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1
Labour provisions in TPP and TTIP: A comparison without a difference?
Joo-Cheong Tham and Keith Ewing
I
A NEW (NEO-LIBERAL) ERA OF LABOUR PROTECTION THROUGH TRADE?
Should labour standards be part of international trade regulation? The answer given
at the multi-lateral level has been resoundingly ‘no’. Responding to calls to include a
‘social clause’ as part of the World Trade Organisation’s (WTO) agenda, the 1996
Singapore WTO Ministerial Declaration pointedly insisted that the ‘International
Labour Organization is the competent body to set and deal with’ ‘the observance of
internationally recognized core labour standards’. It further ‘reject(ed) the use of
labour standards for protectionist purposes, and agree(d) that the comparative
advantage of countries, particularly low-wage developing countries, must in no way
be put into question’. 1 With the reaffirmation of this position in the 2001 Doha WTO
Ministerial Declaration, 2 the debate over integrating labour standards into the
international trading system appeared all but over, with claims that such integration
constituted disguised protectionism and would be particularly unfair to less
developed countries trumping arguments about the rights of workers and ‘levelling
the playing field’ of international trade.
The position at the multi-lateral level appears to have been overtaken by what the
Director of the International Labour Organisation’s (ILO) Research Department has
characterized as a ‘somewhat surprising and largely unexpected’ development 3 - the
rapid increase of provisions dealing with labour standards4in bilateral, regional and
plurilateral trade agreements.5 The principal question with these agreements no
longer seems to be, Should labour standards be part of international trade
regulation? – a strong tendency is to presume ‘yes’ to this question. Rather, the key
question presently appears to be: How should labour standards be integrated into
1
SINGAPORE WTO MINISTERIAL 1996: MINISTERIAL DECLARATION
WT/MIN(96)/DEC, paragraph 4 (Available at
https://www.wto.org/english/thewto_e/minist_e/min96_e/wtodec_e.htm) (accessed on 21 January
2016).
2
DOHA WTO MINISTERIAL 2001: MINISTERIAL DECLARATION
WT/MIN(01)/DEC/1, paragraph 8 (Available at
https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm) (accessed on 21 January
2016). This paragraph stated that:
We reaffirm our declaration made at the Singapore Ministerial Conference regarding
internationally recognized core labour standards. We take note of work under way in the
International Labour Organization (ILO) on the social dimension of globalization.
3
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) v.
4
See generally Cleopatra Doumbia-Henry and Eric Gravel, ‘Free trade agreements and labour rights:
Recent developments’ (2006) 145(3) International Labour Review 185; Clotide Granger and Jean-Marc
Sioren, ‘Core Labour Standards in Trade Agreements: From Multilateralism to Bilateralism’ (2006)
40(5) Journal of World Trade 813. For ease of reference, this paper will refer to provisions dealing
with labour standards as ‘labour provisions’.
5
These agreements are also referred to collectively as preferential trade agreements.
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2
international trade regulation? With this shift, it is no longer a question of ‘free vs
fair trade’ but rather what kind of fair trade. 6
Indeed, the rhetoric from key quarters has been on ‘ratcheting upwards’ the labour
standards provided under trade agreements. In ongoing negotiations between the
European Union (EU) and the United States (US) on the Trans-Atlantic Trade and
Investment Partnership (TTIP), the European Commission has proposed a chapter on
‘Trade and Sustainable Development’ – which centrally includes labour provisions that it says ‘offers the most ambitious provisions ever put forward on these issues to
any trading partner’.7 The US Government has claimed that the recently concluded
Trans-Pacific Partnership Agreement (TPP) has ‘the strongest protections for workers
of any trade agreement in history’, 8 setting a ‘high-water mark for labor protections
in a trade agreement’; 9 following closely behind, the Australian Minister for Trade
and Investment has said that the TPP ‘includes requirements for the highest labour .
. . standards’. 10 Indeed, the ‘Labour’ chapter of the TPP is the most significant set of
labour provisions in trade agreements concluded to date because of the scope of
this ‘mega-agreement’ and the importance of the chapter to this agreement.
After five years of negotiation, the TPP was concluded on 4 October 2015 amongst
12 countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico,
New Zealand, Peru, Singapore, United States, and Vietnam) representing 40 per cent
of global GDP. 11 The TPP is significant not only for the amount of global trade and
investment it (potentially) covers but the approach it is said to have adopted in
relation to international trade. Critics noted the significance of the TPP - a trade
agreement that has been characterized as ‘no ordinary deal’ underpinned by a
‘neoliberal market model’. 12 On the other side, the leaders of the TPP countries have
6
Two decades ago, Brian Langille insightfully argued that this shift was inevitable: Brian Langille,
‘General Reflections on the Relationship of Trade and Labor (Or: Fair Trade is Free Trade’s Destiny)’ in
Jadgish Bhagwati and Robert Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free
Trade? Volume 2: Legal Analysis, MIT Press (1996) Chapter 5.
7
European Commission, ‘EU to pursue the most ambitious sustainable development, labour and
environment provisions in TTIP’, 6 November 2015, media release (available at
http://europa.eu/rapid/press-release_IP-15-5993_en.htm) (accessed on 21 January 2016).
8
https://medium.com/the-trans-pacific-partnership/labour-66e8e6f4e8d5#.mp8nvoqt7 (accessed on
11 January 2016).
9
https://medium.com/the-trans-pacific-partnership/labour-66e8e6f4e8d5#.8ups5mya6 (accessed on
26 January 2016).
10
Andrew Robb, Minister for Trade and Investment, ‘Trans-Pacific Partnership (TPP) pact to drive
jobs, growth and innovation for Australia’, 6 October 2015, media release (available at
http://trademinister.gov.au/releases/Pages/2015/ar_mr_151006.aspx; accessed on 11 January 2016)
11
Trans-Pacific Partnership Ministers Statement, 4 October 2015, https://ustr.gov/about-us/policyoffices/press-office/press-releases/2015/october/trans-pacific-partnership-ministers (accessed on 21
January 2016). The TPP has yet entered into force. Parties have two years after the signing of the TPP
to ratify the agreement: Trans-Pacific Partnership Agreement, Article 30.5. The Parties are due to sign
the TPP on 4 February 2016: official ref To enter into force, it has to be ratified by at least at least six
of the original signatories, which together account for at least 85 per cent of the combined gross
domestic product of the original signatories in 2013: Trans-Pacific Partnership Agreement, Article
30.5.
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3
said that the agreement provides ‘a new and compelling model for trade in one of
the world’s fastest growing and most dynamic region’. 13
Central to this ‘new and compelling model for trade’ is the improvement of labour
standards. As a joint statement of the trade ministers of the TPP countries put it,
‘(w)e expect this historic agreement to promote . . . strong labor . . . protections’.14
Key TPP signatories have echoed these sentiments. The US Government has said that
the TPP ‘will create a fairer and more level playing field for American businesses and
American workers by raising labor standards across the Asia-Pacific’; 15 the Australian
Minister for Trade and Investment, has similarly said that ‘The TPP's labour . . .
chapter will support efforts to . . . improve labour rights’.16 The significance of the
‘Labour’ chapter has also been underlined by the Legal Director of the International
Trade Union Confederation who observed that, ‘(t)he (TPP) labor chapter . . .will
create a new template with broad geographic coverage and is likely to be used as a
model else- where’.17
This paper tackles the topic of labour standards and trade agreements by providing
an exploratory analysis of Chapter 19 of the TPP, its ‘Labour’ chapter, and possible
labour provisions for TTIP. 18
It begins by providing a conceptual framework for understanding labour provisions
in trade agreements. This framework is firstly based on four key dimensions of
labour provisions in trade agreements: their purposes, the legal nature of the
provisions (whether binding or not), the substance of legal obligations imposed and
the institutional processes provided for. Secondly, the framework draws attention to
two dominant approaches to these provisions, the EU and US approaches: the
former can be understood as proposing a broad agenda based on promotional
measures while the latter is underpinned by a narrow agenda based on conditional
12
Jane Kelsey, ‘Introduction’ in Jane Kelsey (ed), No Ordinary Deal: Unmasking the Trans-Pacific
Partnership Agreement (2010) 9.
13
TPP Leaders’ Statement – 18 November 2015 (available at
http://dfat.gov.au/trade/agreements/tpp/news/Pages/tpp-leaders-statement.aspx) (accessed on 11
January 2016).
14
Available at https://ustr.gov/about-us/policy-offices/press-office/pressreleases/2015/october/trans-pacific-partnership-ministers (accessed on 11 - January 2016) (emphasis
added).
15
https://medium.com/the-trans-pacific-partnership/labour-66e8e6f4e8d5#.mp8nvoqt7 (accessed
on 11 January 2016).
16
Malcolm Turnbull, Prime Minister, and Andrew Robb, Minister for Trade and Investment, ‘Historic
Asia-Pacific Trade Agreement Opens New Era of Opportunities’, 6 October 2015, media release
(available at http://www.pm.gov.au/media/2015-10-06/historic-asia-pacific-trade-agreement-opensnew-era-opportunities) (accessed on 11 January 2016).
17
Jeffrey S Vogt, ‘The Evolution of Labor Rights and Trade – A Transatlantic Comparison and Lessons
for the Transatlantic Trade and Investment Partnership’ (2015) 18 Journal of International Economic
Law 827, 835.
18
It should not be assumed that this chapter is the only one of relevance to labour standards. For
example, Chapter 10: Cross-Border Trade in Services and Chapter 12: Temporary Entry for Business
Persons have clear implications for labour mobility and migration. More broadly, increased trade
openness resulting from the TPP will also impact upon labour standards.
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4
measures. Applying this framework, the chapter explains how the ‘Labour’ chapter
of the TPP largely adopts the current US approach to labour provisions.
This analysis is followed by preliminary observations on the the impact of labour
provisions in trade agreements on domestic labour standards. Whilst a complex set
of factors will shape such impact, we speculate – specifically in relation to the labour
provisions in TPP and TTIP - whether it will be the power of the United States that
will prove decisive in determining whether these provisions have positive, neutral or
negative impact on domestic labour standards. And if so, labour provisions in trade
agreements – including those in TPP and TTIP - will lay the ground for American
labour standards being established as the global standard.
II
LABOUR PROVISIONS IN TRADE AGREEMENTS
A
Key dimensions
There has been a dramatic increase of trade agreements with labour provisions.
According to a recent ILO study, only four trade agreements included labour
provisions in 1995 but the number increased to 21 in 2005. In 2013, 58 out of the
248 trade agreements notified to the WTO contained such provisions. 19 While trade
agreements with labour provisions were concentrated in North-South trade
agreements, the study also noted an increasing number of South-South agreements
that included such provisions 20 (Brown has similarly noted how, in contrast with USAsia trade agreements, inter-Asian agreements tended not to include labour
provisions). 21
There is a growing body of scholarship seeking to analyse the content of these
provisions and one point is abundantly clear – these provisions are characterized by
significant diversity. 22 Four dimensions are of particular importance in understanding
such diversity.
19
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) 19. See also Jordi Agusti-Panareda, Franz Christian Ebert and Desiree
LeClercq, Labour Provisions in Free Trade Agreements: Fostering their Consistency with the ILO
Standards System (2014, ILO Background Paper) Figure 1.
20
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) 1, 21.
21
Ronald C Brown, ‘Asian and US perspectives on labor rights under international trade agreement’ in
Axel Marx et al, Global Governance of Labour Rights: Assessing the Effectiveness of Transnational
Public and Private Policy Initiatives (2015), Edward Elgar, Chapter 5.
22
See, for example, Sandra Polaski, ‘Protecting labour rights through trade agreements: An analytical
guide’ (2004) 10(13) Journal of International Law and Policy 13; Sandra Polaski and Katherine
Vyborny, ‘Labor clauses in trade agreements: Policy and practice' (2006) 10(25) Integration and Trade
95; Jacques Bourgeois, Kamala Dawar and Simon Evenett, A Comparative Analysis of Selected
Provisions in Free Trade Agreements (2007), paper commissioned by the Directorate-General of Trade
of the European Commission; Betram Boie, Labour related provisions in international investment
agreements (2012) International Labour Office, 22-26; Jordi Agusti-Panareda, Franz Christian Ebert
and Desiree LeClercq, Labour Provisions in Free Trade Agreements: Fostering their Consistency with
the ILO Standards System (2014, ILO Background Paper); International Labor Organisation,
International Institute for Labour Studies, Social Dimensions of Free Trade Agreements (2015).
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5
The first concerns the purposes of the provisions. 23 The (contested) purposes
commonly attributed to these provisions are that they aim to reduce unfair
competition in international trade by promoting a ‘level playing field’ in working
conditions; and in doing so, prevent a ‘race to the bottom’ in terms of labour
standards and ‘social dumping’ (the practice of using inferior working conditions to
enhance product competitiveness). Associated with these aims is that of protecting
the rights of workers, whether as labour rights and/or human rights. 24 More
recently, the goal of promoting sustainable development has been ascribed to
labour provisions with such provisions allied to environmental standards. 25
Of course, a distinction should be made between the stated and the actual purposes
of the labour provisions. There can – will often – be a gap between both. Some
commentators have concluded, for one, that labour provisions are principally a
strategy to make trade liberalization more politically acceptable in developed
countries. 26 In a similar vein, concerns have been raised that such provisions are
merely ‘window dressing’. 27
The second dimension turns on the legal nature of these provisions: do they impose
legal obligations or merely provide for non-binding clauses (e.g. in the preamble)? 28
The third dimension concerns the substance of legal obligations imposed. Two key
questions arise here: Are the obligations ‘soft’ (e.g. ‘strive to ensure’) or ‘hard’ (e.g.
‘will ensure’)? 29 What is the scope of the obligations? 30 Cutting across these
questions is the manner in which the labour provisions refer to international labour
standards, in particular, ILO instruments. In 2015, two third of these provisions
referred to ILO instruments with most referring to the ILO Declaration on
Fundamental Principles and Rights at Work (ILO 1998 Declaration) while only 15 per
cent of these provisions referring to the ILO fundamental conventions.31
23
See generally Jean-Marc Sioren, ‘Labour provisions in preferential trade agreements: Current
practice and outlook’ (2013) 152(1) International Labour Review 85.
24
For a critical analysis of these purposes, see Michael Trebilcock and Robert Howse, Regulation of
rd
International Trade, Routledge, (3 edition, 2005) 559-563.
25
For a study of the use of unilateral trade measures for this purpose, see Olivier de Schutter, Trade
in the Service of Sustainable Development: Linking Trade to Labour Rights and Environmental
Standards, Hart Publishing (2015).
26
Christopher Erickson and Daniel Mitchell, ‘The American Experience with Labor Standards and
Trade Agreements’ (1999) 3 The Journal of Small and Emerging Business Law 41.
27
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) v.
28
Jacques Bourgeois, Kamala Dawar and Simon Evenett, A Comparative Analysis of Selected Provisions
in Free Trade Agreements (2007), paper commissioned by the Directorate-General of Trade of the
European Commission, 23-24; Betram Boie, Labour related provisions in international investment
agreements (2012) International Labour Office, 12-18.
29
Jacques Bourgeois, Kamala Dawar and Simon Evenett, A Comparative Analysis of Selected Provisions
in Free Trade Agreements (2007), paper commissioned by the Directorate-General of Trade of the
European Commission, 12-14.
30
Jacques Bourgeois, Kamala Dawar and Simon Evenett, A Comparative Analysis of Selected Provisions
in Free Trade Agreements (2007), paper commissioned by the Directorate-General of Trade of the
European Commission, 25-29.
31
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) 107, Figure 4.1. Similarly, in 2013, more than four out of five trade
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6
The question of scope of obligations also throws up a host of issues going beyond
international labour standards. Are other areas covered by the labour provisions, for
instance, minimum level of labour protection beyond international standards,
enforcement and public participation in the development and implementation of
labour laws? Do the obligations apply only when trade or investment between the
State Parties is affected or do they apply generally?
The fourth – and crucial – dimension concerns the institutional processes adopted
relation to the labour provisions. A threshold question here is whether these
processes apply before the trade agreement is ratified (pre-ratification) or only after
ratification (post-ratification). 32 There is also the issue of the institutions and
agencies empowered with monitoring implementation and compliance with the
labour provisions, in particular, whether there is an agency independent of the State
Parties such as the ILO is provided under the labour provisions.33
The fourth dimension implicates a distinction between conditional and promotional
elements of labour provisions in trade agreements. As explained by the ILO:
In the case of conditional elements, labour standards requirements are linked
to economic consequences, in the form of sanctions or, less frequently,
incentives, which concern trade or other benefits, including technical
cooperation. Promotional elements combine (binding or non-binding)
commitments relating to labour standards with cooperative activities,
dialogue, and monitoring. 34
Conditional provisions subject the obligations under the labour provisions to a
dispute-settlement mechanism while labour provisions that rely exclusively upon
promotional measures exempt these obligations from such a mechanism (which
would tend to apply to other provisions of the trade agreement). 35
agreements with references to ILO instruments referred primarily or exclusively to the ILO
Declaration on Fundamental Principles and Rights at Work (ILO 1998 Declaration) while a fifth
referred to specific Conventions: Jordi Agusti-Panareda, Franz Christian Ebert and Desiree LeClercq,
Labour Provisions in Free Trade Agreements: Fostering their Consistency with the ILO Standards
System (2014, ILO Background Paper) 9, Figure 2.
32
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) Chapter 2. See discussion in relation to TPP: US Labor Advisory
Committee on Trade Negotiations and Trade Policy, Report on the Impacts of the Trans-Pacific
Partnership (2015) (available at https://ustr.gov/sites/default/files/Labor-Advisory-Committee-forTrade-Negotiations-and-Trade-Policy.pdf) (accessed on 25 January 2016) 66-67.
33
Jacques Bourgeois, Kamala Dawar and Simon Evenett, A Comparative Analysis of Selected Provisions
in Free Trade Agreements (2007), paper commissioned by the Directorate-General of Trade of the
European Commission, 14-15, 29-33
34
International Labor Organisation, International Institute for Labour Studies, Social Dimensions of
Free Trade Agreements (2015) 21.
35
Jacques Bourgeois, Kamala Dawar and Simon Evenett, A Comparative Analysis of Selected Provisions
in Free Trade Agreements (2007), paper commissioned by the Directorate-General of Trade of the
European Commission, 14-15, 29-33
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7
B
The EU and US approaches
The diversity of labour provisions in trade agreements and their various dimensions
do not mean that dominant approaches cannot be identified. The increase in labour
provisions in trade agreements since the 1990s has largely been attributed to US and
EU foreign policies. 36 In the case of the EU, commentators have noted how the EU is
increasingly willing to exercise power through trade – to use its market power to
‘export’ its laws, standards, values and norms (as distinct from exercising power in
trade, that is, to use market power to secure access to export markets). 37
The question of power highlights how the geo-politics of the international trade
regime deeply affect whether labour provisions are adopted in trade agreements
and their content. In this respect, the ability of the EU and US to effect their policies
in relation to labour provisions in trade agreements is not unrelated to the level at
which negotiations are being conducted. The proliferation of bilateral, regional and
plurilateral trade agreements is commonly traced to the stalled discussions at the
multilateral level.38 The shift away from multilateral negotiations, however, alters
the power dynamics between negotiating States, potentially increasing the
vulnerability weaker trading nations to demands of the stronger nations; the WTO
has observed in relation to this shift that ‘(i)t may be that new international trade
rules are being negotiated and decided outside the WTO in a setting where
differences in power are greater’.39
The EU and US approaches have – and are – evolving. 40 At the same time, it is
possible to identify their current approaches: the EU approach from the labour
provisions it has proposed for TTIP (and associated material) in a draft chapter on
‘Trade and Sustainable Development’; 41 and the US approach from the 2007
36
See Jeffrey S. Vogt, ‘The Evolution of Labor Rights and Trade—A Transatlantic Comparison and
’
Lessons for the Transatlantic Trade and Investment Partnership (2015) 18 Journal of International
Economic Law 827–860. Canada has also been active in negotiating labour provisions into its trade
agreements: ibid 827.
37
Axel Marx et al, ‘Global governance through trade: an introduction’ in Jan Wouters et al (eds),
Global Governance through Trade: EU Policies and Approaches (2015) Edward Elgar, 4. The distinction
between exercising power in trade and through trade originates from an article by Meunier and
Nicolaidis: Sophie Meunier and Kalypso Nicolaidis, ‘The European Union as a conflicted trade power’
(2006) 13(6) Journal of European Public Policy 906-925.
38
Axel Marx et al, ‘Global governance through trade: an introduction’ in Jan Wouters et al (eds),
Global Governance through Trade: EU Policies and Approaches (2015) Edward Elgar, 2.
39
WTO, World Trade Report 2011: The WTO and preferential trade agreements: From co-existence to
coherence (2011) 187-188. See also Australian Productivity Commission, Trade & Assistance Review
2013-2014 (2015) 15.
40
See Jeffrey S. Vogt, ‘The Evolution of Labor Rights and Trade—A Transatlantic Comparison and
’
Lessons for the Transatlantic Trade and Investment Partnership (2015) 18 Journal of International
Economic Law 827–860.
41
European Union, EU Textual Proposal: Trade and Sustainable Development, published on 6
November 2015 (available at
http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153923.pdf; accessed on 20 January
2016)
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8
Bipartisan Trade Deal 42 and its negotiating objectives in relation to TPP.43 Table 1
below summarises these approaches in relation to the purposes and obligations of
the labour provisions while Table 2 does the same in relation to the institutional
processes of the labour provisions.
42
https://ustr.gov/sites/default/files/uploads/factsheets/2007/asset_upload_file127_11319.pdf
(accessed on 20 January 2016)
43
https://ustr.gov/tpp/Summary-of-US-objectives (accessed on 20 January 2016).
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9
Table 1: The present US and EU approaches to purposes and obligations of labour provisions in trade agreements
Purposes
provisions
Obligations
International
standards
of
labour
US approach
• Ensuring ‘level playing field’
• Ensuring respect for worker rights
EU approach
• Promoting sustainable development
• Upholding existing labour standards
• Promoting labour standards globally
labour
•
•
•
•
Adopt and maintain in laws and policies
principles as stated in ILO 1998 Declaration
Violation only when occurs in a manner
affecting trade or investment between the
parties
•



•
•
•
Support realization of ILO Decent Work Agenda
In accordance with ILO 1998 Declaration, laws and practices to respect etc ‘the
internationally recognized core labour standards, which are the subject of the
fundamental ILO Conventions’
Obligation above elaborated through:
Reference to ILO and UN Conventions;
Identification of key principles;
Stipulation of specific obligations (including promoting world-wide
implementation of the principles).
Sustained efforts to ratify fundamental ILO Conventions and ‘priority and
other ILO Conventions that are classified as up to date by the ILO and their
Protocols’
Effective implementation of ratified ILO Conventions (bearing in mind
Recommendations)
‘(C)onsult and cooperate as appropriate’ in relation to ‘cooperation with and
in third countries’ in relation to ILO core labour standards and fundamental
ILO Conventions
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10
Table 1: The present US and EU approaches to purposes and obligations of labour provisions in trade agreements (continued)
Obligations
Minimum level of protection
(apart
from
obligations
relating to international
standards)
Laws establishing ‘acceptable conditions of work’
•
•
•
•
Waiver and derogation
Not to waive or derogate from labour laws in a
manner that affects trade or commerce
•
•
Protectionism
No
Enforcement
•
•


Domestic policies and laws to ‘provide for and encourage high levels of
protection’
Parties to ‘strive to continue to improve those policies and laws and their
underlying levels of protection’
Laws to protect health and safety
Laws to protect decent working conditions
Not to waive or derogate from labour laws as an encouragement for, or in a
manner affecting, trade or commerce
‘(V)iolation of fundamental principles and rights at work cannot be invoked or
otherwise as a legitimate comparative advantage’
‘(L)abour standards should not be used for . . . protectionist trade purposes’
Obligation to effective enforce labour laws
Violation only when non-enforcement occurred:
through a sustained or recurring course of
in/action; and
in a manner affecting trade or investment
between the parties.
‘(R)ecognise the need for an adequate system of labour inspections’
Procedural guarantees
No
No
Transparency and public
participation in development
and implementation of labour
laws
Corporate
Social
Responsibility
Voluntary
sustainability
assurance schemes
No
Requirement of transparency and public participation
No
Promote CSR including through adherence to internationally agreed guidelines and
principles
Encourage voluntary sustainability assurance schemes
Discourage trade in goods by forced labour
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11
Table 2: The present US and EU approaches to institutional processes of labour provisions in trade agreements
Pre-ratification mechanisms
Post-ratification monitoring
enforcement mechanisms
Independent agency
Domestic mechanisms
US approach
Has been required of some countries
EU approach
No
No
Mechanism for public to raise concerns with respective
governments with obligation on governments to consider and
respond
Consultative mechanism
• State-State processes
• Same as applies to other obligations in the trade agreement
•
•
and
Dialogue between parties
Dispute-settlement processes and
remedies
EU principal emphasis on promotional measures
TTIP proposal yet to be released
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12
Table 1 highlights how the scope of the labour provisions differ significantly under
the EU and US approaches with the former adopting a far broader agenda. This is
evident in two ways. First, unlike the US approach, the EU approach proposes
obligations that go beyond the ILO 1998 Declaration to extend to other ILO
instruments, including the core ILO Conventions, and also to key UN Conventions;
second, public participation in the development and implementation of labour laws
is central to the EU approach but not so with the US approach. Both these aspects
are connected to the underlying purpose of the current EU approach - the
promotion of sustainable development – which encompasses but goes beyond the
purposes of the US approach (promoting a ‘level playing field’ and respecting
workers’ rights).
Breadth of agenda does not necessarily spell vagueness. Indeed, it could be said that
the EU approach towards the obligations under labour provisions is more detailed
than the US approach. The US approach is restricted to the ILO 1998 Declaration
(due in no small part to its non-ratification of six out of the eight fundamental ILO
conventions). 44 The EU approach also hinges upon the 1998 Declaration and the four
areas it covers (freedom of association and right to collective bargain; elimination of
forced or compulsory labour; effective abolition of child labour; equality and nondiscrimination in respect of employment). EU’s proposed labour provisions for TTIP,
however, go beyond the ILO 1998 Declaration to refer to the various Conventions
and stipulate key principles and specific obligations in these areas.45
Table 2 summarises how the two approaches deal with institutional processes
relating to the labour provisions. And again there is a notable difference. Table 2
indicates that, while there are promotional elements in the US approach (e.g.
dialogue between the Parties), it is strongly based on conditional measures both at
the pre-ratification and post-ratification stages.46 While the EU’s proposal in relation
44
The eight fundamental ILO Conventions are: 1) Freedom of Association and Protection of the Right
to Organise Convention, 1948 (No. 87); 2) Right to Organise and Collective Bargaining Convention,
1949 (No. 98); 3) Forced Labour Convention, 1930 (No. 29); 4) Abolition of Forced Labour
Convention, 1957 (No. 105); 5) Minimum Age Convention, 1973 (No. 138); 6) Worst Forms of Child
Labour Convention, 1999 (No. 182); 7) Equal Remuneration Convention, 1951 (No. 100); and
8) Discrimination (Employment and Occupation) Convention, 1958 (No. 111) . Of the eight, the US has
only
ratified
5)
and
6)
above,
see
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:10011:0::NO::P10011_DISPLAY_BY,P10011_C
ONVENTION_TYPE_CODE:1,F (accessed on 1 February 2016).
45
European Union, EU Textual Proposal: Trade and Sustainable Development, published on 6
November 2015 (available at
http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153923.pdf; accessed on 20 January
2016) Article 5 (Freedom of association and right to collective bargaining); Article 6 (Elimination of
forced or compulsory labour); Article 7 (Effective abolition of child labour); Article 8 (Equality and
non-discrimination in respect of employment and occupation).
46
See Chapter 2 of International Labor Organisation, International Institute for Labour Studies, Social
Dimensions of Free Trade Agreements (2015) for US emphasis on conditional measures.
Draft
13
to institutional processes for the TTIP’s labour provisions has yet to be released, its
traditional emphasis has been on promotional measures. 47
In sum, the EU approach is one of a broad agenda based on promotional measures
while the US approach can be characterized as one of a narrow agenda based on
conditional measures.
47
See Chapter 3 of International Labor Organisation, International Institute for Labour Studies, Social
Dimensions of Free Trade Agreements (2015) for US emphasis on conditional measures.
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14
The ‘Labour’ Chapter of the TPP: An American Approach to Labour Protection
through Trade Agreements
Table 3 makes clear how the TPP ‘Labour’ chapter largely corresponds to the current
US approach to labour provisions in trade agreements.
C
Table 3: The TPP ‘Labour’ chapter and the US approach to labour provisions in
trade agreements
Purposes of labour provisions
TPP ‘Labour’ chapter
Similar to US approach
Obligations
International standards
Identical to US approach
Minimum level of protection (apart from
obligations relating to international standards)
Waiver and derogation
Similar to US approach
Protectionism
Obligation in addition to US approach
Enforcement
Identical to US approach
Procedural guarantees
Obligation in addition to US approach
Transparency and public participation in
development and implementation of labour
laws
Corporate Social Responsibility
Similar to US approach
Voluntary sustainability assurance schemes
Identical to US approach
Institutional
mechanism
Consistent with US approach
processes:
Pre-ratification
Narrower than US approach as limited to rights
as stated in ILO 1998 Declaration and
‘acceptable conditions of work’
Obligation in addition to US approach
Institutional
processes:
Post-ratification
monitoring and enforcement mechanisms
Independent agency
Similar to US approach
Domestic mechanisms
Similar to US approach
Dialogue between parties
Similar to US approach
Dispute-settlement processes and remedies
Similar to US approach
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15
As indicated by Table 3, most aspects of the chapter are identical or similar to the US
approach. 48 The obligations in relation to protectionism and corporate social
responsibility are in addition to those proposed by this approach but these are not
obligations of significance: the obligation on ‘protectionism’ may be unenforceable
given the lack of definition as to what is ‘protectionism’ and the obligation in relation
to corporate social responsibility is merely a very ‘soft’ obligation to ‘endeavour to
encourage’.
The two areas of departure from the US approach of greater significance concern the
obligations in relation to waiver and non-derogation and procedural guarantees. The
first results in weaker labour protection under the TPP. While the US approach
proposes obligations in relation to waiver and non-derogation that apply to all
labour laws, the TPP’s ‘Labour’ chapter confines it much more narrowly to
inconsistency with rights under the ILO 1998 Declaration and in special trade zones,
the weakening of these rights or ‘acceptable conditions of work’. 49 The second area
of departure, obligations concerning procedural guarantees, on the other hand,
results in more stringent obligations as the US approach does not propose any such
obligations.
The strong correspondence between the TPP’s ‘Labour’ chapter and the US approach
is hardly a matter of coincidence. The US was clearly the dominant party – by far – in
the TPP negotiations. As Kelsey noted before the TPP was concluded, ‘(t)here is
really only one certainty’ with the TPP – ‘that US trade strategy and negotiating
demands will determine the shape of negotiations and the prospects for a final
agreement’. 50 The US government itself has characterized the TPP as the
opportunity for America to write ‘the rules of the road’ in Asia.51
With the labour provisions in particular, the US government has said that the ‘TPP
helps ensure that the global economy reflects our interests and values by requiring
other countries to play by fair wage, safe workplace and strong environmental rules
that we help set’.52 The US Labor Advisory Committee on Trade Negotiations and
Trade Policy, a statutory body comprising of union officials, has argued in relation to
48
The US Labor Advisory Committee on Trade Negotiations and Trade Policy has said that ‘(t)he TPP's
Labor Chapter broadly meets the standards of the “May 10” Agreement’: US Labor Advisory
Committee on Trade Negotiations and Trade Policy, Report on the Impacts of the Trans-Pacific
Partnership (2015) (available at https://ustr.gov/sites/default/files/Labor-Advisory-Committee-forTrade-Negotiations-and-Trade-Policy.pdf) (accessed on 25 January 2016) 50. See also discussion in
Jeffrey S Vogt, ‘The Evolution of Labor Rights and Trade – A Transatlantic Comparison and Lessons for
the Transatlantic Trade and Investment Partnership’ (2015) 18 Journal of International Economic Law
827, 835-836.
49
See text above accompanying nn?
Jane Kelsey, ‘Introduction’ in Jane Kelsey (ed), No Ordinary Deal: Unmasking the Trans-Pacific
Partnership Agreement (2010) 12.
51
https://ustr.gov/tpp/#what-is-tpp (accessed on 26 January 2016).
52
https://ustr.gov/tpp/#strategic-importance (accessed on 26 January 2016).
50
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16
the TPP’s ‘Labour’ chapter that ‘(t)he core part of the Chapter is a mere copy’ of the
labour provisions in the US-Peru trade agreement. 53
The TPP does not merely correspond to the US approach – it adopts the US
approach.
III PRELIMINARY OBSERVATIONS ON THE IMPACT OF LABOUR PROVISIONS IN
TRADE AGREEMENTS ON DOMESTIC LABOUR STANDARDS
(OR WHY WE MIGHT END UP WITH AMERICAN RULES)
Questions now arise about the likely implications of labour provisions in trade
agreements as regulatory instruments at national level. In particular are they likely
to raise standards? The answer here is complex, and it is unlikely that there will be
a clear and simple answer. The impact of these provisions will be determined by a
range of circumstances including their content (and whether the EU or US approach
is adopted) and measures taken by signatories to implement the provisions
domestically and also to monitor the compliance of other signatories with the
provisions.
These measures will be shaped, in turn, by the strength of the commitment to
genuinely implementing these provisions - a matter influenced by the level of
domestic support for the provisions - and the implementation burden (the extent
and intensity of regulatory effort required for the signatories to implement the
provisions). These measures will also be affected by the disparity in the level of
labour standards amongst the signatories: those with lower standards are less likely
to monitor – let alone complain about – the lack of compliance with the labour
provisions by those with higher standards; conversely, signatories with higher
standards may be more likely to be concerned about non-compliance by signatories
with lower labour standards. Cutting across all these factors is the crucial question of
the power relations amongst the signatories – the more powerful countries are in a
position not only to shape (dictate) the content of these labour provisions but also
determine the nature and extent of their compliance.
Given these diverse factors, we would expect the impact of labour provisions in
trade agreements on domestic labour standards not only to vary according to the
trade agreement but also according to the particular signatory country and possibly
also within countries themselves. And here, so far as we can tell at this stage, there
are three possible effects, in the sense that these agreements will affect different
countries in different ways. In some cases there may be a positive impact; in some
cases the impact will be neutral; and in other cases there will be a negative impact.
53
US Labor Advisory Committee on Trade Negotiations and Trade Policy, Report on the Impacts of the
Trans-Pacific Partnership (2015) (available at https://ustr.gov/sites/default/files/Labor-AdvisoryCommittee-for-Trade-Negotiations-and-Trade-Policy.pdf) (accessed on 25 January 2016) 65
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17
We illustrate below how these different types of impact have resulted from labour
provisions in trade agreement with a focus on the TPP’s labour provisions and those
proposed for TTIP. What we highlight here is the preponderance of US power such
that the regulatory centre of gravity is likely to settle on something with which the
US will be comfortable, and will reflect the US approach to labour standards as a
result. Here it is to be recalled that although there is a heavy reliance on the ILO
Declaration on Fundamental Principles and Rights at Work (1998), only two of the
eight conventions by which that Declaration is informed have been ratified by the
US. 54
A
Positive impact
The capacity for trade agreements to have a positive effect on labour standards
(without prejudice to the application of these standards in practice) depends in large
measure on the nature of the agreement and the parties to it. TPP is an agreement
which is perhaps most calculated to have the greatest positive impact in national
labour standards, not because of the general terms of the labour chapter which as
we have seen reproduce the terms of many bilateral FTAs, but because of the
bilateral agreements negotiated by the US and Brunei, Malaysia and Vietnam
respectively.
The latter are much more specific, coercive and conditional than is the case in most
FTAs, typically drafted in much more general terms. All of these countries have low
levels of ratification of ILO Conventions and high levels of non-compliance with those
which they have ratified. So Brunei has been an ILO member only since 2007 and
has ratified only two conventions (both on child labour), concerns having been
expressed about its compliance with both Conventions 138 and 182.
Having
addressed earlier concerns about child pornography, the outstanding issue relating
to the latter was the slow response to dealing with children in hazardous
occupations. 55
Nevertheless, Brunei has agreed to make significant changes across five different
fields, namely freedom of association, forced labour, child labour, discrimination in
employment, and working conditions, in the last case committing to legislate for a
minimum wage for private sector workers. The far reaching freedom of association
guarantees address the need to protect the independence of trade unions from
employer and State interference, the need for remedies to deal with acts of antiunion discrimination, as well as establishing procedures for dealing with collective
bargaining and amendments to guarantee the right to strike. 56
54
These are Conventions 105 (Forced Labour Convention, 1957), and Convention 182 (Worst Forms of
Child Labour Convention, 1999). The USA has ratified only 14 Conventions.
55
ILO Committee of Experts, Observations (2015):
http://www.ilo.org/dyn/normlex/en/f?p=1000:13100:0::NO:13100:P13100_COMMENT_ID:3242312
(accessed 13 April 2016).
56
TPP (2015), Chapter 19 (US-BN Labour Constituency Plan): https://ustr.gov/sites/default/files/TPPFinal-Text-Labour-US-BN-Labour-Consistency-Plan.pdf (accessed 13 April 2016).
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18
Malaysia has ratified only 17 Conventions, including six of the core conventions (all
except Conventions 87 and 111, though Convention 105 was denounced in 1958 and
is not now in force). However, the ILO CEACR has expressed concerns about
Malaysia in relation to forced labour and the freedom of association, the concerns in
the latter case applying to the excessive delays faced by unions seeking recognition
by employers for collective bargaining purposes, the high threshold of support
required in order to secure recognition, the failure of employers to comply with
recognition orders and restrictions on the scope of collective bargaining. 57
Although impervious to ILO criticism, it seems that Malaysia has yielded to US
demands, committing in the TPP side agreement to undertake radical surgery to its
labour laws, 58 with the US Trade Representative triumphantly reporting that
Malaysia commits to remove restrictions on union formation and strikes that
have been in place for decades; to limit governmental discretion in
registering and canceling a trade union; to allow foreign workers to assume
leadership positions in unions (after working in the country for a period of
time); and to remove restrictions on the subjects on which workers can
collectively bargain with their employers. Malaysia also commits to address
concerns that outsourcing or subcontracting may be used to undermine
freedom of association or collective bargaining rights. 59
As with the Brunei side-agreement, the US agreement with Malaysia establishes a
government-to-government review mechanism to oversee its implementation. In
the case of Vietnam, it is further provided that ‘the United States may withhold or
suspend tariff reductions for Vietnam if Vietnam does not comply with its
commitment to provide the right to form labor unions across enterprises and at
higher levels within five years’. 60 Vietnam has ratified 17 ILO Conventions, including
five of the eight fundamental conventions, two of the exclusions being Conventions
87 and 98 (freedom of association).
In the two years prior to the conclusion of TPP, the ILO CEACR had expressed
concern about the application of forced labour, child labour and discrimination
conventions by Vietnam.61 All of these matters are addressed in the US – Vietnam
side agreement, though it is clear from the foregoing that the United States was
57
ILO Committee of Experts, Observations (2015):
http://www.ilo.org/dyn/normlex/en/f?p=1000:13100:0::NO:13100:P13100_COMMENT_ID:3255358
(accessed 13 April 2016).
58
For detail, see TPP (2015), Chapter 19 (US-MY Labour Constituency Plan):
https://ustr.gov/sites/default/files/TPP-Final-Text-Labour-US-MY-Labour-Consistency-Plan.pdf
(accessed 13 April 2016).
59
Office of the US Trade Representative, Chapter (19) Summary:
https://ustr.gov/sites/default/files/TPP-Chapter-Summary-Labour-1.pdf (accessed 13 April 2016).
60
Ibid.
61
ILO, Committee of Experts, Observations 2013 (forced labour, child labour); 2015 (discrimination).
On the latter, see
http://www.ilo.org/dyn/normlex/en/f?p=1000:13100:0::NO:13100:P13100_COMMENT_ID:3254726
(accessed 13 April 2016).
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19
more concerned with freedom of association about which there is no consideration
by the ILO. The great bulk of the detailed 10 page labour reform project demanded
by the US is dedicated to what will be the long slow process towards a US system,
with Vietnam to embrace concepts such as good faith bargaining and rights-based
strikes. 62
These are important initiatives and it may not matter that TPP is being used by the
US for nakedly protectionist reasons if the purpose and effect is to raise standards
on core questions. The coercive use of TPP in this way would however be more
compelling if the strategy was used more widely to apply to all countries in breach of
core Conventions, and if the author of the strategy was to set an example not only
by ratifying all eight of the core Conventions, but also by fully complying with them.
As it is, the United States has ratified fewer Conventions than either Malaysia or
Vietnam, and as we have seen has ratified only two of the eight core Conventions.
B
Neutral impact
In contrast to these atypical provisions of TPP, it seems improbable in many cases
that the general provisions of FTAs will have much impact on labour standards. An
indication of this close to home is the effect of the bilateral agreement concluded
between Australia and the US during the Howard era. Apparently at US insistence,
this agreement had a detailed labour chapter with a commitment by the parties to
strive to ensure that its laws provide for labour standards consistent with the
internationally recognised labour principles and rights set forth.63
In a flush of naïve enthusiasm (albeit informed by concerns expressed publicly by the
Howard government), 64 it was thought that the latter agreement would require
Australia to take steps to amend domestic law and bring it into line with ILO
standards. 65
That did not happen, and indeed Australia’s renewal of its commitment to ILO
standards did not prevent the enactment of Work Choices just after the agreement
was signed. It is true that steps were taken subsequently by the Rudd government
to repeal much of the Howard legacy. But in doing so, there is no evidence that the
FTA played any part in this process, which in any event appeared not fully to satisfy
the demands of ILO Convention 87, with the Committee on Freedom of Association
62
TPP (2015), Chapter 19 (US-VN Plan for Enforcement of Trade and Labour Relations
(https://ustr.gov/sites/default/files/TPP-Final-Text-Labour-US-VN-Plan-for-Enhancement-of-Tradeand-Labour-Relations.pdf) (accessed 13 April 2016).
63
Australia - USA Free Trade Agreement (2004), para 18.2
64
The Australian, 6 May 2003 (‘Labour laws threaten US trade pledge’). Note that the Australia –
Singapore FTA also negotiated by the Howard government did not contain a labour clause, unlike the
US-Singapore FTA.
65
K D Ewing, ‘The Price of Free Trade' (2003) 9(7) Employment Law Bulletin 1.
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20
commenting adversely on a number of provisions in the Fair Work Act in a CEPU
complaint soon after enactment. 66
Nor is there any evidence that the Australia – US FTA has had any effect on raising
standards in the USA, in relation to which the ILO CFA has also concluded that
national law (in the shape of the National Labor Relations Act 1935 – the so-called
Wagner Act) does not satisfy ILO principles on freedom of association. This is
because of restrictions on union officials’ right of access to employers’ premises
during organizing campaigns, 67 and the rule introduced by the Supreme Court in
NLRB v McKay Radio, 68 whereby striking workers can be permanently replaced (but
not dismissed – work that one out).
The Australia – US agreement reveals a core weakness in FTAs at least so far as any
expectation that they may raise standards is concerned. This is that both parties
enter the agreement in breach of its terms with no intention of complying with these
terms, or in the case of the United States with no power to comply with its terms.
As already pointed out, the USA has not ratified six of the core ILO Conventions on
which the FTA obligations are built, and it appears to be politically impossible to
increase the level of ratification because of the need for Senate approval, which
appears to be impossible to obtain.
The same problem arises in relation to amending US labor law to bring it closer into
line with the ILO principles which are reflected in the freedom of association
conventions, as most clearly revealed by Obama’s failure (albeit for the want of a
single vote) to make progress with his Employee Free Choice Act (EFCA), a modest
measure which would have addressed some of the rigidities of the NLRA, for
example by allowing ‘card check’ rather than elections to secure certification as a
bargaining agent.
But this still would not have taken the USA all the way to
compliance with ILO freedom of association standards. 69
It is at this point that the USA and the EU begin to converge, despite the differences
of approach highlighted above. The EU as a matter of course enters into FTAs with
countries which at the point of the agreement are in breach of the obligations they
have undertaken to respect. A good example of this highlighted elsewhere relates
to Korea, which has been the subject of excoriating criticism by the ILO supervisory
bodies on freedom of association, and which again has not ratified several of the
core Conventions. 70 There is no indication in the six years since the agreement was
concluded that matters are set to change.
66
ILO, Committee on Freedom of Association, Complaint No 2698 (Australia):
http://www.ilo.org/dyn/normlex/en/f?p=1000:50001:0::NO:50001:P50001_COMPLAINT_FILE_ID:289
7911 (accessed 13 April 2016).
67
ILO, Committee on Freedom of Association, Complaint No 1523 (USA).
68
304 US 333 (1938). See ILO, Committee on Freedom of Association, Complaint No 1543 (USA).
69
On EFCA, see S Estreicher (ed), Labor and Employment Law Initiatives and Proposals under the
Obama Administration (2011).
70
ILO, Committee on Freedom of Association, Complaint No 359 (Korea).
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21
Yet the EU is in the process of signing off a FTA with Canada (CETA), which contains
the same commitments to ILO standards, despite the fact that Canada has not
ratified ILO Convention 98, 71 and despite the fact that Canada has been the subject
of more complaints to the ILO’s CFA than perhaps any other developed country.72
Canada’s violation of ILO standards with illiberal labour laws is remarkable and
counter-intuitive, all the more so for the willingness of the Supreme Court of Canada
warmly to embrace ILO standards in its now very progressive interpretation of the
Charter of Rights and Freedoms. 73
But it is not only the EU’s trading partners that are in breach of the labour
commitments they solemnly undertake to observe. So too are EU member states,
the United Kingdom being a notorious example, 74 having as recently as 2015 (at the
time TTIP negotiations were taking place) being told by the Committee of Experts
that proposed legislation violated ILO Convention 87.75 Yet the United Kingdom is
not alone, a recent study showing that no fewer than ** of 28 EU member states are
in breach of the freedom of association conventions alone.76 Work now needs to be
done on the other six core conventions.
C
Negative impact
The proposed TTIP has been promoted as creating the biggest free trade area in the
world. It may also be the biggest free trade area built in the biggest lie yet told on
international labour standards. It is an agreement to which both the parties are
committing themselves to standards with which they do not comply, have no
intention of ever complying with, and have no power to comply with fully. In the
case of the USA, as we have seen the lack of power is for political reasons; in the
case of the EU it is for legal reasons, the ECJ having developed a body of
jurisprudence that has been found to violate ILO Convention 87.77
71
On which see B Langille, ‘The Freedom of Association Mess: How We Got into It and How We Can
Get out of It’ (2009) 54 McGill LJ 177.
72
See K D Ewing, ‘’The Lady Doth Protest Too Much, Methinks – The Right to Strike, International
Standards and the Supreme Court of Canada’ (2015) 18 Canadian Labour and Employment Law
Journal 517.
73
Saskatchewan Federation of Labour v Saskatchewan 2015 SCC 4; [2015] SCR 245. See J Fudge,
‘Constitutionalizing Labour Rights in Canada and Europe: Freedom of Association, Collective
Bargaining, and Strikes’ (2015) 68 Current Legal Problems 267.
74
ILO, Committee of Experts, Observations (1989):
http://www.ilo.org/dyn/normlex/en/f?p=1000:13100:0::NO:13100:P13100_COMMENT_ID:2077801
(accessed 13 April 2016).
75
ILO Committee of Experts, Observations (2015):
http://www.ilo.org/dyn/normlex/en/f?p=1000:13100:0::NO:13100:P13100_COMMENT_ID:3255351
(accessed 13 April 2016).
76
K D Ewing and J Hendy, ‘The Eclipse of the Rule of Law: Trade Union Rights and the EU’ (2015) 4
Revista Derecho Social y Empresa 80.
77
Case 438/05, International Transport Workers Federation v Viking Line ABP [2007] I-ECR 10779, and
Case 341/05, Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska
Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] I-ECR
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22
So it is not only EU member states that are in breach of the commitments in FTAs; so
too is EU law itself, the latter immutable in the sense that it can be changed only by
the Court itself. In these circumstances, what is the incentive on the part of either
party to enforce the terms of the agreement against the other? Although there is a
greater economic balance between the parties (EU and US), the Australia – US
agreement points the way to a stalemate of non-compliance, in which neither side
provokes the other for fear of a mutually destructive tit – for – tat response.
From the perspective of European trade unionists (who are hostile to TTIP, as are
their US counterparts), this nevertheless would be the most desirable outcome of
the agreement in the likely event that it is successfully concluded. The fear (and the
likelihood) is that TTIP will have a negative impact on labour standards in the EU,
even if it is the EU FTA model that is adopted in preference to the American. These
fears are most keenly felt in relation to collective bargaining, partly because of the
different collective bargaining systems operating in the US and the great bulk of EU
member states. 78
These differences reflect the different role of collective bargaining and the different
levels of coverage in the two ‘systems’.
In the bulk of EU states (the UK being a
notable exception), collective bargaining has a ‘regulatory’ function in the sense that
it operates on a multi-employer basis, at sectoral level or above, setting terms and
conditions for the sector as whole, and in some cases capable of extension to
employers who were not parties to the agreement. In the US in contrast, collective
bargaining has a ‘representative’ function, the union acting as a ‘bargaining agent’
for a ‘bargaining unit’ within an enterprise.
Function and level (though mainly the latter) are crucial in determining collective
bargaining density, with the EU average of **% comparing favourably with US
figures which may be as low as 6% in the private sector. It is at this point that the
difference between the EU and US approaches to labour rights in FTAs collapses and
makes no difference.
Even assuming the US agrees to the apparently more
progressive EU model on labour rights, the pressure towards regulatory convergence
in a competitive market is likely to lead only one way, which will be the American
rather than the European way.
There are two reasons for this. The first is that the EU bargaining model is one that
the US cannot reach, even if it were to ratify ILO Convention 87. Apart from the fact
that it would require a profound political change in the United States to create the
11767 See an excellent collection of essays discussing these important cases, see M R Freedland and J
Prassl (eds), Viking, Laval and Beyond (2015). On the ILO CEACR response, see ILO Committee of
Experts (2009) (United Kingdom):
http://www.ilo.org/dyn/normlex/en/f?p=1000:13100:0::NO:13100:P13100_COMMENT_ID:2314990
(accessed 13 April 2016).
78
This issue is more fully explored in K D Ewing, ‘The EU, the USA, and TTIP – Collective Bargaining
and the Emerging ‘Transnational Labor Relations Act’ (2016) Theory and Struggle, Journal of the Marx
Memorial Library (forthcoming).
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23
legislation necessary to reflect the EU collective bargaining model, it is in any event
the case that regulatory bargaining of the kind found throughout the EU would
almost certainly be unconstitutional in the US, following the Schechter Poultry case
in 1935. 79 This is because regulatory bargaining is a rule making process that would
usurp the legislative power of Congress.
So even if the political will was there, the US cannot meet the EU bargaining model.
On the contrary, the Wagner Act is likely to operate as a magnet pulling EU collective
bargaining systems in the direction of the American, not only because US investors
will eschew European bargaining methods. In doing so they will be encouraged by
the European Commission, already pushing in the direction that the magnet is
pulling. By a combination of new economic governance initiatives adopted in 2010
and financial assistance conditionality, steps are already well underway to
decentralize in the American direction. 80
The fear is that free trade will pull and push the European collective bargaining
model in the direction of the Wagner Act. This would not in itself be in breach of
the FTA’s commitment to promote ILO standards on freedom of association, as the
ILO supervisory bodies do not prescribe any particular form or level of collective
bargaining, which should be a matter of choice for the bargaining parties. 81 But
such a development would almost certainly be a negative consequence of free trade
if - as is likely – decentralization were to lead to the spectacular decline in coverage
witnessed in the UK.
IV CONCLUSION
As we have seen, there are different models of FTA, a distinction being drawn in this
paper between the European and the American. It is also the case that demands
made by FTAs vary considerably.
Putting the EU and NAFTA to one side as
structures which are sui generis, the FTAs which have been the subject of this paper
have developed from instruments of a largely promotional nature (such as the
Australia – US FTA), to instruments that superficially create a more formal
expectation of compliance (TPP and TTIP), to instruments that impose mandatory
obligations on States.
Regardless of the model, however, the impact of FTA’s labour law is likely to vary
greatly, from the positive to the neutral to the negative. The positive effect is most
likely to be seen in countries with poorly developed standards, where the agreement
is reinforced by coercive intervention as in the case of the TPP side agreements
79
Schechter Poultry Corp v US, 295 US 495 (1935).
See A Koukiadaki, I Tavora and M Martinez Lucio, ‘The EU is exporting UK neoliberalism to the rest
of Europe’ (IER Blog, 2016).
80
81
ILO, General Survey on the fundamental Conventions concerning rights at work in light of the ILO
Declaration on Social Justice for a Fair Globalization, 2008 (2012), para 222.
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24
addressed to Brunei, Malaysia and Vietnam. But it would of course be unrealistic to
expect these standards in developing countries ever to rise to the level of advanced
countries such as the USA, which will take more than the warm words of an FTA and
enthusiastic US support to raise standards.
For highly developed systems such as those in the EU in contrast it is likely that FTAs
will accelerate the tendency towards declining standards. In this regard our focus
has been primarily with freedom of association and collective bargaining, which is
where we see the potential negative impact to be greatest. The process is likely to
be slow and gradual, but inevitable and irreversible. The overall effect is thus likely
in time to lead to the extension and consolidation of the US system of collective
bargaining globally and to a future as a result in which collective bargaining is an
atypical practice in all countries.
For all their possible benefits and potentially good intentions, it is difficult to break
free from the suspicion that FTAs are being used mainly by the US simultaneously for
aggressive protectionism and expansionism, a suspicion reinforced by the revealing
marketing by the US Trade Representative. 82 It is about protecting US jobs from
unregulated labour markets, and protecting US investment from heavily regulated
labour markets. As a result it is about taking US law as the standard for America’s
trading partners, in a world in which the Natonal Labor Relations Act becomes the
Transnational Labor Relations Act.
82
See Office of the US Trade Representative, Chapter (19) Summary:
https://ustr.gov/sites/default/files/TPP-Chapter-Summary-Labour-1.pdf (accessed 13 April 2016):
‘The Trans-Pacific Partnership (TPP) levels the playing field for American workers and American
businesses, leading to more Made-in-America exports and more higher-paying American jobs here at
home’.