Road?

As the NAALC enters its fourth year, it can be concluded (1) that the institutions and activities set out in the original document have been implemented and (2) that the NAALC research, cooperative, and consultation activities have generated significant information on labor relations in the three countries and especially in Mexico. As a NAALC by-product, there are indications of strengthened cross-border alliances and increased NAFTA-wide activities among various labor, labor-interest, and professional groups, most notably the alliance among the telephone workers unions of the three countries, the NAFTA Desk of the Canadian Labor Congress, the Frente Auténtico de Trabajo (FAT) in Mexico, the International Labor Rights Fund (ILRF) in the United States, and the NAFTA Committee of the Industrial Relations Research Association (Verma 1996). Still absent, however, is the necessary key player, the AFL-CIO, which should, to the extent that there is North American integration of business and the economy, similarly develop a labor movement integration framework.

The question remains, however, of whether or not the NAALC information, cooperation, and consultation approach will lead to high labor standards in North America or even to enforcement of the labor laws of the three countries. Ultimately, the burden of proof is on the proponents. In the present climate of anxiety about employment and incomes and skepticism about the efficacy of any government action, those who would conclude that the NAALC is achieving a positive labor-market outcome have their work cut out for them. Those who would argue either for engaging the NAALC processes to push them to their limits and carry the work beyond or for another approach to the same goals independent of the NAALC will have an only slightly easier time of it. NAALC skepticism should be replaced with the question of how to achieve high labor standards in North America, followed by considering how the NAALC contributes to the larger effort.