[CTC] TPP's labor "consistency plans"

[Arthur Stamoulis]

Two articles from Insides US Trade…

TPP Includes Binding, Enforceable Labor Plans With Vietnam, Malaysia, Brunei
Posted: October 08, 2015

The Trans-Pacific Partnership (TPP) includes "consistency plans" to identify the labor reforms that Malaysia, Vietnam and Brunei need to make in order to comply with the labor chapter of the final agreement and which will be subjected to the TPP dispute settlement procedures.

The labor plans for Vietnam, Malaysia and Brunei include several measures that were priorities for U.S. unions, though labor sources asserted that based on USTR's descriptions, the plans appear to be flawed because they do not specify that they must be implemented before the TPP is ratified.

The plan negotiated with Vietnam has a feature not reflected in the other two. It gives the U.S. the option of linking Hanoi's failure to allow the "cross-affiliation" of unions with the suspension of tariff phaseouts for key products five years after the TPP enters into force (see related story).

The plan for Malaysia lays out how to implement the labor chapter's obligations on forced labor, the right to collective bargaining and freedom of association, according to a USTR fact sheet.
"[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 … and to remove restrictions on the subjects on which workers can collectively bargain with their employees," USTR said.
According to USTR, Malaysia committed to fully implement recently passed amendments to its Anti-Trafficking law to allow the victims of human trafficking to work and reside outside government facilities, including while under protection orders.

These amendments and Malaysia's practice of detaining victims of human trafficking became the subject of a heated debate this summer, after the State Department upgraded Kuala Lumpur's status on its annual report on human trafficking during the fast-track debate (Inside U.S. Trade, July 31). This caused an outcry against what critics said was a politically motivated decision, and Friends of the Earth has since filed two Freedom Of Information Act requests seeking the release of State Dept. communications related to that decision.

Sources said the USTR announcement seemed to largely reflect the demands of the labor unions and lawmakers like House Ways & Means Committee Ranking Member Sander Levin (D-MI) for the Malaysia consistency plan, but one labor source noted that the language in some cases appears to be hortatory or non-binding.

This source pointed to the fact that the TPP, according to USTR, "commits Malaysia to significant legal and institutional reforms" to improve its governance of strikes, union registration, and other labor issues. According to this source, USTR's summary does not specify how it will ensure Kuala Lumpur's compliance with this standard, or if Malaysia will be required to fulfill these requirement on day one of the TPP's entry-into-force.

For Brunei, according to the USTR fact sheet, the consistency plan commits the country to implement a minimum wage and reform its current labor laws, which allow the government to exert "broad discretion" in determining union registration or cancellation.

It also would require Brunei to permit the international affiliation of unions and "establishes protections against interference in union activities." The plan calls for specific procedures on collective bargaining and strikes, according to the fact sheet, and "strengthens protections against child labor and forced labor.”

Both the Malaysia and Brunei plans set out a government-to-government review mechanism that will remain in place for ten years following the deal's entry-into-force, the fact sheet said. For Vietnam, the review mechanism includes an "independent labor expert committee that will monitor implementation and identify any challenges that may arise for at least the first ten years."
The labor source said that the description of each of these review mechanisms also seemed exceedingly vague, and that they left open the possibility that the government-to-government discussions or the independent panel would not have any sort of leverage or authority to enforce a country's implementation of the consistency plans.

Levin, in a Sept. 24 memo to fellow Democrats, said these labor reforms need to take place before Congress votes on the agreement.

"TPP needs to: (1) bring Vietnam, Mexico, and other countries with serious labor deficiencies, such as Malaysia and Brunei, into compliance with international labor standards (as reflected in the May 10 Agreement) before Congress votes and (2) ensure compliance after the TPP agreement enters into force," he wrote.

Congressional Democrats see these consistency plans as equivalent to side letters on commercial issues, which they say have historically been subject to dispute settlement under previous free trade agreements. They argue that there is no reason why side letters relating to labor rights should not be subject to the same dispute settlement.

Aides for House Ways & Means Committee Chairman Paul Ryan (R-WI) have previously made clear that he believes the model for these consistency plans should be the U.S.-Colombia labor action plan, which was completely separate from the bilateral free trade agreement although it was politically linked.

That plan was not subject to dispute settlement but had a modicum of "political" enforcement due to the fact that it consisted of staged commitments from both sides. For instance, Colombia had to take a series of specific actions to improve labor rights before the Obama administration would submit the FTA implementing bill to Congress.
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U.S., Mexico Continue Discussing Labor Reforms After TPP Conclusion
Posted: October 08, 2015

The Obama administration has opted for a different approach to Mexican labor rights reforms than the one it took with Malaysia, Brunei and Vietnam in the negotiations for the Trans-Pacific Partnership (TPP), and is continuing to talk with Mexico about the reforms after concluding a final deal.

The administration also does not appear to be trying to seek a side deal or consistency plan in the context of the TPP in the interim period between this week's conclusion of the negotiations and the deal's entry-into-force, according to a source familiar with the negotiations.

For the three Asian countries, the administration insisted on so-called labor consistency plans that lay out which reforms each country will undertake to comply with the TPP labor chapter, subject to the agreement's dispute settlement (see related story).

Organized labor in the U.S. and its allies in Mexico have said Mexican labor rights problems must be fixed in the context of TPP negotiations and implemented before Congress votes on the TPP implementing bill. A USTR official in the summer indicated in a briefing that the U.S. was seeking a "consistency plan" with Mexico along with Malaysia, Brunei and Vietnam (Inside U.S. Trade, Aug. 14).

One labor source speculated that the U.S. backed away from that position in an effort to quell Mexico's opposition to the automotive rules of origin the U.S. favored and which emerged as a key issue in the final weeks of negotiations.

The Mexican government has insisted that any labor reforms it undertakes are independent of the TPP. Mexican Secretary of Labor and Social Welfare Alfonso Navarrete Prida in a Spanish-language interview with the news service Notimex on Oct. 5 noted that the final TPP deal would not subject Mexico to commercial sanctions for suspected labor violations, an apparent reference to the lack of a binding implementation plan.

The U.S.-Mexico talks are likely to focus on U.S. labor unions' demands to adopt reforms that will eliminate the use of so-called "protection contracts" and get rid of corruption in the country's conciliation and arbitration boards (CABs).

Protection contracts are a type of collective bargaining agreement prominent in Mexico negotiated by employer-dominated unions that critics say shut workers out of their right to bargain over wages and benefits. The CABs are meant to adjudicate labor complaints and enforce labor laws, but workers often find delays, demands for bribes and a complete lack of transparency, according to labor union critics.

Eliminating the CABs and replacing them with new labor courts, as demanded by Mexican and U.S. unions, would require a change to the Mexican constitution, though that would not be the case for lesser changes.

A source familiar with the negotiations said that one of the biggest hangups in the U.S.-Mexico talks was its reluctance to tie changes to its constitution in a consistency plan, as organized labor had recommended. He acknowledged that it would be "a bit dicey" for the U.S. to ask Mexico to make changes to its constitution in any circumstances.

Navarrete also said Mexico and the U.S. had "discussed" the issue of protection contracts, but not on the same track as the TPP, and that the Mexican government is opposed to and is fighting against these contracts.

Earlier this year, Mexico made clear its unwillingness to negotiate a consistency plan with the United States that would address the two core complaints. An official from the Mexican labor secretariat in August emphasized that his government would not make any of its labor reforms contingent on TPP, but instead would undertake reforms through its domestic process.
One informed source noted that the number of collective bargaining agreements in Mexico that follow International Labor Organization standards is "miniscule" because of the dominance of protection contracts, and that this has a significant impact in keeping labor costs low in Mexico.

This is a problem because wages in Mexico overall are lower compared to the U.S., one labor source said, since workers are stripped of their right to bargain collectively for higher wages. This source noted that wage growth in sectors represented by independent unions, as opposed to the employer-dominated unions that seek protection contracts, is nearly double those of sectors where protection contracts are common.

A source familiar with the final TPP deal noted that, despite what labor proponents see as a stronger than anticipated outcome with Vietnam, much of the focus during the TPP ratification debate will focus on Mexico because its workforce is in intense competition with U.S. workers.

Ways & Means Committee Ranking Member Sander Levin (D-MI) this week called attention to the ongoing U.S.-Mexico talks on labor rights in an Oct. 7 letter to members of the Democratic caucus.

"Unfortunately, there is still no satisfactory plan to ensure that Mexico -- a country where economic competition with U.S. workers is intense -- changes its laws and practices to comply with its obligations under the [TPP] agreement," Levin said. "That is still being negotiated bilaterally between the two Governments.”

In the letter and in an Oct. 5 press release, Levin praised the deals with Vietnam and Malaysia, but pointed to the omission of an implementation plan for Mexico as a major shortcoming of the TPP's labor provisions.

He indicated that solely relying on challenging Mexico's labor laws through the TPP's dispute settlement mechanism, absent a plan, would be insufficient for ensuring that the TPP improves on North American Free Trade Agreement (NAFTA), so U.S. workers can remain competitive with their Mexican counterparts.

"Changing NAFTA has been a top priority -- we cannot miss this opportunity and hope to rely on a future dispute settlement panel to do so," he said.

A TPP fact sheet released by the Office of the U.S. Trade Representative this week only states that Mexico is "developing parallel labor reforms, including to better protect collective bargaining and reform its labor system for administering labor justice." In a separate statement, a USTR spokesman said the U.S. "is working with Mexico" on the labor reforms it is pursuing.
The administration is touting the labor chapter as fulfilling President Obama's 2008 campaign promise that he would renegotiate the NAFTA likely because the labor chapter is much stronger than the NAFTA labor side accord. The TPP reflects the "May 10" requirements for signatories to adopt, maintain and enforce labor laws that reflect the 1998 Declaration on Fundamental Principles and Rights at Work approved by members of the International Labor Organization (ILO).

The declaration obligates members to respect and promote four principles reflected in the ILO core conventions, whether or not they have ratified the convention. According to the ILO, these categories are: freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labor, the abolition of child labor and the elimination of discrimination in respect of employment and occupation.

USTR said the TPP labor chapter will, as expected, require countries to adopt and maintain laws related to the "fundamental labor rights as recognized by the ILO." The fact sheet's definitions of what that covers roughly reflect the ILO's, though USTR notes that TPP would require the adoption and maintenance of laws related to the "abolition of child labor and a prohibition on the worst forms of child labor.”

Additionally, the TPP labor chapter will require parties to have laws "governing minimum wages, hours of work, and occupational safety and health," according to USTR.
 
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