Section V: Interpretation, Application, and Enforcement
Section V: Interpretation, Application, and Enforcement
A. The Submission, Consultation, Evaluation, and Enforcement Process
Interpretation, application, and enforcement of the Agreement are governed by a complicated series of steps.48 The first phase, cooperative consultations, encompasses two steps: (1) consultations initiated by one NAO with another NAO "regarding the other Party's labor law, its administration, or labor market conditions in its territory,"49 and, if the matter remains unresolved, (2) Ministerial Consultations "regarding any matter within the scope of this Agreement."50 While NAO-to-NAO consultations may be triggered by a public submission pursuant to Article 16(3),51 each NAO has the independent authority to initiate consultations over any matter within the scope of the NAALC.52
This first phase is deliberately designed to be cooperative, investigatory, and consultative, ending in negotiated resolution of any disputes after clarification of the issues.53 It is not structured as an adversarial, adjudicatory dispute resolution process, includes no neutral fact-finder, and has no sanctions or any other type of remedy. The Parties are required to exert every effort to settle the contentious matters through NAO level and ministerial level cooperative consultations.
This first or consultation phase affords the only level of procedures for interpretation, application, and enforcement of the Agreement as to several of its key provisions. As to other provisions, however, the NAALC specifies two further phases. The phase following consultation is denominated an "evaluation" phase, in which an Evaluation Committee of Experts produces a fact-finding report analyzing patterns of (non)enforcement of the specified body of domestic labor law.54 The third and final phase is the "dispute resolution" phase and centers on a five-member, Arbitral Panel-based, binding dispute resolution process. This dispute resolution phase commences with further Party-to-Party consultations,55 and followed by a special session of the Council,56 convening of an Arbitral Panel. The Arbitral Panel is authorized to render a report containing determinations as to a Party's alleged "persistent pattern . . . of failure to effectively enforce" specified labor laws and recommending a suitable remedial action plan.57 If necessary, further procedures may be invoked to adopt and enforce an action plan binding on the offending Party, enforceable through measures which may include monetary assessments. Unpaid monetary assessments may either lead to trade sanctions in an amount equivalent to the unpaid financial penalty or, in the case of Canadian violations, a Canadian domestic court judgment enforcing the assessment.58
Unlike the consultations phase, the evaluations phase and the Arbitral Panel-based dispute resolution phase have progressively narrower jurisdiction. Only "patterns of practice" by a Party in enforcement of its occupational safety and health or "other technical labor standards" may be raised at the Phase 2, ECE level.59 Of the 11 Labor Principles seemingly mutually recognized in Annex 1 of the accord, the first three -- freedom of association, collective bargaining, and the right to strike -- are omitted from the definition of "technical labor standards,"60 hence excluded from proceedings before the ECE. Moreover, "the setting of all standards and levels in respect of minimum wages and labor protections for children and young persons by each Party," as opposed to enforcement of those standards set by each Party, is further excluded from "obligations under this Agreement," at least as to ECE proceedings addressing "technical labor standards."61
In addition, the Party complained against before the ECE has the option of seeking a determination by a Council-appointed expert that the underlying matter either is not "trade-related" or is not "covered by mutually recognized labor laws."62 The definition of "trade related" encompasses firms or sectors directly engaged in cross-border trade in goods or services, as well as those that compete domestically within the complained-against Party's territory with goods or services produced by firms operating in another Party's territory.63 Even within the limited labor law subject matter jurisdiction afforded for ECE proceedings, matters can be excluded from the process if the sector in which they happen to arise is unconnected to cross-border trade with another NAFTA Party.
A matter cannot be brought before an ECE if it is determined not to be "covered by mutually recognized labor laws;" i.e., if the two Parties involved in the proceeding do not each have laws "which address the same general subject matter in a manner that provides enforceable rights, protections or standards."64 Thus, proceedings at the ECE level may be maintained against a Party which fulfills its NAALC aspiration to maintain and improve its labor laws covering the eight principles (safety and health and technical labor standards), including fulfilling its NAALC obligations to provide for government enforcement of these laws,65 as well as for enforceability by private actors whose interests are injured by violations.66 The Agreement is unclear regarding the procedural posture of a Party which repeals existing legislation, for example, governing child labor, or one which renders its occupational safety and health law unenforceable by failing to enact any private right of action and by repealing legislation providing for government inspectors or authorities to prosecute alleged violations. A construction of the NAALC which allowed a Party by repeal of a labor law provision to thereby exclude itself from the potential embarrassment of ECE fact-finding, where the less dramatic action of routinely looking the other way when violations occur would remain subject to ECE proceedings, would be extremely unfortunate. Such a construction could undermine accomplishment of the major NAALC objectives and vitiate a Party's fulfillment of its undertaking, in Article 2, to maintain and strive to improve its labor standards. It should be noted here that a matter cannot progress to the arbitral dispute resolution phase without completion of the ECE process; hence exclusions from the ECE phases also ensure that no binding remedy can be imposed in such circumstances.
The final phase, the arbitral dispute resolution process, is even further restricted, both in subject matter and in the nature of violations which may be pursued at that level. The Arbitral Panel may only address an "alleged persistent pattern of failure by the Party complained against to effectively enforce its occupational safety and health, child labor, or minimum wage technical labor standards," and only if the matter is both "trade-related" and "covered by mutually recognized labor laws."67 A two-thirds vote of the Council is required to convene such a panel.68 Thus, only matters regarding pervasive failures to enforce domestic labor law in one of the three categories may be raised at the level specifying potential remedies, either monetary or in the nature of an equitable order to modify government practices.
B. Submission Cases to Date
The experience upon which the NAC may draw in assessing the efficacy of the NAALC structures and procedures aimed at ensuring effectuation of its terms by the Parties is extremely limited. While the Agreement permits the NAO of any Party to initiate consultations with any other Party over interpretative uncertainties or alleged violations of the NAALC, this power of initiative has remained wholly unused. Rather, the only instances in which such consultations have been commenced have stemmed from submissions to one of the NAOs by nongovernmental organizations, trade unions, and private citizens, containing allegations of violations of another Party's obligations. Indeed, as of the writing of this report, fewer than a dozen submissions in toto had been filed since the inception of the NAALC.
Virtually all submissions have focused on the first three labor rights, those of freedom of association, the right to bargain collectively, and the right to strike, which are precisely the three labor rights for which the NAALC provides only NAO and Ministerial Consultations, that is, voluntary persuasion rather than any more potent remedy. Recent submissions, however, have raised issues of sex discrimination and of nonenforcement of occupational health and safety protections. These cases, however, have yet to progress beyond the Ministerial Consultation stage, so no experience-based assessment can be made of the effectiveness of either the Evaluation Committee of Experts step in the procedure, which would be the terminal one for a sex discrimination claim, or of the possibility of monetary penalties or trade sanctions, the final step available as to health and safety violations.
In addition, it should be noted that only one submission has progressed, before the Mexican NAO, as to U.S. violations of labor rights; all of the others have been initiated before the U.S. NAO regarding alleged Mexican failures to comply with their NAALC obligations. The slow pace of ratification among the Canadian provinces has precluded any submissions before the Canadian NAO, or about Canadian violations, except in the narrow sphere encompassed within the Canadian federal labor jurisdiction, and none have been filed.
C. Evaluation of the NAALC Processes Regarding Interpretation, Application, and Enforcement of the Agreement
Despite these limitations, some observations about the operations of the submissions, enforcement, and dispute resolution process can be made. First, it is noteworthy that no government has on its own initiated a cooperative consultation and evaluation process involving an alleged breach of obligation by any other Party. The submission process does not appear to have been originally intended as the main vehicle for raising and addressing issues of compliance with and fulfillment of the terms of the NAALC, yet thus far, it certainly has operated in that fashion. The NAOs' authority to initiate such consultations, set forth in Article 21, has so far remained dormant.
In light of the focus of the NAALC interpretation, evaluation, compliance and enforcement process on systemic failures to comply by a Party, rather than instances of enforcement error or nonenforcement in domestic disputes between private parties, this represents a potential structural difficulty. Governments will have diplomatic disincentives against initiating such procedures against other Parties; NGOs, unions, and other potential private actor enforcement initiators will encounter resource difficulties and may have little or no interest in addressing whole subject areas of concern under the NAALC. The U.S. NAC believes the NAOs of each Party could fruitfully utilize their powers of initiative to accelerate fuller application of the NAALC.
Second, in several submission-related matters, as well as in the course of some of the research conducted by the Secretariat, lack of adequate record-keeping requirements at the domestic level in one or all Parties contributes to the problem. Data compilations regarding violation rates and enforcement rates under particular laws will be extremely important in demonstrating the presence or absence of patterns of enforcement failures, once matters begin to reach the ECE and higher levels of the interpretation, application and enforcement process under the NAALC. Where record keeping is at the government level, of course, the Party or Parties should unilaterally solve the matter by changing their practices, but such action appears thus far not to have been forthcoming.
A focus by the Commission on assuring mutually compatible and comparable governmental record keeping on labor-related, especially labor law-related, matters would be most timely and could head off problems that otherwise might develop when a greater volume of cases begins to reach the ECE phase of the interpretation and application process under the Agreement. In certain instances, the absence of data relates to the lack of governmentally imposed record-keeping obligations on the part of employers. Article 3(1)(d) obligates each Party to "promote compliance with and effectively enforce its labor law through appropriate government action . . . such as . . . requiring record keeping and reporting..." In those instances where lack of employer record keeping precludes adequate Party data compilation, consultations initiated by the NAOs or at the ministerial level to improve both private and public record keeping could prove to be highly constructive.
Third, it is noteworthy that both the U.S. and Mexican NAOs have investigated, and processed through the consultation stage, most public submissions stating claims of violations of terms of the NAALC.69 In most cases, public hearings have been held, and in some instances, expert presentations have been sought, in addition to requests directed to the complained-against Party NAO for explanatory legal and factual material. The U.S. and Mexican NAOs thus far have developed and administered a flexible, reasonable, and transparent set of procedures that are designed to and, in fact, assure the public in all three Party countries that the submissions alleging violations of the accord by another Party will receive a fair hearing.
This is not to suggest universal satisfaction with all aspects of the present process. Employer and trade union representatives have urged diametrically opposite critiques of the present process. Employers protest, inter alia, the focus of a typical submission on a particular employer's alleged labor law violation and the Party government's law enforcement failure allegedly highlighted therein. Unions complain, inter alia, of the absence of employer participation in the NAALC submissions hearing process on grounds that it prevents full factual development of the law enforcement issues.
Fourth, the structure of the steps in the NAALC evaluation and dispute resolution procedure raise issues about whether their terms are adequate to fulfill the goals of the Agreement. The design of the process appears oriented exclusively toward systematic failures to enforce the 11 Labor Principles of Annex 1 and differentiates among them. The NAC is deeply divided over the propriety of these divisions; several of its members believe the omission of all of the principles from full enforcement parity is a major flaw in the Agreement, to be remedied at the first opportunity to negotiate changes in the text. Apart from the hotly disputed question of whether there should be such prioritization or discrimination among the various core Labor Principles, however, is the failure of the text to expressly include in the interpretation, application and enforcement process, beyond the purely consultative first stage, violations of the Parties' undertakings in the NAALC that do not involve systemic failures to enforce particular labor laws.
The U.S. NAC interprets "patterns of practice . . . in the enforcement of" the specified labor laws, defining the scope of ECE competence in Article 23(2), and "persistent pattern of failure... to effectively enforce such [specified labor] standards," defining the scope of Arbitral Panel competence in Article 27(1), as terms to be broadly construed to encompass all types of violations of NAALC Part Two obligations as they bear upon effective enforcement of a particular domestic labor law right. Not only systematic failures of government enforcement action, in violation of Article 3, but failure to ensure private recourse, in violation of Article 4, systemic failure to assure due process and other minimum procedural guarantees under Article 5, and lack of transparency in violation of Articles 6 and 7, as well as failure to maintain or improve existing labor standards or labor rights, under Article 2, may be cognizable in ECE and Arbitral Panel dispute resolution proceedings where they contribute to the pattern of nonenforcement of a covered Annex 1 labor principle.
The Committee would view with grave concern any contrary construction of the NAALC, which might limit violations that appear to be cognizable under the effective enforcement rubric to those falling with the scope of Article 3, "Government Enforcement Action," which encompasses obligations such as appointing and training inspectors, requiring record keeping and reporting, and initiating appropriate proceedings seeking imposition of sanctions for violations of domestic law. The remaining obligations, including each Party's duty to "ensure that its labor laws and regulations provide for high labor standards," to ensure appropriate private party access to judicial or other tribunals to enforce labor law rights, due process and other procedural guarantees, and publication and transparency of laws, must be included in the processes of interpretation, application and enforcement involving expert fact-finding and evaluation, as well as those involving arbitration and potential imposition of remedies for violations. The significance of violations of these kinds to accomplishment of the fundamental goals and objectives, and to fulfillment of the concrete obligations of the NAALC, may be at least as great as systemic failures to hire labor inspectors or prosecute domestic law breakers, in the enforcement of a particular body of domestic labor law.
Lest the point be thought to be purely conjectural, these types of issues have already arisen in submissions. In the Fishing Ministry case,70 the argument was made that the very structure of the Mexican Conciliation and Arbitration Board (CAB) tribunal system, with its customary inclusion of one labor member affiliated with the dominant labor confederation, itself affiliated with the PRI, in turn commonly linked via the government to the appointment of the government representative on the CAB, renders the CABs systematically devoid of neutrality and impartiality in cases involving independent trade unions. This claim was treated as being limited to the particular substantive issues raised regarding violation of freedom of association rights, but the claim equally asserted violations of the obligation to provide "fair, equitable, and transparent" tribunal proceedings,71 that "comply with due process of law,"72 and that are "conduct[ed by tribunals that are] impartial and independent and do not have any substantial interest in the outcome of the matter."73 This is a claim of a systemic violation that cuts across several different substantive labor law rights guarantees, since it applies to every matter cognizable before the CAB in which at least one litigant is openly aligned with a trade union confederation, employer confederation, or political party at odds with the dominant political party in government at the level appointing the particular CAB.
The submission raising issues regarding pregnancy discrimination provides another example. The Mexican government asserted therein that its laws prohibiting employment discrimination on the basis of sex and pregnancy only covered workers who are already employed. Regardless of the merits, the contention highlights the possibility that a government may simply fail to provide legislation, or may repeal or reinterpret existing legislation to eliminate as a "mutually recognized labor standard" a matter all three Parties presumably believed they were mutually assuring under the Labor Principles of Annex 1. Assuming the Mexican labor laws do not in fact protect pregnant job applicants (as opposed to employees) against hiring discrimination, the NAALC must be construed to preclude such a lowering of standards heretofore mutually acknowledged.
This type of matter must be regarded as cognizable before an ECE, given that employment discrimination laws fall among the "technical labor standards" for which ECE proceedings are available. To hold the contrary would force the untenable conclusion that the greater the impairment of the benefit of the NAALC bargain, in terms of mutual assurance of a floor on labor standards despite the pressures created by NAFTA, the more difficult for either of the other two countries to obtain adequate redress and compliance by the offending Party.
The NAALC embodies a new approach to the development of international consultation and cooperation on labor standards, in a fashion consistent with preservation of domestic sovereignty and democratic accountability. The core of the approach is reservation of the adoption of labor laws to the domestic level, with the accord, despite its aspiration of promoting improved labor standards, being primarily structured to prevent a downward spiral, particularly through nonenforcement of formally existing labor rights. Underlying the NAALC is the implicit premise that each of the three Parties in fact already subscribes to legislation and enforcement procedures providing on their face the basic level of labor rights in the 11 core areas specified.74 One difficulty with this approach is that similar principles may mean very different things in the respective domestic context, particularly bearing in mind the differences in governmental structure, and legal traditions, among the three countries. It is likely to require a considerable period of time, for example, for the Parties to fully appreciate the extent to which their commitments to the various Labor Principles are in fact equivalent or widely divergent when viewed within the comparative context. Application of the ECE and arbitral level to matters beyond law enforcement issues, narrowly interpreted, may contribute to an acceleration of this process, which is likely to prove to be an essential part of long-term regional integration of markets.