Free Trade Area of the Americas - FTAA

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May 15, 2002

Original: Spanish
Translation: FTAA Secretariat



Name (s) Edgar Lara
Organization (s) Fundación Nacional para el Desarrollo
Country El Salvador


The bottom line is that this process of free trade and improved living and working conditions can only hope to develop if there is universal respect for fundamental human rights in the workplace.

International Labor Organization (ILO), [April] 1997[Press Release (ILO/97/10)]

1. Introduction

In response to the open invitation for contributions from members of civil society in the countries of the Hemisphere, the El Salvador National Foundation for Development (FUNDE) would like to share its thoughts on the treatment of labor in the Draft FTAA Agreement.

In the following paragraphs, an argument is made for inserting a “labor clause” in the FTAA Agreement that would be duly integrated into the agreement’s trade and investment provisions, in a way that leads to improved living conditions for all workers, men and women alike, throughout the hemisphere.

2. The relationship between trade - the labor market and the draft FTAA Agreement

In their negotiation of free trade agreements, the countries of the region have placed a decidedly heavy emphasis on the liberalization of goods and capital, without considering the labor-related issues involved in liberalization processes. With the FTAA, economic liberalization may lead to an increase in export production, as well as the establishment of new enterprises, making the participation of the labor sector in trade indispensable. Moreover, in many of the region’s countries, the labor force is key to selling certain goods and services on the international market. Consequently, trade and labor cannot be treated as two separate or unrelated topics in FTAA negotiations.

It is important to point out that the development of trade in the region and in each FTAA member country will be contingent on, inter alia, the existence of a competitive workforce that helps companies improve their capacity to maintain or increase their foreign trade volume. Maintaining a competitive workforce in the framework of this trade agreement will require the negotiators and the member countries to recognize the rights of all workers in the actual text of the FTAA Agreement and undertake the differential gender analysis that this entails, as well as establish support and cooperation mechanisms for the labor sector in the most vulnerable countries.

Insofar as a labor clause or agreement that promotes and ensures the fulfillment of labor rights in export production has not been included in the Draft FTAA Agreement, all considerations of labor have been practically excluded. Two articles in the Draft Chapter on Investment (Articles 7 and 9) do, in fact, mention the establishment of performance requirements in the areas of job creation and worker training, as well as the fact that the failure to fulfill labor obligations may result in the imposition of conditions on investor transfers. However, these aspects still exist in theory only, since the articles do not define the mechanisms and procedures that would enable investors to fulfill the obligations set out in the chapter.

3. Arguments for incorporating labor considerations into the FTAA Agreement

Within the context of the negotiations currently underway, there are several arguments that justify the inclusion of labor considerations in the FTAA Agreement.

Some of the more convincing arguments are those related to: (1) asymmetries between the countries and regions; (2) human rights as viewed from an economic and social perspective; (3) the goals of the free trade agreements; and (4) labor conditions in export processing zones.

1) According to the first argument, disparities between the region’s countries in development, competitiveness, and foreign trade will necessitate cooperation and complementation programs in all areas (economic, social, and technological) affected by trade. The inclusion of a labor clause in the FTAA Agreement will be important for reducing social inequalities between the countries.

2) The second argument deals with human rights as seen from a social and economic perspective. According to this argument, the region’s countries, through international agreements or standards, have promised to safeguard human rights (including social and economic rights, which, in turn, include the basic rights accorded to all workers) both within and beyond their national borders, and consequently, the legal text of any trade agreement should set out these internationally recognized labor standards so that the countries can actively protect and promote human rights in all activities related to international trade.

3) The argument concerning the goals of the free trade agreements (see the corresponding preambles), interpreted as the reasons for the countries’ decisions to forge agreements of this nature, posits that, in most cases, the region’s countries have negotiated trade agreements in order to create job opportunities, improve living conditions, and even, in some cases, protect the basic rights of workers. However, precious few of these agreements contain labor provisions that guarantee the integration of, or coordination between, trade and investment and the labor market. As a result, FTAA negotiators should not exclude labor-related aspects from trade and investment provisions.

4) Lastly, with regard to export processing zones or the labor conditions in the maquiladora industry, in which Salvadoran women make up more than 80 percent of the workforce, if the FTAA Agreement does not include a labor agreement, there will continue to be instances of illegal labor conditions that violate human rights, as cases in Honduras and El Salvador demonstrate. In these countries, there have been cases of worker abuse by supervisors, violations of the rights of workers to organize, poor industrial safety and hygiene, irregular pay for overtime, over-intensive or over-extended workdays, etc.

4. Recommendations for an FTAA Agreement that is fair for all workers

In accordance with the preceding paragraphs, civil society organizations, especially those in the labor sector, insist on a Free Trade Area of the Americas Agreement that will yield improved conditions for workers, specifically, and for the wider society, in general. To this end, we recommend that the following aspects be taken into consideration during FTAA negotiations:

  • The inclusion of a labor clause in the FTAA Agreement; understood to be a set of labor provisions that are incorporated into the trade agreements for the purpose of enforcing the rights of workers involved in international trade activities (exports and imports, as well as foreign investment) are protected, since a labor clause is the principal mechanism for defining the relationship between trade and the labor market, insofar as it specifies the ways in which relationships between workers and employers will be established within an international trade context.

  • The purpose of the labor clause will be to promote national and international labor rights, and ensure that they are complied with and enforced, in export production or any other activity related to international trade and foreign investment, by establishing penal mechanisms or imposing trade sanctions and stripping benefits that the FTAA may confer on a country, in the event that workers’ rights are shown to have been violated.

  • The clause should minimally set out the basic rights of workers as identified by the International Labor Organization (ILO). FTAA businesses and countries that fail to comply with ILO conventions by denying workers the freedom of association, obligating or forcing individuals to work, paying men and women different salaries, creating discriminatory access to sources of work, and employing children in activities related to international trade will be subject to trade sanctions or fines.

  • We advocate a labor clause that is duly integrated with the trade and investment provisions of the FTAA; that is, provisions on investment or any other topic should not prevail over labor provisions.

  • The clause should set out mechanisms for ensuring that respect for workers’ basic rights is mandatory in FTAA countries.

  • Compensation mechanisms for counteracting the effects of jobs lost as a result of economic liberalization should be considered.

  • If the basic rights of workers are to be woven into the fabric of the FTAA Agreement, the active involvement of the ILO and labor organizations must be sought out and integrated into the institutional framework of all the trade agreements.

  • Steps should be taken to provide forums for and ensure the participation of labor organizations in FTAA negotiations and in the drafting or definition of the labor clause, in a way that secures benefits for both the labor sector and society in general.

  • 5. Conclusions

    We recognize the importance of international trade as a means of promoting development and growth in the region’s countries. However, the FTAA Agreement will only benefit all of the region’s and countries’ sectors if it confers labor, social, and environmental benefits on its members, in addition to those that are strictly trade-related. Therefore, labor organizations insist that a labor clause be incorporated and integrated into the legal text of the FTAA Agreement in a way that ensures that the basic rights of all workers involved in trade and investment activities carried out in the framework of this hemispheric treaty are upheld.

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