Free Trade Agreements:

U.S. Partners Are Addressing Labor Commitments, but More Monitoring and Enforcement Are Needed

GAO-15-160: Published: Nov 6, 2014. Publicly Released: Nov 13, 2014.

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What GAO Found

Partner countries of free trade agreements (FTA) that GAO selected—the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) and the FTAs with Colombia, Oman, and Peru—have taken steps to implement labor provisions and other initiatives to strengthen labor rights. For example, U.S. and foreign officials said that El Salvador and Guatemala—both partners to CAFTA-DR—as well as Colombia, Oman, and Peru have acted to change labor laws, and Colombia and Guatemala have acted to address violence against union members. Since 2001, U.S. agencies have provided $275 million in labor-related technical assistance and capacity-building activities for FTA partners, including $222 million for the four FTAs GAO reviewed. However, U.S. agencies reported, and GAO found, persistent challenges to labor rights, such as limited enforcement capacity, the use of subcontracting to avoid direct employment, and, in Colombia and Guatemala, violence against union leaders.

Since 2008, the Department of Labor (DOL) has accepted five formal complaints—known as submissions—about possible violations of FTA labor provisions and has resolved one, regarding Peru (see fig.). However, for each submission, DOL has exceeded by an average of almost 9 months its 6-month time frame for investigating FTA-related labor submissions and issuing public reports, showing the time frame to be unrealistic. Also, union representatives and other stakeholders GAO interviewed in partner countries often did not understand the submission process, possibly limiting the number of submissions filed. Further, stakeholders expressed concerns that delays in resolving the submissions, resulting in part from DOL's exceeding its review time frames, may have contributed to the persistence of conditions that affect workers and are allegedly inconsistent with the FTAs.

Five Labor Submissions Accepted by DOL Regarding Free Trade Agreements

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In 2009, GAO found weaknesses in the Office of the U.S. Trade Representative's (USTR) and DOL's monitoring and enforcement of FTA labor provisions. In the same year, the agencies pledged to adopt a more proactive, interagency approach. GAO's current review found that although the agencies have taken several steps since 2009 to strengthen their monitoring and enforcement of FTA labor provisions, they lack a strategic approach to systematically assess whether partner countries' conditions and practices are inconsistent with labor provisions in the FTAs. Despite some proactive steps, they generally rely on labor submissions to begin identifying, investigating, and initiating steps to address possible inconsistencies with FTA labor provisions. According to agency officials, resource limitations have prevented more proactive monitoring of all FTA labor provisions. As a result, USTR and DOL systematically monitor and enforce compliance with FTA labor provisions for only a few priority countries. USTR's annual report to Congress about trade agreement programs provides limited details of the results of the agencies' monitoring and enforcement of compliance with FTA labor provisions.

Why GAO Did This Study

The United States has signed 14 FTAs, liberalizing U.S. trade with 20 countries. These FTAs include provisions regarding fundamental labor rights in the partner countries. USTR and DOL, supported by State, are responsible for monitoring and assisting FTA partners' implementation of these provisions.

GAO was asked to assess the status of implementation of FTA labor provisions in partner countries. GAO examined (1) steps that selected partner countries have taken, and U.S. assistance they have received, to implement these provisions and other labor initiatives and the reported results of such steps; (2) submissions regarding possible violations of FTA labor provisions that DOL has accepted and any problems related to the submission process; and (3) the extent to which U.S. agencies monitor and enforce implementation of FTA labor provisions and report results to Congress. GAO selected CAFTA-DR and the FTAs with Colombia, Oman, and Peru as representative of the range of FTAs with labor provisions, among other reasons. GAO reviewed documentation related to each FTA and interviewed U.S., partner government, and other officials in five of the partner countries.

What GAO Recommends

DOL should reevaluate its submission review time frame and better inform stakeholders about the submission process. USTR and DOL should establish a coordinated strategic approach to monitoring and enforcement labor provisions. USTR's annual report to Congress should include more information of USTR's and DOL's monitoring and enforcement efforts. The agencies generally agreed with the recommendations but disagreed with some findings, including the finding that they lack a systematic approach to monitor and enforce labor provisions in all FTAs. GAO stands by its findings.

For more information, contact Kimberly Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In a correspondence dated January 16, 2015, DOL concurred with GAO's recommendation that DOL take steps to better inform stakeholders in FTA partner countries about its FTA labor submission process. DOL recognized the importance of informing stakeholders about all mechanisms and processes that help DOL monitor and enforce FTA labor obligations. Since then, the Monitoring and Enforcement of Trade Agreements Division (META) in DOL's Bureau of International Labor Affairs (ILAB) has instituted new Standard Operating Procedures (SOPs) for monitoring FTA labor provisions and engaging with partner country governments and stakeholders. Specifically, the SOPs call for META staff to take monitoring trips to FTA partner countries in an effort to identify labor issues. As part of these trips, META staff are to reach out to various in-country stakeholders to explain the labor submissions process, including its procedures, outcomes, and timeline. META conducted monitoring trips to Nicaragua in April 2016 and to Jordan, Oman, and Morocco in September 2015. This recommendation is closed as implemented.

    Recommendation: To improve the capacity of the U.S. government to monitor and enforce FTA partners' compliance with mutually agreed FTA labor provisions, DOL should take steps to better inform stakeholders in FTA partner countries about its FTA labor submission process.

    Agency Affected: Department of Labor

  2. Status: Open

    Priority recommendation

    Comments: DOL concurred with GAO recommendation and stated that it regularly coordinates monitoring and enforcement activities related to assessing and ensuring the consistency of FTA partner countries' labor laws, regulations, and practices with FTA labor provisions with USTR and State. In March 2017, the Monitoring and Enforcement of Trade Agreements Division (META) in DOLs Bureau of International Labor Affairs (ILAB) finalized Standard Operating Procedures (SOPs) for monitoring FTA labor provisions and engaging with partner country governments and stakeholders. These SOPs involve a renewed emphasis on monitoring trips to FTA partner countries to meet with government officials and in-country stakeholders to gather information on potential FTA violations and make key contacts with stakeholders to encourage direct communication going forward. The SOPs also include provisions regarding coordination with USTR and State in the monitoring and enforcement of FTA labor provisions. As of May 2017, this recommendation remains open pending further action by DOL and USTR.

    Recommendation: To improve the capacity of the U.S. government to monitor and enforce FTA partners' compliance with mutually agreed FTA labor provisions, USTR and DOL, in cooperation with State, should establish a coordinated strategic approach to monitoring and enforcing FTA labor provisions, to ensure that they systematically assess the consistency of priority FTA partner countries' laws, regulations, and practices with trade agreement labor provisions and address any identified concerns.

    Agency Affected: Department of Labor

  3. Status: Open

    Comments: In a correspondence dated January 12, 2015, USTR concurred with GAO's recommendation that USTR and DOL, in cooperation with State, establish a coordinated strategic approach to monitoring and enforcing FTA labor provisions, to ensure that they systematically assess the consistency of priority FTA partner countries' laws, regulations, and practices with trade agreement labor provisions and address any identified concerns. USTR stated that it is constantly exploring strategies to monitor and analyze information on labor issue more effectively and take action to implement those strategies. To implement GAO's recommendation, USTR is increasing the level and frequency of interagency monitoring through the Trade Policy Staff Committee, Subcommittee on Labor Monitor and Enforcement. Additionally, with DOL, USTR is exploring ways to improve engagement with U.S. Embassies in trade partner countries to monitor labor conditions. For example, DOL is funding the placement of labor officers in certain priority U.S. Embassies to collect and assess facts and to support the implementation of USTR and DOL's efforts. To date, according to USTR, DOL has placed labor officers in Colombia, Honduras, and Bangladesh. As of May 2017, this recommendation remains open pending further action by USTR and DOL.

    Recommendation: To improve the capacity of the U.S. government to monitor and enforce FTA partners' compliance with mutually agreed FTA labor provisions, USTR and DOL, in cooperation with State, should establish a coordinated strategic approach to monitoring and enforcing FTA labor provisions, to ensure that they systematically assess the consistency of priority FTA partner countries' laws, regulations, and practices with trade agreement labor provisions and address any identified concerns.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

  4. Status: Open

    Comments: In a correspondence dated January 12, 2015, USTR concurred with GAO's recommendation that USTR should ensure that the Annual Report of the President of the United States on the Trade Agreement Programs, which USTR provides each year to Congress, includes results of USTR's and DOL's efforts to proactively monitor partner countries' compliance with FTA labor provisions. USTR stated that its annual report already provides country-specific information on labor issues and that USTR regularly engages with Congress to provide detailed information on labor issues via meetings and phone conferences. Nonetheless, USTR recognizes that meaningful engagement with Congress is an indispensable part of monitoring and enforcing FTA labor provisions. To implement GAO's recommendation, USTR agreed to continue to identify more effective ways of communicating with Congress, including USTR's committees of jurisdiction, with respect to the Administration's FTA monitoring and enforcement efforts. Furthermore, USTR stated that it will solicit congressional advice and input to inform its efforts. As of May 2017, this recommendation remains open pending further action by USTR.

    Recommendation: To improve the capacity of the U.S. government to monitor and enforce FTA partners' compliance with mutually agreed FTA labor provisions, USTR should ensure that the Annual Report of the President of the United States on the Trade Agreement Programs, which USTR provides each year to Congress, includes results of USTR's and DOL's efforts to proactively monitor partner countries' compliance with FTA labor provisions.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

  5. Status: Closed - Implemented

    Comments: In a correspondence dated January 16, 2015, DOL concurred with GAO's recommendation to reevaluate and adjust, if necessary, its FTA labor submission review time frame to ensure that it more accurately reflects the time required to thoroughly investigate and to report on most labor submissions. In July 2016, DOL completed a review of its FTA labor submission time frame and determined that no changes were necessary. Instead, DOL developed and implemented Standard Operating Procedures (SOP) for handling submissions. According to DOL, the new streamlined process for receiving and reviewing public submissions enables the agency to thoroughly investigate and report on labor submissions within the previously established timelines. Since then, the streamlined process for receiving and reviewing public submissions has resulted in the timely handling of six new submissions. This recommendation is closed as implemented.

    Recommendation: To improve the capacity of the U.S. government to monitor and enforce FTA partners' compliance with mutually agreed FTA labor provisions, DOL should reevaluate and adjust, if necessary, its FTA labor submission review time frame to ensure that it more accurately reflects the time required to thoroughly investigate and to report on most labor submissions.

    Agency Affected: Department of Labor

 

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