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.

Additional Materials:

Contact:

Kimberly Gianopoulos
(202) 512-8612
gianopoulosk@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

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

D:\My Documents\Reports in process\320980_160\Graphics\TIFF\Highlights-B_5 v01 320980 OT-01.tif

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: Open

    Comments: In a correspondence received on 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. Furthermore, DOL provided examples of actions taken to date. For example, during Labor Subcommittee meetings in Jordan in June 2014 and Morocco in September 2014, DOL and USTR discussed in detailed with partner governments and stakeholders the mechanisms available for providing public input to DOL efforts to monitor the implementation of FTA labor commitments and for filing labor submissions alleging violations of those commitments; DOL and USTR held similar discussions at a Labor Affairs Council meeting in Peru in October 2014. To implement GAO's recommendation, DOL stated it will continue its outreach efforts and identify additional opportunities to increase their capacity to inform stakeholders and the 19 U.S. trading partners with FTA labor commitments about DOL's FTA labor submission process, as well as seek information from stakeholders about potential areas of concern. This recommendation remains open pending further DOL action.

    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 this 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. For example, recently coordinated strategic monitoring and enforcement efforts include: (1) participation by USTR, DOL, and State in a September 2014 government-to-government Labor Affairs Council meeting and a public session in Peru, as well as separate stakeholder outreach meetings; (2) development by USTR, DOL, and U.S. Embassies in Jordan and Morocco of action plans related to labor issues of mutual concern discussed at recent Labor Subcommittee meetings; (3) calls among DOL, USTR, and State to discuss and analyze coordinated enforcement strategies with respect to the Government of the Dominican Republic's labor obligations under CAFTA-DR; and (4) continued coordination among DOL, USTR, and State with the Colombian government to implement the Government of Colombia's commitments under the Colombian Action Plan Related to Labor Rights. In May 2016, DOL reported that since early 2015, DOL, Treasury, and State have been working together to develop a more cohesive labor enforcement plan. Once finalized, the plan will outline ways that the agencies, led by the interagency Trade Policy Staff Committee (TPSC) Subcommittee on Labor Monitoring and Engagement, will increase coordination, streamline public submission processes, increase communication and transparency, and increase resources allocated to monitoring and enforcing FTA labor provisions. According to DOL, the draft plan, which will be finalized in fall 2016 in the coming months, also calls for the TPSC Subcommittee to institute a new annual review process for monitoring priority trade partners' compliance with the labor provisions of FTAs and addressing any identified key areas of concern. As of October 2016, Labor is continuing these efforts. We will close this recommendation when DOL finalizes the labor enforcement plan and provides evidence that the plan is operational.

    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 received on 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 (TPSC) Subcommittee on Labor Monitor and Enforcement. Additionally, USTR is working with DOL to explore ways of improving 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 to implementation of USTR and DOL's efforts. To date, according to USTR, DOL has placed labor officers in Colombia, Honduras, and Bangladesh. This recommendation remains open pending further USTR action.

    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 received on 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.

    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: Open

    Comments: In a correspondence received on January 16, 2015, DOL concurred with GAO's recommendation to reevaluate and adjust, if necessary, its FTA labor submissions review time frame to ensure that it more accurately reflects the time required to thoroughly investigate and to report on most labor submissions. DOL acknowledged difficulty in conducting a thorough and detailed review and assessment of all information obtained in an FTA Labor Submission, given their existing internal procedural guidance and time frames. To implement GAO's recommendation, DOL plans to reevaluate its existing internal FTA Labor Submission review process, in consultations with the U.S. Trade Representative, the State Department, and stakeholders, to determine what adjustments may be necessary. This recommendation remains open pending further DOL action.

    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

 

Explore the full database of GAO's Open Recommendations »

Dec 5, 2016

Dec 2, 2016

Nov 2, 2016

Oct 4, 2016

Sep 28, 2016

Sep 27, 2016

Sep 22, 2016

Sep 20, 2016

Looking for more? Browse all our products here