The inclusion of labour and environmental chapters in regional trade agreements (there are none in the WTO) is often lauded by governments negotiating such agreements that workers’ rights and environmental protection will be safeguarded even as commercial trade between countries increases. Given the importance of working conditions and the sustainability of our ecological commons are to human health, such attention in trade agreements should be welcomed by public health. Although such provisions may slow down a regulatory race to the bottom, however, they often do little more than simply entrench an existing and not terribly health-equitable status quo.
Labour
Like other areas of the USMCA, many of the provisions in its Labor Chapter are modelled on the CPTPP, which we have reviewed in detail elsewhere [
45]. As with other labour chapters (including in the CPTPP), the USMCA refers only to the ILO Declaration and not to any of its more specific, fundamental Conventions (of which the US has only ratified 2, and neither of those related to workers’ right to organize and collectively bargain); and which, if implemented and enforced, contribute both directly and indirectly to workers’ health. Also like the CPTPP, and despite several incremental improvements, much of the language surrounding labour standards in the USMCA is hortatory. The acceptability of labour standards, for example, is to be determined by each individual country.
The USMCA also neglects important labour rights, notably those pertaining to social protection policies which can provide a means of mediating the health impact of job loss, for example, through unemployment insurance [
46]. In Mexico, there is currently no unemployment benefit anchored in national legislation. While Canada and the US both have legislated unemployment schemes, the share of unemployed who actually receive benefits is 40 and 27.9%, respectively [
47]. Through its Trade Adjustment Assistance program, the US is unique in offering targeted social protection for trade displaced workers, including job retraining services. The scheme, however, requires workers to submit a joint petition to the Department of Labor—leading to long delays in benefit receipt. Historically, it has also covered only a minority of workers displaced by trade [
48] and has failed to secure new employment for the vast majority of those completing its retraining services [
49].
More positively, the chapter’s article on forced labour was strengthened from the CPTPP text so that parties “shall prohibit” (rather than “shall. .. discourage”) importation of goods produced by forced labour. There are also two new articles in the chapter which cover violence against workers generally (23.7) and migrant workers, specifically (23.8), along with a strongly worded provision on gender equity not found in the CPTPP:
Accordingly each Party shall implement policies that protect workers against employment discrimination on the basis of sex, including with regard to pregnancy, sexual harassment, sexual orientation, gender identity, and caregiving responsibilities, provide job-protected leave for birth or adoption of a child and care of family members, and protect against wage discrimination. (Art.23.9.1).
While the Trump administration’s latest move against gender identity or sex identity already violates this provision, a footnote to this provision specifically says the US’s current policies regarding hiring is “sufficient to fulfill the obligation set forth.” This addition is likely the result of the 40 Republican members of Congress who, in a letter to President Trump, said a trade deal was “no place for the adoption of social policy” [
50]. The labour chapter also requires that Mexico allow independent trade unions, weakening the present domination of non-independent unions that work more in corporate than worker favour. This is a positive step forward, and one the new government in Mexico is likely to follow, although there are indications that Mexico’s 2019 budget may be unlikely to include funding to implement these labour reforms [
51].
As with each government’s discretion in setting its own labour standards, each country retains sovereignty over setting its enforcement procedures. There is a certain irony, for example, that the US under the Obama administration amended its policy that had allowed importing goods made by prison labour if domestic supply did not meet ‘consumptive demand’, and continues to include clauses banning imports of goods made by prison labour, while allowing its own companies to employ prison labour, as the following describes:
Prisoners earn as little as 23 cents an hour working on assembly lines, and their products often compete for business with legitimate government contractors who operate under the Berry Amendment (a law that requires U.S. military uniforms to be made in the U.S.). These respectable American companies make apparel and footwear for many branches of the U.S. government and often use the Berry business as an anchor, to help them run their U.S. factories so they can compete in the global marketplace [
52].
The extent to which such clothing is directly or indirectly exported (or passed through firms in a way that disguises its origin in prison labour) is unknown. Even if such apparel remains for domestic consumption only, there is an arguable case that the US ban on imports made by prison labour ironically violates national treatment provisions.
As with the CPTPP, violations of labour conditions with the USMCA are confined only to circumstances where a labour right is denied or level of labour protection lowered in order to obtain a trade or investment advantage. This would seem to exclude all persons working in the non-export or private (investment-driven) sectors, such as public employees and teachers, with potential knock-on effects for health equity [
45]. However, for the first time in a trade agreement, the USCMA chapter does provide a definitions of the oft-used phrases “through a sustained or recurring course of action or inaction” and “in a manner affecting trade between the Parties”:
For greater certainty, a “sustained or recurring course of action or inaction” is “sustained” where the course of action or inaction is consistent or ongoing, and is “recurring” where the course of action or inaction occurs periodically or repeatedly and when the occurrences are related or the same in nature. A course of action or inaction does not include an isolated instance or case (footnote 8).
For greater certainty, a “course of action or inaction” is “in a manner affecting trade or investment between the Parties” where the course involves: [
1] a person or industry that produces goods or provides services traded between the Parties or has investment in the territory of the Party that has failed to comply with this obligation; or [
2] a person or industry that produces goods or provides services that compete in the territory of a Party with goods or services of another Party (footnote 9).
It has been argued that these definitions set a low threshold for claims of violations and could make it easier to initiate labour-related arbitrations in the future [
53]. This is important since this phrasing is precisely the point on which the only dispute to date on labour chapter provisions failed, (under the Dominican Republic-Central America Free Trade Agreement) where violations of Guatemalan labour laws were not proven to have led to a trade or investment advantage.
It is also worth noting that while this text sets limits to the obligations surrounding the protection of labour rights, there are no such limits in several other areas of the USMCA, for example, in relation to intellectual property rights where arbitration can be sought regardless of whether alleged violations affected trade. Such a course of logic, as in other areas of the Chapter, affords a higher priority to trade than to labour rights.
A further watering down of the chapter can be found in Article 23.5.3:
If a Party fails to comply with an obligation under this Chapter, a decision made by that Party on the provision of enforcement resources shall not excuse that failure. Each Party retains the right to exercise reasonable enforcement discretion and to make bona fide decisions with regard to the allocation of enforcement resources between labor enforcement activities among the fundamental labor rights and acceptable conditions of work enumerated in Article 23.3.1 and Article 23.3.2, provided that the exercise of that discretion, and those decisions, are not inconsistent with its obligations under this Chapter.
The value of this chapter must also be seen in light of text within the Appendix to Annex 4-B that specifies, in order to avoid US import tariffs, 40–45% automotive content (including parts and assembly) must be in jobs paying US$16/h, most of them in manufacturing (factory) employment. This arrangement represents a first attempt at integrating a guaranteed minimum wage into a trade agreement. Some trade analysts argue that a lower disparity between US and Mexican automotive workers may redirect investment (and employment) away from Mexico to the US [
42]. However, it is unclear whether automakers in Mexico are likely to triple the going hourly wage, or simply opt to pay the (comparatively low) tariff (only 2.5% on cars, Mexico’s main automotive export) [
54], or how adherence to this provision would be monitored by either the American or Mexican government. The provision also makes no allowance for inflation adjustment and neglects the many other economic sectors that also suffer from low wages and wage disparities.
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Environment
The Environment Chapter begins with this normative claim:
The Parties recognize that a healthy environment is an integral element of sustainable development and recognize the contribution that trade makes to sustainable development (Art.24.2.2).
No evidence is offered to support this claim, despite a joint WTO/UNEP report in 2009 acknowledging the link between increased trade and climate change [
56,
57], and extensive criticisms from environmental groups on successful trade challenges to environmental protection measures [
58]. More recently both organizations have begun a dialogue to document how international trade might be conducted such that it can also ensure “a healthier environment” [
59].
The USMCA recognizes that each Party has “the sovereign right” to establish its “own levels of domestic environmental protection” and the right to modify this as it sees fit, while calling on Parties to “strive to ensure” (weak language) that its laws provide for “high levels of environmental protection.” This is language similar to that in the CPTPP and other FTAs, along with the proviso that “No Party shall fail to effectively enforce its environmental laws through a sustained or recurring course of action or inaction in a manner affecting trade or investment between the Parties…” (Art.24.4). This is the same language that weakens provisions in the labour chapter and renders much of the rules in the environment chapter first, because it is difficult to prove “sustained and recurring” and, second, because the concern of this chapter is not with environmental protection, but (as with the labour chapter) lowering standards specifically to gain a trade or investment advantage. If a country gains no such advantage, it can destroy the environmental commons at will.
Art.24.7.1 calls on Parties to undertake environmental impact assessments “of proposed projects…that may cause significant effects,” which appears to be a novel addition to a trade agreement but, since all three countries already have domestic requirements for such impact assessments, what it means and why it is here in a trade treaty is unclear. The chapter repeats calls in other treaties for cooperation between the Parties with respect to engaging in new multilateral environment agreements, notably:
The Parties commit to consult and cooperate as appropriate with respect to environmental issues of mutual interest, in particular trade-related issues, pertaining to relevant multilateral environmental agreements. This includes, inter alia, exchanging information on the implementation of multilateral environmental agreements to which a Party is party; ongoing negotiations of new multilateral environmental agreements; and, each Party’s respective views on becoming a party to additional multilateral environmental agreements (Art.24.8.3).
The italicized text may be insignificant, but it could also lead to pressures from one Party on another if its implementation or new MEA negotiations do not align with the trade/investment or economic interests of the other Party. The language here is stronger than in the CPTPP, which only identifies a need for dialogue between the Parties; the USMCA commits Parties to such cooperation and information sharing.
There are some mixed elements, largely in how the chapter references several MEAs, such as the Montreal Protocol on ozone-depleting substances (Art.23.9), and pollution due to marine shipment (Art. 23.10). Failure of a Party to abide by these environmental accords are subject to dispute but, once more, only if existing standards are lowered to gain a trade or investment advantage. Two other environmental concerns (air pollution and ‘marine litter’, meaning micro plastic waste) are identified as serious problems but contain no specific measures, rendering them de facto unenforceable. Reference is also made to the importance of protecting biodiversity but there is no mention of the International Convention on Biodiversity, which the US (despite past programs protecting biodiversity) has yet to ratify. The Chapter also emphasizes voluntary environmental measures (Art.24.14), but with the usual caveat that even here such measures should “avoid the creation of unnecessary barriers to trade.”
Other articles, however, do reference several other environmental issues:
-
protection of ‘wild fisheries’ (24.17)
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‘fisheries management’ (24.18 – though the language here is softer, ‘shall seek to’ rather than ‘shall’)
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‘conservation of marine species’ (24.19, which bans killing of great whales) and,
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as in the CPTPP, forceful language banning subsidies for fishing fleets that work in overfished waters (24.20)
Art. 24.23, like other references to environmental issues, recognizes the importance of maintaining healthy forests by emphasizing harvesting of legal logs only, which begs the question how effective are such laws and their enforcement, and fails to account that legal logs are likely monocrop industrial forests which pose severe risks to biodiversity. Finally, Art.24.22 also requires governments to implement obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The Convention does not ban trophy hunting (poaching, illegal trade, and habitat loss/climate change are far greater threats to wildlife) but does monitor annual import/export permits for such trophy animals to determine if such hunting is posing danger to species’ populations. The problem with Article 24.22, however, is that (as in many of the provisions in this chapter) it is subject to dispute only if the lowering of government standards creates a trade or investment advantage.
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