GAO-15-160, FREE TRADE AGREEMENTS: U.S. Partners Are Addressing Labor Commitments, but More Monitoring and Enforcement Are Needed

FREE TRADE

AGREEMENTS

U.S. Partners Are

Addressing Labor

Commitments, but

More Monitoring and

Enforcement Are

Needed

Report to Congressional Requesters

November 2014

GAO-15-160

United States Government Accountability Office

Highlights of GAO-15-160, a report to

congressional requesters

November 2014

FREE TRADE AGREEMENTS

U.S. Partners Are Addressing Labor Commitments,

but More Monitoring and Enforcement Are Needed

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.

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

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.

View GAO-15-160. For more information,

contact Kimberly Gianopoulos at (202) 512-

8612 or

gianopoulosk@gao.gov.

Page i GAO-15-160 Labor Provisions in Free Trade Agreements

Letter 1

Background 5

Selected Countries Have Taken Steps, with U.S. Assistance, to

Address FTA Labor Commitments and Other Labor Initiatives

but Have Limited Enforcement Capacity 10

One of Five Labor Submissions Has Been Resolved, but

Reporting Deadlines and Limited Public Awareness of the

Process Present Problems 23

U.S. Agencies Provide Limited Monitoring, Enforcement, and

Reporting on FTA Labor Provisions 32

Conclusions 46

Recommendations for Executive Action 47

Agency Comments and Our Evaluation 47

Appendix I Objectives, Scope, and Methodology 50

Appendix II Reported Violence against Trade Unionists in Colombia and

Guatemala 55

Appendix III U.S. Monitoring of Implementation of Other Labor Initiatives 65

Appendix IV Status of Labor Submissions 69

Appendix V Comments from the Office of the U.S. Trade Representative 77

Appendix VI Comments from the Department of Labor 92

Appendix VII GAO Contact and Staff Acknowledgments 96

Contents

Page ii GAO-15-160 Labor Provisions in Free Trade Agreements

Figures

Figure 1: Labor-Related Technical Assistance Administered by

U.S. Agencies under Selected Free Trade Agreements

(FTA) and All Other FTAs 16

Figure 2: U.S. DOL Labor Submission Process 24

Figure 3: Free Trade Agreement (FTA) Labor Submissions

Accepted by DOL as of July 2014 26

Figure 4: Murders of Unionists in Colombia, 2003-2013 56

Figure 5: Timeline and Status of Labor Submission Regarding

Bahrain 70

Figure 6: Timeline and Status of Labor Submission Regarding the

Dominican Republic 72

Figure 7: Timeline and Status of Labor Submission Regarding

Guatemala 74

Figure 8: Timeline and Status of Labor Submission Regarding

Honduras 75

Figure 9: Timeline and Status of Labor Submission Regarding

Peru 76

Page iii GAO-15-160 Labor Provisions in Free Trade Agreements

Abbreviations

AFL-CIO American Federation of Labor and Congress of Industrial

Organizations

CAFTA-DR Dominican Republic-Central America-United States Free

Trade Agreement

CICIG International Commission against Impunity in Guatemala

DOL Department of Labor

DPPS División de Protección de Personas y Seguridad

DRL Bureau of Democracy, Human Rights, and Labor

ENS Escuela Nacional Sindical

FTA free trade agreement

ILO International Labour Organization

INL Bureau of International Narcotics and Law Enforcement

NAFTA North American Free Trade Agreement

NGO nongovernmental organization

SENA Servicio Nacional de Aprendizaje

SINAUT National Union of Tax Administration Workers

SUNAUT National Superintendency of Tax Administration

TPSC Trade Policy Staff Committee

UNP Unidad Nacional de Protección

USAID U.S. Agency for International Development

USTR Office of the U.S. Trade Representative

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Page 1 GAO-15-160 Labor Provisions in Free Trade Agreements

441 G St. N.W.

Washington, DC 20548

November 6, 2014

The Honorable George Miller

Ranking Member

Committee on Education and the Workforce

House of Representatives

The Honorable Sander M. Levin

Ranking Member

Committee on Ways and Means

House of Representatives

As global economic competition has intensified, concerns in the United

States that competitors’ labor practices may disadvantage U.S. workers

and producers have become acute. Recent U.S. free trade agreements

(FTA) contain a provision requiring partner countries to commit to respect

internationally accepted core labor rights, such as freedom of association

and the right to bargain collectively.

FTAs phase out barriers to trade

with particular countries or groups of countries and contain rules and

other commitments to improve access for services and investment. FTAs

represent a major component of U.S. trade policy, as the United States

has signed 14 FTAs with 20 countries covering, according to the

Department of Commerce, more than 35 percent of all U.S. imports—$2.3

trillion in 2013.

For example, FTAs that have entered into force since February 2009 contain a provision

stating that “[e]ach Party shall adopt and maintain in its statutes and regulations, and

practices thereunder, the following rights, as stated in the ILO [International Labour

Organization] Declaration on Fundamental Principles and Rights at Work and Its Follow-

up (1998).” For example, see United States-Colombia FTA (entered into Force May 2012),

art. 17.2. According to the Department of Labor (DOL), freedom of association is the right

of workers and employers to organize to defend their interests, including for the purpose

of negotiating salaries, benefits, and other conditions of work, and is a fundamental right

that underpins democratic representation and governance; collective bargaining is an

essential element of freedom of association that helps to ensure that workers and

employers have an equal voice in negotiations and provides workers the opportunity to

seek to improve their living and working conditions.

The status of the implementation of FTA labor provisions

As of July 2014, the United States had entered into FTAs with Australia, Bahrain,

Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala,

Honduras, Israel, Jordan, South Korea, Mexico, Morocco, Nicaragua, Oman, Panama,

Peru, and Singapore. The Dominican Republic-Central America-United States Free Trade

Agreement (CAFTA-DR) covers six of these countries (Costa Rica, Dominican Republic,

El Salvador, Guatemala, Honduras, and Nicaragua).

Page 2 GAO-15-160 Labor Provisions in Free Trade Agreements

is of particular relevance, as the United States is negotiating the Trans-

Pacific Partnership—a trade agreement with 11 Pacific Rim countries, in

which the administration is seeking to negotiate high-standard labor

provisions. The effective implementation of labor provisions is also

relevant as Congress considers renewal of the President’s lapsed Trade

Promotion Authority, most recently in effect from 2002 through 2007.

In 2009, we reported significant challenges connected with the

enforcement of labor provisions in four FTAs.

We also reported that the

U.S. agencies responsible for the monitoring and implementation of labor

provisions in the FTAs in many cases engaged in only minimal oversight

and assistance with FTA partner countries to address these challenges.

We recommended that the Department of Labor (DOL), in consultation

with other agencies, initiate regular contact with all FTA partners’

ministries of labor to review implementation of FTA labor provisions and

to develop ongoing priorities and plans for technical cooperation on labor

matters. We also recommended that the Office of the U.S. Trade

Representative (USTR), in cooperation with other agencies, prepare

updated plans to implement, enforce, monitor, and report on compliance

with and progress under the FTAs’ labor provisions and that these plans

should reflect ongoing trade developments, be provided to Congress, and

be summarized in USTR’s annual trade agreements report. In 2012, both

agencies were taking actions to address the recommendations.

As the main U.S. point of contact for all FTAs, USTR has general

oversight responsibility for commitments in FTAs. DOL is responsible for

monitoring partner countries’ labor conditions and compliance with FTA

labor provisions, addressing complaints regarding violations of these

provisions, and providing technical assistance. The Department of State

Trade Promotion Authority, previously known as “fast track” negotiating authority,

established conditions and procedures under which the President could submit legislation

to approve and implement trade agreements, such as FTAs, that Congress could approve

or disapprove but could not amend or filibuster. See Bipartisan Trade Promotion Authority

Act of 2002, Pub. L. No. 107-210, Div. B, § 2103, 116 Stat. 933, 1004–08.

GAO, International Trade: Four Free Trade Agreements GAO Reviewed Have Resulted

in Commercial Benefits, but Challenges on Labor and Environment Remain, GAO-09-439

(Washington, D.C.: July 10, 2009). Our 2009 report reviewed implementation of the U.S.

FTAs with, respectively, Chile, Jordan, Morocco, and Singapore.

Additional information about U.S. agencies’ monitoring and reporting on compliance with,

and progress under, FTA labor provisions is presented later in this report.

Page 3 GAO-15-160 Labor Provisions in Free Trade Agreements

(State) supports USTR and DOL in discharging their responsibilities and

also monitors labor conditions in each partner country. In some instances,

the U.S. Agency for International Development (USAID) supports partner

countries in implementing FTA labor obligations and initiatives by

administering technical assistance projects, carried out by USAID’s

implementing partners. In 2009, USTR announced that it would take

steps jointly with DOL and State to improve interagency cooperation;

proactively monitor the implementation of labor provisions; and address

identified problem areas, including foreign practices that would constitute

violations of FTA requirements. Furthermore, the President’s 2014 Trade

Policy Agenda indicates that the administration will focus on

implementation of the numerous agreements into which the United States

has entered and that the United States will work with key trading partners

around the world to address specific labor issues.

You asked us to assess the current status of the implementation of FTA

labor provisions as well as the United States’ and trade partner countries’

responses to related challenges, such as reported violence against

unionists in some partner countries. This report examines the following

(see app. I for a detailed description of our scope and methodology):

1) steps that selected partner countries have taken, and U.S. assistance

they have received, to implement FTA labor provisions and other

labor initiatives and the reported results of such steps;

2) complaints—known as submissions—about possible violations of FTA

labor provisions that DOL has accepted and any problems related to

the submission process; and

3) the extent to which USTR, DOL, and State monitor and enforce

partner countries’ implementation of FTA labor provisions and report

results to Congress.

In addition, appendix II describes reported violence against labor

unionists in selected FTA partner countries as well as steps that the

countries have taken to address such occurrences. Appendix III describes

U.S. agencies’ efforts to monitor implementation of other labor initiatives.

For our review, we selected four FTAs—the Dominican Republic-Central

America-United States Free Trade Agreement (CAFTA-DR), the United

States-Colombia Trade Promotion Agreement (Colombia FTA), the

United States-Oman Free Trade Agreement (Oman FTA), and the United

States-Peru Trade Promotion Agreement (Peru FTA). We also visited five

partner countries—El Salvador and Guatemala, both of which are

Page 4 GAO-15-160 Labor Provisions in Free Trade Agreements

CAFTA-DR partners; Colombia; Oman; and Peru. We selected these

FTAs and countries in part because of the extent of known labor issues in

each country; because of the timing of the FTAs’ entry into force; and to

reflect regional dispersion across Central America, South America, and

the Middle East.

In addition, we selected the Colombia and Peru FTAs in

part because the labor chapters in those agreements contain provisions

reflecting labor language as delineated in the May 10, 2007, Bipartisan

Trade Agreement on Trade Policy, popularly known as the May 10th

Agreement.

To address our objectives, we reviewed relevant documents, including

the labor chapters of the four selected FTAs; labor submissions received

by DOL; labor rights reports and trade agreement reports compiled by

U.S. agencies, international organizations, and FTA stakeholders; and

documents pertaining to U.S. monitoring and enforcement plans. In

addition, we reviewed documentation related to labor conditions in partner

countries that we obtained from partner country governments as well as

from business associations, labor unions, the International Labour

Organization (ILO), and nonprofit organizations. We interviewed

representatives of these organizations; relevant foreign government

officials; and U.S. agency officials in Colombia, El Salvador, Guatemala,

Oman, and Peru during fieldwork in those countries. We also interviewed

U.S. agency representatives in Washington, D.C., and Geneva,

Switzerland.

However, the results of our review of these selected FTAs

and partner countries cannot be generalized to all FTAs and partner

countries.

According to USTR, FTA provisions provide for the FTA’s entry into force through an

exchange of formal diplomatic notes among the parties. USTR also notes that, in the

United States, the President must first determine that the trading partner has come into

compliance with obligations that will take effect when the agreement enters into force.

When an FTA enters into force, it generally means that the agreement becomes legally

binding on the parties to the agreement.

We collected data on U.S. funding for labor assistance

Congressional leaders and the Bush administration jointly agreed to the May 10th

Agreement, resulting in a new trade policy template that calls for, among other things, (1)

enforceable reciprocal obligation for the countries to adopt and maintain in their laws and

practice the five basic internationally recognized labor principles, as stated in the

International Labour Organization (ILO) Declaration on Fundamental Principles and Rights

at Work and (2) labor obligations subject to the same dispute settlement procedures and

remedies as commercial obligations.

The views expressed by these officials and organizations cannot be generalized to all

officials or organizations knowledgeable about labor provisions in the selected FTAs.

Page 5 GAO-15-160 Labor Provisions in Free Trade Agreements

programs in FTA partner countries from 2001 to 2013 and on reported

violence against unionists in Colombia—the only selected FTA partner

country with such data—and we assessed these data’s reliability by

interviewing agency officials knowledgeable about the data sources and

by tracing the data to source documents. We determined that the data

were sufficiently reliable for the purposes of describing U.S. assistance

for implementation of labor provisions in FTA partner countries and

describing general trends in reported violence against unionists in

Colombia. (See app. I for further details of our scope and methodology.)

We conducted this performance audit from May 2013 to November 2014

in accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain

sufficient, appropriate evidence to provide a reasonable basis for our

findings and conclusions based on our audit objectives. We believe that

the evidence obtained provides a reasonable basis for our findings and

conclusions based on our audit objectives.

The current and prior administrations have expressed concerns that poor

labor standards in FTA partner countries may affect workers in the United

States and other parts of the world, incentivizing a global “race to the

bottom” that unfairly distorts global markets and prevents U.S. businesses

and workers from competing on a level playing field. According to DOL, to

address such concerns, each FTA signed in the past decade, including

those we selected, contains a “labor chapter” that differs in detail across

the FTAs but generally includes labor provisions

, establishes points of

contact for labor matters, and provides a recourse mechanism for matters

arising from the labor provisions.

All of the selected FTAs contain mechanisms to address matters arising under the

respective labor chapters. CAFTA-DR and the Colombia, Oman, and Peru FTAs each

include labor provisions that state that each party shall designate an office within its labor

ministry that shall serve as a contact point with the other party and with the public.

Furthermore, the FTAs state that each party’s contact point shall provide for the

submission, receipt, and consideration of communications on matters related to the

respective labor chapter and shall make such communications available to the other party

and, as appropriate, to the public. While either party can request consultations regarding

any matter addressed in the labor chapter, FTA dispute settlement procedures may be

invoked only under specified circumstances, which vary by FTA.

The provisions in the labor chapters of

Background

FTA Labor Provisions

and Other Initiatives to

Address Labor Concerns

Page 6 GAO-15-160 Labor Provisions in Free Trade Agreements

the four FTAs that took effect most recently generally reflect the trade

policy template created by the May 10th Agreement.

• In FTAs that entered into force from January 2004 through January

2009, including CAFTA-DR and the Oman FTA, the labor chapter

contains a provision that a party shall not fail to effectively enforce its

labor laws, through a sustained or recurring course of action or

inaction, in a manner affecting trade between the parties.

Under

CAFTA-DR and the Oman FTA, matters related to this obligation are

the only matters under the respective labor chapters for which parties

can seek recourse through dispute settlement that may result in

possible fines and sanctions.

These FTAs also contain a provision

whereby parties commit to “strive to ensure” that the labor rights

enumerated in the respective labor chapter are protected by their

laws; however, matters arising under this provision do not have

recourse through the dispute settlement chapter of the respective

FTA.

• In FTAs that entered into force after January 2009, including the

Colombia and Peru FTAs,

FTAs with Colombia, Panama, Peru, and South Korea contain language reflecting the

labor provisions of the May 10th Agreement.

the labor chapter includes language

echoing the May 10th Agreement that obligates each partner to adopt

and maintain in its statutes, regulations, and practices certain

United States-Singapore Free Trade Agreement (entered into force in January 2004),

art. 17.2; United States-Chile Free Trade Agreement (entered into force in January 2004),

art. 18.2; United States-Australia Free Trade Agreement (entered into in force January

2005), art. 18.2; United States-Morocco Free Trade Agreement (entered into force in

January 2006), art. 16.2; CAFTA-DR (entered into force between 2006 and 2009 for the

various countries), art. 16.2; United States-Bahrain Free Trade Agreement (Bahrain FTA)

(entered into force in January 2006), art. 15.2; and Oman FTA (entered into force in

January 2009), art. 16.2.

CAFTA-DR, art. 16.6.7; Oman FTA art. 16.6.5.

CAFTA-DR, art. 16.1.1 and 16.6.7; Oman FTA, art. 16.1.1 and 16.6.5.

United States-Peru FTA (entered into force in February 2009), art. 17.2, 17.3; United

States-Colombia FTA (entered into force in May 2012), art. 17.2, 17.3; United States-

Korea Free Trade Agreement (entered into force in March 2012), art. 19.2, 19.3; and

United States-Panama Free Trade Agreement (entered into force in October 2012), art.

16.2, 16.3.

Page 7 GAO-15-160 Labor Provisions in Free Trade Agreements

fundamental labor rights as stated by the ILO.

Although the text of

the respective FTAs’ labor chapters varies, this language generally

relates to, for example, the rights to freedom of association and

collective bargaining and the elimination of compulsory or forced

labor. The labor chapters of these FTAs also obligate the parties not

to fail to effectively enforce these labor laws in a manner affecting

trade between the parties. Pursuant to the labor chapters of these

FTAs, if consultations fail, the parties can seek to resolve matters

arising under the labor chapters by pursuing recourse through the

respective FTAs’ dispute settlement chapters, which may result in

possible fines and sanctions.

In addition, other labor initiatives—one known as the White Paper

and

the other titled Colombian Action Plan Related to Labor Rights (Labor

Action Plan)

—were developed in the context of CAFTA-DR and the

Colombia FTA, respectively.

• White Paper. Before Congress enacted implementing legislation for

CAFTA-DR,

International Labour Organization, Declaration on Fundamental Principles and Rights at

Work and Its Follow-Up (1998),

a group of vice ministers responsible for trade and labor

in the partner countries developed the White Paper to address labor

concerns in Central America and the Dominican Republic. The White

http://www.ilo.org/declaration/thedeclaration

/textdeclaration/lang--en/index.htm, accessed August 18, 2014. The principles and rights

stated by the ILO are (1) freedom of association and the effective recognition of the right

to collective bargaining, (2) the elimination of all forms of forced or compulsory labor, (3)

the effective abolition of child labor, and (4) the elimination of discrimination in respect of

employment and occupation.

United States-Peru FTA, art. 17.7; Colombia FTA, art. 17.7; United States-Korea Free

Trade Agreement, art. 19.7; and United States-Panama Free Trade Agreement, art. 16.7.

Working Group of the Vice Ministers Responsible for Trade and Labor in the Countries

of Central America and the Dominican Republic, The Labor Dimension in Central America

and the Dominican Republic: Building on Progress: Strengthening Compliance and

Enhancing Capacity (April 2005), accessed June 7, 2013, http://www.ilo.org/sanjose

/lang—es/index.htm.

Colombian Action Plan Related to Labor Rights (April 7, 2011), accessed May 29, 2013,

http://www.ustr.gov/webfm_send/2787.

These labor initiatives were created outside an FTA framework.

Dominican Republic-Central America-United States Free Trade Agreement

Implementation Act, Pub. L. No. 109-53, 119 Stat. 262 (Aug. 2, 2005).

Page 8 GAO-15-160 Labor Provisions in Free Trade Agreements

Paper detailed six areas of focus and included recommendations to

enhance the implementation and enforcement of labor standards and

to strengthen the region’s labor institutions.

• Labor Action Plan. Colombia and the United States agreed in 2011

to the Labor Action Plan, in furtherance of Colombia’s commitment to

protect internationally recognized labor rights, prevent violence

against labor leaders, and prosecute the perpetrators of such

violence. The plan listed nine issue areas to strengthen labor rights

that Colombia was required to address before the FTA could receive

congressional approval.

According to DOL, the

U.S. government did not participate in preparing or negotiating the

White Paper’s recommendations. The ILO Verification Project, funded

by DOL, was created to monitor implementation of the White Paper

commitments and released verification reports every 6 months

between 2007 and 2010.

USTR and DOL are jointly responsible for

monitoring Colombia’s ongoing progress in fulfilling these

requirements.

USTR, DOL, and State have key responsibilities related to monitoring

partner countries’ implementation of FTA labor provisions. These roles

involve both discrete and shared responsibilities that require both formal

and informal coordination. USAID has provided funding for cooperative

projects to improve labor capacity.

• USTR. The U.S. Trade Representative is the President’s principal

adviser and spokesperson on trade and has lead responsibility for

negotiating trade agreements, including FTAs, as well as for

Under the White Paper, the labor ministers of the six CAFTA-DR countries agreed to

address the following priority areas: (1) labor law and implementation, (2) budget and

personnel needs of the labor ministries, (3) strengthening the judicial system for labor law,

(4) protections against discrimination in the workplace, (5) worst forms of child labor, and

(6) promoting a culture of compliance.

The nine areas that Colombia agreed to address under the Labor Action Plan were (1)

creation of a specialized Ministry of Labor; (2) criminal code reform; (3) prohibiting the

misuse of cooperatives; (4) preventing the use of temporary service agencies to

circumvent labor rights; (5) criminalizing the use of collective pacts to undermine the right

to organize and bargain collectively; (6) collecting and disseminating information on the

definition of essential services; (7) seeking the ILO’s assistance in implementing the Labor

Action Plan and working with the ILO to strengthen its presence, capacity, and role in

Colombia; (8) reforming protection programs; and (9) criminal justice reforms.

U.S. Agencies’

Responsibilities Related to

Monitoring Implementation

of FTA Labor Provisions

Page 9 GAO-15-160 Labor Provisions in Free Trade Agreements

developing and coordinating U.S. trade policy and issuing policy

guidance related to international trade functions. USTR is responsible

to the President and Congress for administering the trade agreements

program, including periodic reporting to Congress as required.

• DOL. DOL’s Bureau of International Labor Affairs is responsible for

monitoring implementation of FTA labor provisions for all FTAs. The

bureau’s Office of Trade and Labor Affairs is designated as the point

of contact for implementation of the labor provisions of the FTAs as

well as for the labor cooperation mechanisms. Before congressional

approval and implementation of an FTA, DOL’s responsibilities

include preparing reports for Congress, in consultation with USTR and

State, about the partner country’s labor rights protections and child

labor laws and the FTA’s potential effect on employment in the United

States. After an FTA enters into force, DOL’s responsibilities include

receiving, reviewing, and acting on any public complaint submitted

about the partner’s compliance with FTA labor obligations

(submissions).

USTR is also responsible for coordinating the administration’s

activities to create a fair, open, and predictable trading environment

by identifying, monitoring, enforcing, and resolving the full range of

international trade issues. According to USTR, this includes asserting

U.S. rights; vigorously monitoring and enforcing bilateral and other

agreements; and promoting U.S. interests, including labor interests,

under FTAs.

19 U.S.C. § 2171. Generally, the trade agreements program includes all activities

consisting of, or related to, the negotiation or administration of international agreements

that primarily concern trade and that are concluded pursuant to the authority vested in the

President by the Constitution, 19 U.S.C. § 1351, the Trade Expansion Act of 1962, and

the Trade Act of 1974 as amended.

Both before and after an FTA is implemented, DOL is

responsible for assisting the partner country as needed—for example,

planning, developing, and pursuing cooperative projects related to

labor matters—to strengthen the partner country’s capacity to promote

respect for core labor standards.

In addition, DOL is responsible for convening the FTA labor affairs councils among

partner government’s labor ministries, which oversee the FTA labor chapters, and for

administering the U.S. Labor Advisory Committee for Trade Negotiations and Trade

Policy. The committee consists of representatives of labor organizations and is tasked

with providing information and advice with respect to negotiation and implementation of

U.S. trade agreements. DOL also administers the National Advisory Committee for Labor

Provisions of U.S. Free Trade Agreements, which consists of 12 representatives (4 from

the business community, 4 from the labor community, and 4 from the public sector).

Page 10 GAO-15-160 Labor Provisions in Free Trade Agreements

• State. State is responsible for supporting USTR and DOL in

implementing and monitoring FTAs. State’s Bureau of Democracy,

Human Rights, and Labor (DRL) coordinates State’s in-country labor

officers, who are tasked with carrying out regular monitoring and

reporting and day-to-day interaction with foreign governments

regarding labor matters. State annually produces Country Reports on

Human Rights Practices, which includes information about countries’

labor practices. In addition, State participates with USTR and DOL in

the USTR-led interagency team that negotiates FTA labor provisions,

contributes critical input to the research and analysis of reports

produced by DOL, and provides technical assistance funding to

strengthen some countries’ labor capacity. Because USTR and DOL

do not maintain a presence in other countries, they often rely on State

for outreach, monitoring, and reporting activities related to FTA labor

provisions.

• USAID. USAID administers technical assistance programs to address

labor-related matters. USAID administers trade-capacity-building

programs globally in both FTA and non-FTA partner countries. In

addition, during the FTA negotiations, USAID provides USTR input on

draft FTA text as well as input on possible trade-capacity-building

programs to address labor-related issues.

Each of the FTA partner countries that we selected for our review has

taken steps to strengthen labor rights pursuant to its FTA with the United

States, and some of these countries have also implemented other labor

initiatives outside the FTA framework. The U.S. government has provided

some technical assistance to help FTA partner countries meet their labor

commitments. However, stakeholders reported that limitations in partner

countries’ capacity to enforce labor laws cause gaps in labor protections

to persist.

Selected Countries

Have Taken Steps,

with U.S. Assistance,

to Address FTA Labor

Commitments and

Other Labor Initiatives

but Have Limited

Enforcement

Capacity

Page 11 GAO-15-160 Labor Provisions in Free Trade Agreements

El Salvador and Guatemala, the CAFTA-DR countries we selected for our

review, have both taken steps to implement labor initiatives responding to

their FTA commitments and areas of focus identified in the White Paper.

According to the ILO, and as reported by DOL, these countries have

addressed these areas of focus by implementing changes to improve

labor protections, such as increasing the number of labor inspectors and

increasing the number of judges and courts that hear labor cases.

El Salvador. According to DOL and ILO verification reports, El Salvador

increased its Ministry of Labor’s enforcement budget by about 120

percent from 2005 to 2010, leading to an increase in the number of labor

inspectors during the same period as well as increases in both the

number of inspections conducted and the number of fines imposed on

employers.

Ministry of Labor officials reported that with the increase in

size and budget, which resulted from the White Paper recommendations,

the ministry is now able to accommodate workers’ requests for workplace

inspections and labor inspectors can issue fines for violations not

addressed by employers.

Department of Labor, Progress in Implementing Chapter 16 (Labor) and Capacity-

Building under the Dominican Republic-Central America-United States Free Trade

Agreement (Washington D.C.: May 11, 2012). According to DOL, this report relies on

information collected by the ILO as part of its project to verify the results of actions taken

to address the White Paper recommendations.

In addition, according to officials from the

Supreme Court in El Salvador, the labor courts have created a

comprehensive statistical system to track labor issues identified in the

White Paper, and unions have successfully advocated for legislation that,

if passed, would speed labor case reviews and allow plaintiffs to

participate more actively.

Stakeholders reported challenges related to the issuance of fines, as discussed later in

this report

Selected Countries Have

Taken Steps to Implement

FTA Labor Commitments

and Other Labor

Initiatives, Including

Strengthening Labor

Institutions

CAFTA-DR: El Salvador and

Guatemala

Page 12 GAO-15-160 Labor Provisions in Free Trade Agreements

Guatemala. Guatemala has taken some steps to address labor

conditions in accordance with commitments outlined in an Enforcement

Plan that the United States and Guatemala agreed to in 2013 as a result

of negotiations to resolve a labor case initiated through a labor

submission to DOL.

The actions that the plan calls for include, among

others, increasing the budget for labor law enforcement at the Ministry of

Labor and verifying employer compliance with court orders.

According to USTR, Colombia has taken steps to implement labor

protection commitments outlined in the Labor Action Plan, such as

reforming the criminal code to establish criminal penalties for employers

that undermine the right to organize and bargain collectively, enacting

legal provisions and regulations prohibiting the use of temporary service

agencies to circumvent labor rights, and reforming the criminal justice

system. USTR and DOL have reported that the Colombian government

took concrete steps and made meaningful progress under the Labor

Action Plan, which fulfilled the condition for advancing the FTA to

Congress and resulted in the FTA’s entering into force in May 2012. The

government’s steps included securing legislation to establish a separate

labor ministry and expanding its labor inspectorate by hiring additional

Officials

from the Ministry of Labor reported improvements in labor rights

implementation in response to the Enforcement Plan. For example, the

number of labor inspections rose from about 5,000 nationwide in 2011 to

about 36,800 nationwide in 2013. Also, according to ministry officials, the

ministry now conducts labor inspections regularly, rather than in response

to complaints, and has increased its legal education requirements for

labor inspectors, to further fulfill its Enforcement Plan commitments.

Mutually Agreed Enforcement Action Plan between the Government of the United States

and the Government of Guatemala (2013), accessed August 1, 2013,

http://www.dol.gov/ilab/programs/otla/guatemalasub.htm.

The commitments outlined in the Enforcement Plan are (1) reaching an interagency

information exchange agreement, (2) providing police assistance for Ministry of Labor

inspectors, (3) allocating resources for Ministry of Labor enforcement of labor laws, (4)

allowing for the ministry to issue fine recommendations and expedited judicial review, (5)

standardizing time frames for Ministry of Labor inspections, (6) ensuring labor law

compliance for certain enterprises, (7) ensuring labor law compliance for enterprises

receiving export benefits, (8) ensuring labor law compliance upon enterprise closure, (9)

employer substitution, (10) developing a system for tracking compliance with court orders,

(11) verifying employer compliance with court orders, (12) monitoring judicial enforcement

of court orders, (13) applying certain labor code articles, (14) ensuring transparency and

tripartite coordination on Enforcement Plan implementation, (15) publishing labor law

enforcement statistics and data.

Colombia

Page 13 GAO-15-160 Labor Provisions in Free Trade Agreements

inspectors. Additionally, USTR and the Colombian Ministry of Labor

reported that the government enacted a series of laws and ministerial

decrees that expanded labor protections as a result of the Labor Action

Plan. According to USTR and the Colombian Ministry of Labor, these

laws and decrees include, for example, legislation to establish criminal

penalties, including imprisonment, for employers that undermined the

right to organize and bargain collectively as well as new provisions and

regulations to prohibit and sanction with significant fines the misuse of

cooperatives

and other employment relationships that undermine

workers’ rights.

Oman has taken steps to implement labor protections that have allowed

for unionization and collective bargaining. Officials from Oman’s Ministry

of Manpower—the ministry responsible for labor affairs—reported that

Oman’s interest in entering into a free trade agreement with the United

States helped lead to the introduction of labor reforms, including the

establishment of unions. According to USTR, in order to meet its

commitments made in connection with the FTA, Oman has enacted a

number of labor law reforms including, among others, a royal decree in

2006 that established the right to organize labor unions, allowed for

collective bargaining, prohibited the dismissal of workers for union

activity, guaranteed the right to strike, and guaranteed unions the right to

practice their activities freely and without interference from outside

parties. According to union and Ministry of Manpower officials we met

with in Oman, the General Federation of Trade Unions held its first

election in 2010 and served as the starting point for the union movement

in Oman. The federation serves as an umbrella organization representing

workers from various sectors and, according to union officials, represents

about 200 company-level unions and one sector-level union, established

in 2013 in the oil and gas sector.

According to DOL, associated work cooperatives are self-governed, autonomous

enterprises, under which associated workers are considered cooperative owners, rather

than workers, and are excluded from many Labor Code protections.

According to DOL’s 2011 Labor Rights Report on Colombia, until late 2010, penalties for

the misuse of cooperatives to avoid direct employment relationships were not enforced

against third-party employers. According to DOL, as a result, cooperatives became a

vehicle widely used by employers to end direct employment relationships with their

workforces while retaining the same workers through cooperatives and continuing to act

as their de facto employers.

Oman

Page 14 GAO-15-160 Labor Provisions in Free Trade Agreements

According to USTR, Peru committed to steps to implement labor

protection commitments in the context of FTA negotiations with the United

States. During our fieldwork, officials at Peru’s Ministry of Labor told us

that Peru recently established a new labor inspection regime and that the

ministry has focused on improving inspections in the workplace. For

example, in 2013, according to Ministry of Labor officials, the ministry

took action to centralize authority for labor inspections and help ensure

that inspectors are applying the same criteria across the country. Ministry

of Labor officials also reported that the ministry took steps to improve

labor inspections by modernizing its information systems to allow for

digital record keeping, with technical assistance provided by USAID.

According to USAID, as a result of these programs, the time required to

adjudicate labor cases has decreased from 2 years to 6 months.

Additionally, according to a 2007 U.S. House of Representatives,

Committee on Ways and Means report, in order to bring Peruvian labor

laws into alignment with the obligations under the FTA, the government of

Peru took steps to change Peru’s legal framework governing temporary

employment contracts, subcontracting and outsourcing contracts, the

right of workers to strike, recourses against unit-union discrimination, and

workers’ right to organize. Ministry of Labor officials reported that the

ministry has progressively increased the number of labor inspectors, in

connection with the commitments Peru made during the FTA negotiation,

to double its labor inspectorate. As of September 2013, the ministry

reported having about 400 labor inspectors on staff nationally.

Peru

Page 15 GAO-15-160 Labor Provisions in Free Trade Agreements

From fiscal year 2001 through fiscal year 2013, the U.S. government

provided a combined total of about $275 million in labor-related

assistance for all FTA partner countries.

All CAFTA-DR countries,

Colombia, and Peru received a combined total of about $222 million in

labor-related technical assistance and capacity-building activities since

the passage of implementing legislation for these FTAs. In contrast, the

U.S. government provided about $53 million in labor-related assistance

for all other FTA partner countries during the periods since those FTAs

were implemented.

Figure 1 shows the labor-related technical assistance that U.S. agencies

provided under CAFTA-DR and the Colombia, Oman, and Peru FTAs

during the periods beginning, respectively, with the year that Congress

passed the FTA’s implementing legislation and ending in 2013. Figure 1

also shows labor-related technical assistance that U.S. agencies provided

from 2001 through 2013 under all other FTAs that entered into force in or

after 2001.

This amount includes both FTA and non-FTA labor-related assistance provided to FTA

partner countries. This amount does not include labor-related technical assistance to

Oman that DOL provided for a joint project in Oman and Bahrain. DOL’s records show

that it obligated $758,000 for the project in 2006 but do not show how the funds were

divided between the two countries, because, according to DOL, standard financial reports

for federal grants to more than one country do not allow the grantor to report amounts

received by each country. In addition, this amount excludes any assistance provided

under the United States-Israel Free Trade Agreement (Israel FTA), which does not contain

a specific article on labor provisions, and the North American Free Trade Agreement

(NAFTA), which addresses labor-related issues under a related agreement, the North

American Agreement on Labor Cooperation.

This amount excludes the Israel FTA and NAFTA.

U.S. Agencies Have

Provided Technical

Assistance to Help FTA

Partner Countries Meet

Labor Commitments, with

Largest Amounts for

CAFTA-DR

Page 16 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 1: Labor-Related Technical Assistance Administered by U.S. Agencies under

Selected Free Trade Agreements (FTA) and All Other FTAs

Notes: Time periods for the data shown for CAFTA-DR and the Colombia, Oman, and Peru FTAs

each begin with the year that the respective FTA’s implementing legislation was passed by Congress,

before the FTA entered into force. Data for “All other FTAs” exclude the only FTAs that entered into

force before 2001—the U.S.-Israel Free Trade Agreement (1985) and the North American Free Trade

Agreement (1994).

Totals for projects that DOL administered under CAFTA-DR include projects that Congress funded

through appropriations to DOL for technical assistance to reduce child labor as well as projects that

State’s Bureau of Western Hemisphere Affairs funded through transfers to DOL from State’s

Economic Support Fund and Development Assistance account.

Data shown exclude funding that DOL provided for a regional labor-related technical assistance

project in Oman and Bahrain in 2006. According to DOL officials, data showing country-specific

funding for regional projects are not available.

Data shown for Colombia include $500,000 that State provided for promotion of labor rights.

CAFTA-DR’s six partner countries have received the largest amounts of

U.S. assistance for labor-related projects undertaken pursuant to the FTA

or independent of the FTA. From 2005, when the CAFTA-DR

CAFTA-DR

Page 17 GAO-15-160 Labor Provisions in Free Trade Agreements

implementing legislation was passed by Congress, through 2013, the

U.S. government provided about $170 million for such projects. According

to DOL, this amount included funding appropriated by Congress to fund

labor-capacity-building activities as well as funds appropriated to DOL for

child labor technical assistance projects to assist these partner countries

in addressing labor-related priorities outlined in the White Paper.

U.S. technical assistance for labor-related projects in Colombia totaled

about $24 million from 2011, when the Colombia FTA implementing

legislation was enacted, through 2013. U.S. agencies provided $9 million

of that amount for projects to combat child labor and about $13 million to

address workers’ rights. DOL has also provided in-kind resources,

sending a staff person with labor expertise to support the Colombian

government in taking initial steps to implement the Labor Action Plan. The

United States is currently funding multiple labor-related projects in

Colombia, including State’s award of about $500,000 to the ILO for the

promotion of core labor rights and DOL’s award of about $7.8 million for

the ILO office in Colombia.

According to DOL officials, DOL, State, and USAID established an

interagency group to develop FTA labor-related projects in consultation

with USTR and CAFTA-DR partner governments and to allocate funding

among these projects, with funds transferred from State. DOL reported

that from 2005 to 2013, these three U.S. agencies administered more

than 20 technical assistance projects in support of the White Paper’s

priority issue areas.

Oman has not received U.S. technical assistance specifically for labor-

related projects since the FTA was enacted. According to State, the

United States is not involved in any labor-capacity-building or labor-

related assistance programs in Oman because of the Omani

government’s reluctance to accept foreign assistance. However, officials

at Oman’s Ministry of Manpower told us that the United States has

provided information and advice on supporting unions and the role of

unions in the economy and has expressed support of ongoing labor

reforms, including the establishment of unions.

Beginning in 2005, Congress appropriated funds for labor-capacity-building activities

relating to the free trade agreements with the countries of Central America and the

Dominican Republic. For example, see Consolidated Appropriations Act, 2005, Pub. L.

No.108-447, §570, 118 Stat. 2809, 3026 (2004).

Colombia

Oman

Page 18 GAO-15-160 Labor Provisions in Free Trade Agreements

U.S technical assistance for labor-related projects in Peru totaled about

$27.5 million from 2007, when the Peru FTA implementing legislation was

enacted, through 2013. Of that amount, $13 million was dedicated to

combat child labor, with the remainder dedicated to labor-capacity-

building and education projects. USAID officials stated that, for example,

the agency expended $3.3 million over a 3-year period to target labor

issues. Of this amount, $2.7 million was granted to the Solidarity Center,

a labor nongovernmental organization (NGO) affiliated with the American

Federation of Labor and Congress of Industrial Organizations (AFL-CIO),

to strengthen union negotiation capacity, and $600,000 was granted to an

implementing partner—Nathan Associates—for improving information

systems, providing training for labor inspectors, and training judges on the

implementation of labor laws.

El Salvador. Stakeholders we met with during our fieldwork in El

Salvador identified concerns related to the enforcement of labor rights.

Further, State and DOL reports show that workers are often unable to

benefit from the legal rights afforded in the labor laws. For example,

according to NGO officials, although labor courts have improved their

ability to process cases, court decisions are often not enforced. U.S.

officials stated that the Ministry of Labor’s increases in its budget and

number of labor inspectors have not improved the labor inspectorate’s

effectiveness. According to Ministry of Labor officials, although the

ministry’s labor inspectors can fine employers for labor law violations, the

ministry does not collect the fines and workers must petition the labor

courts to enforce the penalties. Moreover, according to an ILO official,

although the government of El Salvador has greatly reduced the amount

of time that the courts take to accept a case, resolution of most labor

disputes still takes 2 to 4 years. Officials from the Supreme Court in El

Salvador told us that about 51 percent of labor court sentences are not

enforced, primarily because the plaintiffs do not have the funds required

to continue the claims. Union and NGO officials we met with in El

Salvador emphasized their concerns over enforcement, stating that

because of the length of time the courts take to adjudicate labor cases,

Peru

Stakeholders Reported

Limited Enforcement

Capacity and Gaps in

Labor Rights in Selected

Partner Countries

CAFTA-DR: El Salvador

and Guatemala

Page 19 GAO-15-160 Labor Provisions in Free Trade Agreements

workers often take buyouts from the company and drop the cases. State’s

2013 Human Rights Report echoes these concerns. For example, the

report states that in 2013, the government of El Salvador did not always

effectively enforce the laws on freedom of association and the right to

collective bargaining, and that legal remedies and penalties are

ineffective.

Guatemala. According to stakeholders we met with during our fieldwork

in Guatemala, as well as State reports, concerns related to the

enforcement and application of labor rights persist. According to USTR,

Guatemala has taken steps to address labor reforms outlined in the

Enforcement Plan, but additional steps are needed, including passing

legislation providing for an expedited process to sanction employers that

violate labor laws and implementing a mechanism to ensure payments to

workers in cases where enterprises have closed.

Additionally, according

to USTR, Guatemala will need to demonstrate that the legal reforms it

has undertaken and still needs to undertake are being implemented

effectively and are leading to positive changes.

According to USTR, as of September 2014, this bill had not been passed by the

Guatemalan congress.

Union representatives

reported concerns related to freedom of association—specifically, that

union leaders have been offered monetary compensation to resign from

their jobs and to influence other workers against joining the union. Union

officials we met with also noted that workers have been terminated for

their union affiliation or for not disbanding unions. State’s 2013 Human

Rights Report echoed these concerns, stating that the government of

Guatemala did not effectively enforce legislation on freedom of

association, collective bargaining, or antiunion discrimination. Further,

according to this report, as a result of inadequate allocation of budget

resources and inefficient legal and administrative processes, the relevant

government institutions did not effectively investigate, prosecute, and

punish employers who violated freedom of association and collective

For more information about the status of implementation of the Guatemala Enforcement

Plan, see app. III.

Page 20 GAO-15-160 Labor Provisions in Free Trade Agreements

bargaining laws, and the institutions did not reinstate workers illegally

dismissed for engaging in union activities.

Stakeholders we met with in Colombia identified concerns related to the

enforcement of labor rights and not benefiting from rights afforded in the

labor laws. According to USTR, the government of Colombia has made

meaningful progress under the Labor Action Plan, but work remains to

build on this progress and address remaining and new challenges.

• According to USTR, the collection of fines for labor violations remains

problematic. USTR and DOL have reported that although Colombia’s

national training and apprenticeship system, Servicio Nacional de

Aprendizaje (SENA), is responsible for collecting fines for labor

violations, until recently SENA has been barred from collecting fines

from companies that filed a judicial appeal.

• USTR has reported that new forms of abusive contracting remain

problematic to the protection of labor rights in Colombia. For example,

according to USTR, although the number of illegal cooperatives has

dropped, many employers have shifted to various forms of

subcontracting, including entities known as simplified stock

companies, to avoid direct employment relationships.

According to a joint

USTR-DOL statement, as of April 2014, SENA was authorized to hold

monetary payment as collateral payment from businesses, pending

the outcome of the judicial appeal of their fines, but had not yet begun

to exercise this authority. Additionally, although the Ministry of Labor

increased the number of inspectors, labor unions and NGOs reported

that this action has not resulted in more effective inspections or

improved working conditions.

According to U.S and Guatemalan officials, as well as union representatives and the

ILO, violence against unionists has occurred in Guatemala. The government of Guatemala

reported that it had taken steps to address the violence. However, stakeholders were

unsure of the extent of the problem because of a lack of statistics collected by the

government. For more information about violence against unionists in Guatemala, see

app. II.

ILO, NGO,

According to DOL, Colombia’s Minister of Labor heads SENA's board of directors.

According to DOL, a simplified stock company is a corporate model that holds

shareholders liable only up to the amount of their investment. DOL further stated that

these companies are easy to create and dissolve and are a legitimate business model in

Colombia. In cases where a simplified stock company is used for contracting—either legal

or illegal—an employer hires the company to carry out a task and the company provides

the labor through its own employees.

Colombia

Page 21 GAO-15-160 Labor Provisions in Free Trade Agreements

and labor union officials we met with described this form of

subcontracting as a legal loophole that is used to undermine workers’

rights. According to union officials, a law passed by the Colombian

government in 2013 prohibiting the misuse of cooperatives was also

intended to increase formalized employment and encourage

companies to hire workers directly instead of as temporary labor.

State’s 2013 Human Rights Report noted that the Colombian government

generally enforced applicable labor laws and took steps to increase the

enforcement of freedom-of-association laws. However, the report

identified weaknesses in labor protections in Colombia, echoing concerns

expressed to us by labor union and NGO representatives, related to labor

inspections, collecting fines for labor violations, and employers’ use of

outsourcing contracts.

Ministry of Manpower and union officials we met with in Oman reported

that collective bargaining and freedom of association are allowed by law

and largely respected. However, State has raised concerns about the

enforcement of labor law among Oman’s foreign worker population.

State’s 2013 Human Rights Report notes that Oman’s Ministry of

Manpower effectively enforces the labor law as it applies to Omani

citizens but has not effectively enforced regulations related to working

conditions and hours for foreign workers.

Despite steps that the government of Peru has taken to address labor

conditions, union and NGO officials we met with reported that

enforcement of labor laws remains weak and labor conditions have not

improved in certain respects. According to State, Peru’s labor laws place

a 5-year limit on the continuous renewal of short-term labor contracts not

leading to permanent employment in most sectors of the economy.

However, State’s 2013 Human Rights Report notes that a sector-specific

law covering nontraditional export sectors such as apparel exempts

employers from this 5-year limit and allows them to hire workers through

indefinite series of short-term contracts. Union officials we met during our

fieldwork also reported poor labor conditions in Peru’s nontraditional

In addition, although murders of unionists have generally been decreasing over the past

10 years, and despite actions by the Colombian government to reduce homicides of union

members and labor activists, stakeholders we interviewed reported that violence against

unionists continues. For a more detailed description of reported violence against union

members and activists in Colombia, see app. II.

Oman

Peru

Page 22 GAO-15-160 Labor Provisions in Free Trade Agreements

export sectors, which these officials described as not affording the same

labor rights as other sectors in the economy.

State’s 2013 Human Rights Report also identifies continuing labor

concerns in Peru’s nontraditional export sectors, such as the effect of the

use of temporary service contracts and subcontracting on workers’

freedom of association. State’s report also notes that in 2013, penalties

for violations of freedom of association and collective bargaining were

rarely enforced, the judicial process was prolonged, and employers were

seldom penalized for dismissing workers involved in trade union activities.

In addition, union officials whom we met with stated that Peru’s

agricultural law allows for workers to be paid less than the legal minimum

wage and to be continuously hired on temporary contracts for 2- to 3-

month periods. These officials stated that this limits workers’ ability to

collectively bargain and exercise freedom of association, because of fear

that if they join a union, their contracts will not be renewed.

More generally, according

to NGO officials, Peru’s large informal sector makes it difficult for the

government to enforce labor rights, because informal companies, which

are not registered with the government and therefore are not subject to

labor inspections, typically do not follow labor laws.

According to State, Peru’s nontraditional export sectors include fishing, wood and paper,

nonmetallic minerals, jewelry, textiles and apparel, and the agriculture industry.

Page 23 GAO-15-160 Labor Provisions in Free Trade Agreements

DOL has accepted five of six labor submissions—that is, formal

complaints alleging that FTA labor provisions had been violated—that it

has received since 2008

and has closed one submission as resolved.

However, DOL did not meet its original deadlines for reviewing and

reporting on any of the submissions, exceeding the established 6-month

submission review time frame by an average of about nine months and

possibly delaying resolution of the submissions. Stakeholders whom we

interviewed in the selected five partner countries generally expressed a

lack of awareness or understanding of DOL’s submission process, which

may have limited the number of submissions filed. Moreover,

stakeholders we interviewed expressed concerns about delays in

resolving labor concerns detailed in the submissions for Guatemala and

Honduras.

According to DOL, FTA labor provisions establish official processes for

receiving submissions from interested organizations that believe a trading

partner is not fulfilling its labor commitments. In the United States, DOL

generally receives and reviews submissions made under the labor

chapters of each trade agreement. DOL issued procedural guidelines

pertaining to this function via publication of a Federal Register notice in

2006.

According to DOL officials, DOL also received a sixth submission, filed under the Costa

Rica FTA in July 2010, which the filing party withdrew before DOL decided whether to

accept it. DOL has also accepted other labor submissions under the North American

Agreement on Labor Cooperation (one of three accords supplementary to NAFTA), which

we did not examine.

The guidelines contain deadlines and substantive criteria for

acceptance and investigation of submissions. For example, DOL shall

determine whether to accept a submission within 60 days and is to

consider, among other things, whether it contains statements that, if

substantiated, would constitute a failure by the other party to comply with

its commitments under an FTA. If DOL determines that the circumstances

require, the 60-day timeframe can be extended. According to DOL, its

decision to review a public submission does not indicate any

determination as to the validity or accuracy of the allegations contained in

the submission; the submission’s merit is addressed in the public report

that follows DOL’s review and analysis. DOL officials noted that although

DOL has responsibility for investigating submissions, USTR, DOL, and

State work together to engage diplomatically to address concerns.

71 Fed. Reg. 76691 (Dec. 21, 2006).

One of Five Labor

Submissions Has

Been Resolved, but

Reporting Deadlines

and Limited Public

Awareness of the

Process Present

Problems

DOL Announced Its

Process for Receiving

and Evaluating

Submissions in 2006

Page 24 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 2 illustrates DOL’s submission process, including the established

time frames for accepting and reviewing submissions.

Figure 2: U.S. DOL Labor Submission Process

Legend: FTA = free trade agreement, USTR = Office of the U.S. Trade Representative.

DOL may extend the timeframe if it determines that circumstances require such an extension.

The free trade commission established for each FTA is the primary forum for bilateral dialogue about

the FTA’s implementation.

Page 25 GAO-15-160 Labor Provisions in Free Trade Agreements

Since 2008, DOL has accepted labor submissions filed under the

Bahrain, Dominican Republic, Guatemala, Honduras, and Peru FTAs and

has closed the Peru FTA submission.

DOL has also accepted other labor submissions under the North American Agreement

on Labor Cooperation (one of three accords supplementary to NAFTA), which we did not

examine.

The submissions for Bahrain, the

Dominican Republic, and Guatemala—accepted in 2011, 2012, and 2008,

respectively—remain open while the U.S. government engages with the

governments to address the concerns that the submissions raised. The

submission for Honduras, accepted in 2012, remains open while DOL

reviews its allegations. Figure 3 presents information about the five

submissions (see app. III for further details).

DOL Has Closed One of

Five Labor Submissions

Accepted since 2008

Page 26 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 3: Free Trade Agreement (FTA) Labor Submissions Accepted by DOL as of

July 2014

Notes: DOL has also accepted other labor submissions under the North American Agreement on

Labor Cooperation, which we did not examine.

Alleged violations shown for the Bahrain, Dominican Republic, Guatemala, and Honduras

submissions are examples of those detailed in the submissions.

Page 27 GAO-15-160 Labor Provisions in Free Trade Agreements

Although DOL accepted most of the submissions it received within the 60-

day time frame established by its guidelines, it did not complete its

reviews of the submission within the established 180-day time frame.

For each of the submissions, DOL determined at the end of the original

180-day review time frame to extend the review period and reported its

findings and recommendations an average of 262 days after the original

time frame had ended. According to USTR and DOL, before DOL

publishes its review of a submission, both agencies engage informally

with the relevant partner country to explore ways to address the concerns

raised in the submission. However, USTR and DOL do not request formal

consultations with a partner country to address DOL’s recommendations

until DOL has issued its report. As a result, extensions of DOL’s review

time frame may delay resolution of the submission.

DOL official we met with indicated that DOL cannot complete within the

180-day time frame the types of comprehensive investigations and

reports it has been providing.

• Bahrain. DOL received the Bahrain submission on April 21, 2011,

and accepted it on June 10, 2011, or 50 days later. In December

2011, DOL extended the submission review period to consider and

review additional information received from the government of Bahrain

and Bahraini workers, amendments made to the Bahraini Trade Union

Law, and labor-related developments in international forums. DOL

issued its report on December 20, 2012, 559 days after accepting the

submission.

• Dominican Republic. DOL received the Dominican Republic

submission on December 22, 2011, and accepted it on February 22,

2012, or 62 days later. In August 2012, DOL extended the review time

frame to consider public comments about the submission as well as

information gathered by a Bureau of International Labor Affairs

delegation during a visit to the Dominican Republic. DOL issued its

report on September 27, 2013, 583 days after accepting the

submission.

• Guatemala. DOL received the Guatemala submission on April 23,

2008, and accepted it on June 12, 2008, or 50 days later. DOL issued

DOL may extend the timeframe if it determines that the circumstances require such an

extension. 71 Fed. Reg. 76691.

DOL Did Not Meet 6-

Month Time Frame for

Any Submission, Showing

the Time Frame to Be

Unrealistic

Page 28 GAO-15-160 Labor Provisions in Free Trade Agreements

its report on January 16, 2009, 218 days after accepting the

Guatemala submission.

• Honduras. DOL received the submission on March 26, 2012, and

accepted it on May 14, 2012, or 49 days later. On November 2, 2012,

5 days before DOL’s 180-day reporting deadline, DOL extended its

review because of the scope of the submission, the scope of the

alleged labor law violations, and the large amounts of information

received from the Honduran government and stakeholders. As of

September 2014, DOL officials were continuing to review

documentation of the allegations and prepare their report. DOL

officials were unable to estimate when they would issue a public

report.

• Peru. DOL received the submission for Peru on December 29, 2010,

and accepted it on July 19, 2011, or 202 days later. On January 20,

2012, 185 days after accepting the submission, DOL concluded that

circumstances required an extension of time for a thorough and

detailed review of the Peru submission. DOL issued its report for the

Peru submission on August 30, 2012, 408 days after accepting it.

Although DOL has periodically reviewed and updated the submission

process since establishing it in 1994, DOL officials told us that they have

not reviewed or adjusted the submission review time frame to reflect the

time it takes DOL to issue its reports after accepting the submissions.

DOL’s extensions of each submission review period since 2008 have

shown this time frame to be unrealistic. Federal standards for internal

control call on agency management to monitor and assess the

effectiveness and efficiency of their operations over time and to promptly

resolve any deficiencies.

GAO, Auditing and Financial Management: Standards for Internal Control in the Federal

Government, AIMD-00-21.3.1 (Washington, D.C.: Nov. 1, 1999).

Page 29 GAO-15-160 Labor Provisions in Free Trade Agreements

Our interviews with union and other nongovernmental stakeholders in the

selected partner countries suggested that little or no awareness and

understanding of the FTA labor submission process may have affected

the number of submissions filed. Union representatives we interviewed in

our five case study countries—Colombia, El Salvador, Guatemala, Oman,

and Peru—were generally either unaware of DOL’s labor submission

process or considered it difficult to understand and use. For example, a

union representative in Colombia stated that the union would have filed a

submission if the representative had known about the process. In another

example, representatives of one of the larger El Salvador unions—

GMIES, an NGO that monitors the actions of the Salvadorian

government—stated that it was difficult for a “typical worker” to file a

submission with DOL and that the information required for the submission

is generally difficult, if not impossible, to obtain and document. A small

number of union representatives who were aware of the process

attributed their knowledge to information received from AFL-CIO or their

country’s Solidarity Center.

Moreover, although the government officials we interviewed in the five

countries knew of the labor submission process, only in El Salvador did

these officials express an understanding of how DOL evaluates a

submission and conducts its fact-finding investigations. For example, the

Guatemalan Ministry of Labor officials we interviewed could not provide

information about how the process works or describe the criteria DOL

uses to evaluate a submission’s merits. The Ministry of Manpower

officials whom we interviewed in Oman did not understand the purpose of

the submission process or how submissions could be filed.

For instance, in Guatemala, a representative

of a union that had signed the current Guatemala submission stated that

without the help of the Solidarity Center, the union would have been

unable to locate submission instructions and file the submission.

In addition, U.S. agencies have made minimal efforts to publicize the

process for nongovernment stakeholders, who are most likely to file

submissions. Federal standards for internal control pertaining to

information and communication call for agencies to have relevant,

The American Center for International Labor Solidarity, better known as the Solidarity

Center, is a nonprofit organization affiliated with the AFL-CIO labor federation whose

mission is to help build a global labor movement by strengthening the economic and

political power of workers around the world through effective, independent, and

democratic unions.

Interviewed Stakeholders

Generally Did Not

Understand the Labor

Submission Process,

and U.S. Agencies Have

Made Minimal Efforts to

Explain It

Page 30 GAO-15-160 Labor Provisions in Free Trade Agreements

reliable, and timely communications relating to internal as well as external

events, to ensure control of their operations.

According to DOL officials,

DOL relies exclusively on its website and its 2006 Federal Register notice

to inform the public about the process.

Moreover, U.S. officials whom

we interviewed in the countries we visited indicated that they do not

advertise the existence of the submission process. Without additional

efforts to inform nongovernment stakeholders in FTA partner countries

about the DOL labor submission process, U.S. agencies are limited in

their ability to use the submission process as a means of holding FTA

partners accountable for fulfilling their labor commitments.

Several stakeholders we spoke with expressed concerns about delays in

U.S. agencies’ efforts to resolve the matters raised in the Guatemala and

Honduras submissions. Because of the complexity of these matters,

resolving them has proven difficult and time-consuming, according to

USTR. Moreover, according to USTR, no process or time frames for U.S.

agencies’ efforts to engage diplomatically with FTA partners to resolve

labor matters related to DOL submission reports are outlined in any active

FTA that had entered into force or in U.S. implementing guidance.

According to USTR and DOL, they engage with FTA partners through

informal and formal communication to resolve any FTA concerns. For

example, according to a USTR official, USTR has informally engaged with

FTA partners—through labor affairs council discussions, telephone

conversations, and e-mail exchanges—for an average of 6 months

regarding concerns raised in a submission before requesting formal

consultations with the partner government.

If an FTA partner does not

address USTR’s and DOL’s labor concerns or is unwilling to informally

engage, USTR and DOL may request formal consultations under the

FTA’s labor chapter. USTR officials stated that an FTA partner’s

willingness to engage determines in part how quickly potential labor

AIMD-00-21.3.1.

U.S. Department of Labor, Submissions under the Labor Provisions of Free Trade

Agreements, accessed Aug. 5, 2014, http://www.dol.gov/ilab/trade/agreements/fta-

subs.htm. See also, 71 Fed. Reg. 76691.

The labor chapters of some FTAs call for the establishment of a bilateral labor affairs

council to oversee, and review progress in, implementation of the labor chapter’s

provisions.

Some Stakeholders

Expressed Concern

about Delays in Resolving

Labor Submissions

Page 31 GAO-15-160 Labor Provisions in Free Trade Agreements

violations are addressed. According to USTR officials, some FTA partners

are willing to engage informally to resolve labor violations, while other

partners engage only after USTR and DOL have jointly requested formal

consultations under the FTA’s labor chapter.

Examples of stakeholders’ concerns include the following.

• AFL-CIO representatives in Washington, D.C., who were involved with

the Honduras and Guatemala submissions expressed appreciation of

DOL’s care in investigating cases and were eager to provide requisite

evidence. However, they expressed disappointment that both cases

have taken longer than they anticipated, stating that justice delayed

can mean justice denied when workers’ livelihoods are at stake.

• A union representative in Guatemala expressed disappointment that 6

years after the submission was filed, it had not been resolved. He also

said that the steps outlined in the enforcement plan were mainly

administrative and did not address all complaints detailed in the

submission. As a result, according to the union representative, the

conditions of workers identified in the submission have not improved.

• Four government officials from CAFTA-DR partner countries whom

we interviewed in Washington, D.C., described DOL’s submission

process as lacking fairness and transparency. According to these

representatives, DOL does not give partner governments clear

information about next steps or access to evidence supporting the

submissions and deprives the countries of the opportunity to respond

to allegations presented by any member of the public.

In commenting on a draft of this report, DOL noted that during its submission review, the

partner government has the opportunity to provide input and DOL visits the partner

country and reviews any information that the partner government provides. DOL also

noted that the submission review process is a fact-finding exercise intended to evaluate

the merits of allegations raised in a submission and that acceptance of a submission for

review does not imply that the allegations are correct. In addition, DOL stated that its

decision to review a public submission does not indicate any determination as to the

validity or accuracy of the allegations contained in the submission; instead, the

submission’s merit is addressed in the public report that follows DOL’s review and

analysis. According to DOL, after its submission review report is issued, USTR and DOL

engage with the partner country to address any recommendations in DOL’s report and to

attempt to find a mutually agreeable solution to any potential violation of FTA labor

provisions.

The CAFTA-

DR representatives added that in their opinion, DOL conducts the

submission process in an adversarial manner and that the process

therefore does not function as a mechanism for addressing concerns

Page 32 GAO-15-160 Labor Provisions in Free Trade Agreements

on a cooperative basis. The representatives noted that this, in turn,

can delay or complicate resolution of problems.

Since 2009, USTR and DOL, with State’s assistance, have taken steps

intended to strengthen monitoring and enforcement of FTA partners’

compliance with FTA labor provisions, but their monitoring and

enforcement remain limited.

After USTR announced in July 2009 that

the agencies would take a more proactive, interagency approach to

monitoring and enforcing FTA labor provisions, USTR and DOL

developed mechanisms to track labor conditions and practices in priority

trade partner countries. They also took some proactive monitoring steps

with several FTA partners. However, although they jointly address labor

submissions and work together to engage with partner countries

regarding labor concerns, USTR and DOL have not established a

coordinated strategic approach to systematically assess and address

other possible inconsistencies with the FTA labor provisions, such as

concerns that DOL identifies in internal management reports. The lack of

such an approach may be inconsistent with USTR’s 2009 announcement

as well as with best practices for interagency collaboration. Agency

officials cited limited funding and staffing as constraints on their ability to

monitor and enforce FTA labor provisions. USTR’s, DOL’s, and State’s

annual reports to Congress provide information about labor conditions in

partner countries. However, reflecting in part USTR’s and DOL’s limited

monitoring and enforcement of FTA labor provisions, the reports generally

do not detail concerns about the implementation of FTA labor provisions

by partner countries that have not been the subject of labor submissions.

For information about USTR’s and DOL’s efforts to monitor Guatemala’s and Colombia’s

implementation of other labor initiatives, see app. III.

U.S. Agencies

Provide Limited

Monitoring,

Enforcement, and

Reporting on FTA

Labor Provisions

Page 33 GAO-15-160 Labor Provisions in Free Trade Agreements

In 2009, USTR made a public statement pledging to address weaknesses

in monitoring and enforcement of FTA labor provisions such as those we

identified in our July 2009 report.

In its statement, USTR—which has

principal responsibility for monitoring and enforcing statutory trade

agreements—publicly announced its intention to adopt a proactive,

interagency approach to monitoring and enforcing FTA labor provisions in

cooperation with DOL and State.

A broad range of activities underpins federal monitoring and enforcement

efforts. For the purposes of this report, “monitoring” refers to federal

activities that are undertaken to identify instances where foreign laws,

regulations, and practices may be inconsistent with trade agreement

provisions; “enforcement” refers to actions taken by USTR to secure

foreign compliance with trade agreements, which can include initiating

dispute settlement procedures that certain trade agreements provide.

According to USTR’s announcement,

for example, the agencies would no longer enforce labor obligations only

in response to complaints, would hold trading partners to their obligations

on labor standards, and would work in close partnership to immediately

identify and investigate labor violations. In addition, USTR’s July 2009

announcement stated that the agencies would deploy resources more

effectively to identify and solve problems at the source and would jointly

engage with governments of countries that violate the rules, to quickly

restore workers’ rights, assist partner countries to find a way to fix

identified labor problems, and pursue legal remedies when other options

are closed.

When agencies identify possible inconsistencies with FTA provisions,

agencies take a variety of actions to encourage and obtain foreign

compliance with trade agreements. As we previously reported, according

to records and staff at USTR and other agencies, monitoring and

enforcement of trade agreements typically involves several key steps:

identifying compliance problems, setting priorities, gathering and

analyzing information, developing and implementing responses, taking

GAO-09-439.

Office of the U.S. Trade Representative, “Ambassador Kirk Announces New Initiatives

for Trade Enforcement” (press release), July 16, 2009, accessed July 18, 2013,

http://www.ustr.gov/about-us/press-office/speeches/transcripts/2009/july/ambassador-kirk-

announces-new-initiatives-trade.

See GAO, International Trade: Strategy Needed to Better Monitor and Enforce Trade

Agreements, GAO/NSIAD-00-76 (Washington, D.C.: March 2000).

USTR and DOL Pledged

in 2009 to Strengthen

Monitoring and

Enforcement of FTA

Labor Provisions

Page 34 GAO-15-160 Labor Provisions in Free Trade Agreements

actions to enforce agreements, and coordinating with other agencies.

In our July 2009 report, we found that U.S. agencies had not proactively

monitored FTA partners’ compliance with labor commitments and did not

consider that they were required to do so.

Systematic implementation of these key steps is necessary to ensure that

the agencies effectively and efficiently accomplish their objective and help

ensure that management's directives are carried out.

Moreover, U.S. interaction

with partners regarding labor issues after FTAs entered into force had

been limited, usually in part because of the low priority attached to this

function. Further, we found that U.S. agencies generally gave attention to

problematic labor situations in certain FTA partners’ export sectors only

after media exposure of the situations.

Since July 2009, USTR and DOL have taken steps intended to strengthen

monitoring and enforcement of FTA partners’ compliance with FTA labor

provisions.

USTR staff indicated that an important component of

USTR’s and DOL’s work occurs between an FTA’s finalization and its

entry into force. For example, for the Colombia FTA, the agencies worked

with the Colombian government to establish the Labor Action Plan,

outlining steps that the government was required to take before the FTA

could receive congressional approval. (See app. III for information about

the agencies’ efforts to monitor Colombia’s implementation of the Labor

Action Plan).

In addition, DOL and other U.S. agencies have supported

cooperative activities to assist the countries to be better positioned to

meet their labor commitments after FTAs have entered into force.

general, after FTAs have entered into force, USTR and DOL have

GAO/NSIAD-00-76. To identify these five steps, we reviewed agency records and

interviewed agency officials and staff at several U.S. agencies.

GAO-09-439.

For information about other steps that DOL took in response to our 2009 report’s

recommendations, see http://gao.gov/products/GAO-09-439.

App. III also discusses the agencies’ efforts to monitor implementation of the CAFTA-DR

White Paper and the Guatemala Enforcement Plan.

See fig. 1 for information about U.S. agencies’ cooperative project funding by FTA

partner. In comments on a draft of this report, USTR indicated that 12 of the 20 FTA

partners have received, or are expected to receive, some technical assistance from State

or Labor.

USTR and DOL Track

Partner Countries’ Labor

Conditions but Do Not

Systematically Monitor

and Enforce Compliance

with FTA Labor Provisions

Page 35 GAO-15-160 Labor Provisions in Free Trade Agreements

engaged in discussions with partner countries, gathering information

about labor conditions in the countries and responding to FTA labor

concerns. In doing so, the agencies have addressed some of the typical

key elements of monitoring and enforcement that we previously identified,

such as gathering and analyzing information and setting priorities.

However, the agencies’ approach for countries other than Jordan,

Panama, and, to some extent, Colombia and Peru generally does not

incorporate other key elements, such as identifying compliance problems,

developing and implementing responses, and taking enforcement actions.

In October 2012, USTR established the Trade Policy Staff Committee

(TPSC) Subcommittee on Labor Monitoring and Enforcement to focus on

monitoring and enforcing labor provisions in partner countries, with

members from various agencies, including DOL and State.

USTR

charged the subcommittee with monitoring and enforcing labor issues in

20 FTA partner countries as well as 146 countries that participate in U.S.

trade preference programs. According to a USTR document, the

subcommittee participates in efforts to enforce labor obligations, such as

through submission reviews, consultation, and dispute settlement under

FTAs.

However, according to DOL and State staff who have participated

in the Subcommittee on Labor Monitoring and Enforcement, the

subcommittee’s meetings generally serve as an information-sharing

mechanism rather than a monitoring and enforcement mechanism.

USTR divided the existing TPSC Subcommittee on Labor to form the Subcommittee on

Labor Monitoring and Enforcement and the Subcommittee on Labor Policy and

Negotiations.

State participants described the subcommittee as an interagency process

for reviewing and discussing labor conditions and assessing risks in trade

partner countries, including FTA and trade preference program partners.

State added that although this process does not entail a regular, detailed

review of each FTA partner country’s compliance with labor obligations, it

In addition, according to USTR, the subcommittee is responsible for satisfying public

reporting requirements and making eligibility determinations tied specifically to labor

standards, such as those in specific preference programs. According to USTR, other

TPSC subcommittees may also address enforcement of labor provisions.

USTR staff noted that they also receive information about labor conditions in partner

countries from the subcommittee as well as by other means, such as direct coordination

with DOL and State staff, discussions with stakeholders such as unions and advocacy

groups, communication with FTA partner government officials, and reviews of State cables

and reports and news articles.

USTR

Page 36 GAO-15-160 Labor Provisions in Free Trade Agreements

facilitates discussion of concerns and development of next steps to

address these concerns based on input from each agency. A USTR

official stated that when the subcommittee met in October 2012 and

February 2013, it decided that an emphasis on overseeing labor

conditions in parts of Africa and Haiti was needed and that monitoring of

FTA labor provisions’ implementation would be based mainly on

addressing DOL labor submissions. USTR officials noted that information

sharing is a key part of its process to assess labor conditions in FTA

partner countries relative to their commitments and to identify matters that

are appropriate for further action.

According to a USTR official, work by the subcommittee and ad hoc

interagency country teams has led to increased actions and engagement

in countries such as Jordan, Panama, Peru, and Morocco, where,

according to USTR, it has conducted, or expects to conduct, high-level

labor meetings and monitoring trips in 2014. Further, according to USTR

officials, USTR has used input from the subcommittee to develop a matrix

to more comprehensively track monitoring activities and technical

capacity-building assistance across FTA partner countries. USTR officials

indicated that this tool has served as a point of departure for soliciting the

subcommittee’s input on priorities and coordination of future activities. In

addition, according to USTR officials, USTR regularly coordinates and

communicates with other agencies, industry, labor unions, the ILO and

other external stakeholders to identify possible inconsistencies with the

labor provisions of trade agreements.

USTR officials said that the agencies routinely address labor issues

identified in the subcommittee or by other stakeholders through bilateral

consultations and formally established FTA mechanisms, such as the

labor affairs councils established by most FTAs and the FTA free trade

commissions, which are the main forums for bilateral dialogue about FTA

implementation for each FTA. USTR has publicly reported on such

meetings, as we recommended in 2009. However, the labor affairs

councils for most FTAs have in most cases met only once and in two

Page 37 GAO-15-160 Labor Provisions in Free Trade Agreements

cases have not met at all since the FTAs entered into force.

USTR officials stated that monitoring and enforcement covers a large

spectrum of activities and that in some cases USTR has taken steps to

resolve issues in countries where submissions have not been filed. For

example, according to USTR officials, USTR and DOL negotiated an

implementation plan in 2012 to address concerns regarding foreign

workers in Jordan’s garment sector and have continued to monitor

Jordan’s implementation of its FTA labor commitments. USTR officials

also cited as examples of proactive monitoring and enforcement USTR’s

engagement with Colombia regarding the Action Plan, cooperation with

Panama in passing administrative and legal changes to address labor

concerns as part of the FTA ratification process in 2011, and discussions

with Peru regarding commitments that the government made in 2007 to

improve respect of labor rights for temporary and subcontracted workers.

Moreover,

the FTA free trade commissions’ discussions reportedly do not address

labor issues in depth. For example, officials from the Ministry of Labor in

Peru indicated that in the last free trade commission meeting they

attended, labor issues were not substantively addressed; instead

members of the commission agreed that a meeting on the topic could be

held later in the year.

Our analysis shows that in Jordan and Panama, USTR’s and DOL’s

activities have addressed the typical key elements of monitoring and

enforcement. Regarding Jordan, USTR documents indicate that USTR

and DOL have addressed all key elements of monitoring and

enforcement, such as by putting in place a concrete plan to fix an

identified problem and taking steps to assure that the plan is

implemented. Regarding Panama, USTR documents show that the

agencies took steps to assure that Panama met its commitments both

before and after the FTA entered into effect in 2012 and have been

pursuing steps, such as holding several recent meetings, that may help in

According to DOL, the labor affairs councils for the Singapore and Australia FTAs have

not met since the FTAs went into effect (in 2004 and 2005, respectively). The labor

subcommittee (which serves the same purpose as a labor affairs council) for the Jordan

FTA has met twice since the FTA took effect, and the labor affairs councils under the

remaining FTAs have each met once. The last labor affairs council meeting under CAFTA

was in 2008. According to DOL staff, meetings of the labor affairs councils under the

Morocco and Peru FTAs have been planned. The labor chapters of the Israel FTA and

NAFTA did not provide for labor affairs councils.

Page 38 GAO-15-160 Labor Provisions in Free Trade Agreements

resolving outstanding concerns about implementation of FTA labor

provisions.

However, while USTR’s and DOL’s reported monitoring activities in

Colombia and Peru can assist the countries to be better positioned to

meet their FTA labor commitments and help to better inform USTR of

labor concerns in these countries, the evidence that we examined does

not demonstrate systematic implementation of the typical key elements

for monitoring and enforcement of labor provisions.

• Colombia. Documentation that USTR and DOL provided, as well as

evidence that we gathered in Colombia and in interviews with agency

officials, indicates that the agencies took several of the key steps of

monitoring and enforcement. For example, a report that USTR and

DOL jointly prepared in 2014 showed that the agencies have been

gathering and analyzing information, setting priorities, assessing

implementation, and identifying compliance problems. However, we

did not see evidence that a current plan is in place to address the

outstanding concerns that USTR and DOL have identified.

• Peru. Documentation that USTR and DOL provided demonstrates a

systematic approach to some, but not all, of the monitoring and

enforcement steps that we identified. Specifically, both agencies have

engaged to some extent with Peru regarding labor matters in the 5

years since the Peru FTA went into effect. The agencies’

documentation shows that at least some of their efforts to gather and

analyze information regarding Peru relate to verifying the

government’s implementation and enforcement of previous reforms,

such as reforms of its labor inspection regime and of its legal

framework for temporary employment and subcontracting. USTR and

DOL documents also show that the agencies have identified several

possible compliance concerns and have engaged with the

government by scheduling meetings and asking questions. However,

we did not see evidence of a plan to resolve outstanding U.S.

concerns. Further, in July 2014, Peru announced that it had enacted

legal changes that rolled back previously implemented improvements

in its labor laws in areas such as health and safety protection for

workers, to improve the business climate and attract investment.

Page 39 GAO-15-160 Labor Provisions in Free Trade Agreements

To strengthen its monitoring and enforcement of FTA labor provisions, in

2012, DOL established the Monitoring and Enforcement of Trade

Agreements Division within the Bureau of International Labor Affairs’

Office of Trade and Labor Affairs.

The division’s objectives are to

ensure that partner governments (1) effectively enforce their labor laws

and implement policies that protect worker rights; (2) understand their

commitments under the FTA labor chapters; and (3) revise or adopt laws,

regulations, and policies consistent with international labor standards.

The division mainly monitors implementation of FTA labor provisions

through its review of FTA labor submissions and through the use of

internal documents called management reports, according to DOL

officials.

• FTA labor submissions. DOL’s review of the five FTA labor

submissions—for Bahrain, the Dominican Republic, Guatemala,

Honduras, and Peru—that it has accepted since 2008 have led to

recommendations in three of its submission reports that the partners

address alleged violations of FTA labor provisions.

However, DOL uses management reports to identify labor

concerns rather than to fully assess consistency with FTA labor

provisions.

According to DOL staff, DOL has been monitoring compliance with FTA labor provisions

since NAFTA entered into force in 1994. Before DOL established the Monitoring and

Enforcement of Trade Agreements Division, the Trade Agreement Administration and

Technical Cooperation Division, in the Bureau of International Labor Affairs’ Office of

Trade and Labor Affairs, oversaw administration of FTA labor provisions.

According to

USTR officials, labor submissions are a central component of the

FTAs’ framework for monitoring and enforcement of labor obligations

and USTR and DOL invest extensive time and resources in

addressing submissions. For the Bahrain and Guatemala

submissions, DOL, with USTR, formally requested labor consultations

under the FTAs’ labor chapters to address the concerns raised in the

submissions. In Guatemala’s case, after consultations failed to

address the concerns, the U.S. government invoked dispute

settlement proceedings; during these proceedings, the two

governments negotiated the Enforcement Plan, outlining steps that

According to DOL, the Monitoring and Enforcement of Trade Agreements Division also

monitors implementation of FTA labor provisions and other labor conditions through phone

calls, e-mails, and interactions with numerous stakeholders, as well as through periodic

visits to partner countries, as resources allow.

The five FTA labor submissions exclude any submissions that DOL has received under

the North American Agreement on Labor Cooperation.

DOL

Page 40 GAO-15-160 Labor Provisions in Free Trade Agreements

Guatemala agreed to take. (See app. III for a discussion of DOL’s

monitoring of Guatemala’s implementation of the Enforcement Plan.)

• Internal management reports. In 2012, according to DOL staff, DOL

began consistently monitoring FTA-related labor issues in 13 FTA

partner countries. The management reports provide, among other

information, a synopsis of labor conditions in partner countries based

on sources such as State, ILO, the International Trade Union

Confederation, local stakeholders, and the press. The reports include

updated contact information for each partner and identify labor

conditions or practices—for example, related to freedom of

association and collective bargaining—that may be inconsistent with

the FTA labor provisions. They also outline steps that DOL staff

propose to take to address any identified concerns, subject to

approval and resource availability. According to DOL officials, DOL

uses the management reports to identify labor concerns, rather than

potential FTA violations for enforcement purposes, and to facilitate

engagement on technical assistance projects with FTA partner

countries. DOL officials noted that claiming and proving a violation of

FTA labor provisions would be very costly and legally complicated.

The officials explained that when a management report identifies labor

concerns, DOL may request formal or informal consultations with the

partner country’s ministry of labor to discuss these concerns and will

attempt to cooperatively address them. The officials also noted that a

persistent condition may result in a submission from a stakeholder.

USTR and DOL work together on an ad hoc basis to address labor

concerns identified in submissions and to engage with partner countries

regarding labor matters. However, the agencies have not developed a

coordinated strategic approach to systematically assess and address

other possible inconsistencies with FTA labor provisions, such as the

issues that DOL’s management reports identify, in other partner

countries. This lack of a joint approach may be inconsistent with USTR’s

2009 statement that the agencies would work in close partnership to

immediately identify and investigate labor violations.

Further, while the agencies take steps such as gathering facts from

credible and reliable sources and prioritizing their monitoring of the

partner countries, they have not jointly operationalized other key steps

that we previously identified as typical for monitoring and enforcement of

trade agreements. For example, although DOL’s management reports are

its primary means, other than submissions, of monitoring and identifying

issues that may be inconsistent with FTA labor provisions, the agencies

USTR and DOL Lack a

Coordinated Strategic

Approach to Address

Identified Labor Issues

Page 41 GAO-15-160 Labor Provisions in Free Trade Agreements

have not established a coordinated strategic approach to identify and

carry out steps necessary to address issues identified in the reports.

According to DOL, the management reports are available to USTR and

State and the three agencies routinely discuss the reports’ contents.

USTR confirmed that DOL shares information from the reports with the

Subcommittee on Labor Monitoring and Enforcement for discussion and

consideration.

However, USTR officials noted that USTR regards the

management reports as one of multiple information sources that it

considers before deciding to engage with a country about a labor

concern, rather than as an indicator of a need to engage with the country.

USTR officials also noted that USTR views the management reports as a

new internal DOL tool and is assessing how best to use these reports in

the interagency process.

Moreover, USTR, DOL, and State have differing perspectives on how to

monitor and enforce FTA labor provisions, according to agency officials.

According to a USTR official, each agency approaches monitoring and

enforcement in relation to its mission, and as a result, some of the 13

countries that DOL has identified internally as priorities differ from

countries that USTR has identified as priorities in the context of the FTAs.

The USTR official stated that USTR must assess whether a labor issue

constitutes a breach of obligations set forth in the relevant FTA before it

pursues dispute settlement, whereas DOL and State—as observers of

labor conditions and human rights, respectively—approach labor issues

more strictly as labor rights concerns. According to a State official, USTR

prefers to address identified partner countries’ labor issues without the

intent to invoke the FTA.

Our prior work identifying best practices for interagency collaboration has

shown that agencies can enhance and sustain their collaborative efforts

by engaging in eight practices.

These eight practices are as follows: (1) define and articulate a common outcome; (2)

establish mutually reinforcing or joint strategies; (3) identify and address needs by

leveraging resources; (4) agree on roles and responsibilities; (5) establish compatible

policies, procedures, and other means to operate across agency boundaries; (6) develop

mechanisms to monitor, evaluate, and report on results; (7) reinforce agency

accountability for collaborative efforts through agency plans and reports; and (8) reinforce

individual accountability for collaborative efforts through performance management

systems. GAO, Results-Oriented Government: Practices That Can Help Enhance and

Sustain Collaboration among Federal Agencies,

For example, to achieve a common

GAO-06-15 (Washington, D.C.: October

2005). An updated version of this guidance is available at

http://www.gao.gov/key_issues/leading_practices_collaboration/issue_summary.

Page 42 GAO-15-160 Labor Provisions in Free Trade Agreements

outcome, collaborating agencies need to, among other things, not only

define and articulate the outcome but also establish strategies that work

in concert with their partners’ or are joint in nature. Such strategies help in

aligning the partner agencies’ activities, core processes, and resources to

accomplish the common outcome.

Agency officials cited limited staffing and resources as constraints on their

ability to proactively monitor and enforce implementation of FTA labor

provisions as the number of FTAs increases, leading the agencies to

focus most of their efforts in a few priority countries. The agencies

described enforcement activities as particularly resource intensive. DOL

officials told us that because they had to focus much of their available

resources on enforcing the Colombia Labor Action Plan and the

Guatemala Enforcement Plan, their ability to monitor and enforce FTA

partners’ compliance with their FTAs’ labor provisions in the last year was

limited. Given the staffing and resource constraints that USTR, DOL, and

State officials cited, effective interagency collaboration—including joint

strategies that assist in aligning partner agencies’ activities, core

processes, and resources to more effectively accomplish the common

outcome—is essential to maximize the agencies’ ability to monitor and

enforce compliance with these provisions.

USTR. Staffing and funding constraints have, at times, limited the office’s

engagement with FTA partner countries regarding labor matters,

according to USTR officials. Notably, according to the officials, recent

sequestration-related cuts at USTR sharply limited travel. The officials

told us that USTR’s Office of Labor Affairs has four staff members—an

Assistant U.S. Trade Representative for Labor, two Deputy Assistant U.S.

Trade Representatives for Labor, and the Director for Labor Affairs—

whose responsibilities include, among others, negotiating labor provisions

in new agreements such as the Trans-Pacific Partnership, overseeing

labor matters for 20 FTA partner countries and 120 trade preference

countries, and engaging with countries to address labor complaints.

According to USTR officials, although the Office of Labor Affairs staff has

doubled from two to four since 2008, the number of trade partner

countries for which they are responsible has increased from 14 to 20.

USTR staff stated that because so few staff are available, they cannot

GAO-AIMD-00-21.3.1.

U.S. Agencies Focus

Limited Monitoring

and Enforcement

Resources on a Few

Priority Countries

Page 43 GAO-15-160 Labor Provisions in Free Trade Agreements

engage with partner countries regarding every labor issue identified and

must address such issues in cooperation with other agencies. USTR staff

also noted that they depend on DOL and State for day-to-day monitoring

of labor conditions in partner countries.

DOL. Resource constraints limit DOL’s ability to monitor implementation

of FTA labor provisions except in partner countries that DOL has

identified as priorities, such as countries cited in labor submissions,

according to DOL officials. DOL reported that in fiscal years 2013 and

2014, the Monitoring and Enforcement of Trade Agreements Division had

five to eight full-time staff, with primary responsibilities that include

monitoring labor conditions in 20 FTA partners and addressing and

following up on labor submissions—for example, assessing

implementation of submission report recommendations and engaging in

consultations with the FTA partner. DOL officials stated that over the past

year, the division’s staff spent 80 percent of their work hours monitoring

implementation of the Guatemala Enforcement Plan; following up on

activities initiated under the Colombia Labor Action Plan; and addressing

labor submissions for Honduras, the Dominican Republic, Bahrain, and

Mexico.

State. State has limited resources available to support USTR’s and

DOL’s monitoring of FTA labor provisions, according to State officials.

State’s Bureau of Democracy, Human Rights, and Labor (DRL)

coordinates State’s in-country labor officers or labor reporting officers,

who carry out regular monitoring and reporting and day-to-day interaction

with foreign governments on labor matters. However, these staff are not

responsible for monitoring implementation of labor provisions in the FTAs.

State informs USTR and DOL about labor concerns identified in FTA

partner countries, through reporting cables and other means, and

supports them in investigating labor submissions and addressing related

The employees’ remaining work hours were available to

monitor and engage with the other 14 FTA partner countries. DOL

officials expressed concern that challenges related to resource limitations

will grow as the number of FTAs increases. For example, according to

DOL and State officials, Vietnam is among the countries participating in

the Trans-Pacific Partnership negotiations with a poor record of protecting

labor rights.

In January 2012, DOL accepted a labor submission for Mexico under the North

American Agreement on Labor Cooperation.

Page 44 GAO-15-160 Labor Provisions in Free Trade Agreements

recommendations. DRL has seven staff at State’s headquarters in

Washington, D.C., one of whom focuses on trade-related issues, who are

supported by labor affairs officers and labor reporting officers at the

embassies in each of the 20 FTA partner countries.

State officials

explained that each of these labor affairs officers and labor reporting

officers has other responsibilities. Overall, the amount of time that these

officers dedicated to labor issues varied from 5 percent (in Australia) to 75

percent (in Mexico).

USTR, DOL, and State provide required annual reports to Congress that

contain some information about labor conditions in FTA partner countries.

However, the annual reports generally do not detail concerns about the

implementation of FTA labor provisions by partner countries that have not

been the subject of labor submissions, in part reflecting the agencies’

limited monitoring and enforcement of the provisions.

USTR. Each year, USTR provides Congress with the current Trade Policy

Agenda for the current year, as well as the Annual Report of the

President of the United States on the Trade Agreement Programs. The

agenda and the annual report include information about trade policy

USTR has

statutory responsibility to report to Congress about trade agreement

programs on an annual basis. According to DOL and State, they do not

have such a responsibility, although some of their required reports include

related information.

DRL also includes a position of Special Representative for International Labor Affairs,

which State reported to be vacant during the time of our review.

Section 163 of the Trade Act of 1974, as amended (19 U.S.C. § 2213), requires the

President to annually submit to Congress the Trade Policy Agenda and the Annual Report

of the President of the United States on the Trade Agreements Program. The President

delegated this function to USTR in 2004. 69 Fed. Reg. 10133 (Mar. 1, 2004). The

President is required to submit a biennial report about labor issues for CAFTA-DR. 19

U.S.C. § 4111(a). This function was delegated to DOL in 2008. 73 Fed. Reg. 38297 (June

30, 2008). State is required to report to Congress annually about human rights in every

country worldwide. 22 U.S.C. §§ 2151n and 2304. The Trade Act of 1974 (19 U.S.C.

§ 2464) requires the President to submit an annual report to Congress on the status of

internationally recognized worker rights within each beneficiary developing country (i.e.,

countries that benefit from U.S. trade preferences), including the findings of the Secretary

of Labor with respect to the beneficiary country’s implementation of its international

commitments to eliminate the worst forms of child labor. According to DOL, this

commitment historically has been fulfilled by State's Human Rights Reports and DOL's

Trade and Development Act of 2000 reports on child labor.

U.S. Agencies’ Annual

Reports Address FTA

Partners’ Labor Conditions

to an Extent

Page 45 GAO-15-160 Labor Provisions in Free Trade Agreements

priorities and actions taken to implement FTAs. For example, the 2014

agenda indicates, among other things, that USTR will seek to ensure that

trade partners meet their obligations related to labor rights, will focus on

implementation of FTAs, and will work with key partner countries to

address specific labor issues. The 2013 annual report describes, among

other things, the status of the labor submissions regarding Bahrain,

Guatemala, the Dominican Republic, and Honduras and USTR’s efforts to

address the concerns that the submissions identify; in some cases,

possible inconsistencies with the FTA may be discussed. However, the

annual report generally does not detail concerns about the

implementation of FTA labor provisions by partner countries that have not

been the subject of labor submissions, reflecting in part USTR’s and

DOL’s limited monitoring and enforcement of these provisions.

Including

appropriate information resulting from more extensive monitoring and

enforcement could help inform Congress and other U.S. stakeholders

about the extent to which trade partners are fulfilling their FTA labor

commitments.

DOL. DOL is required to report to Congress every 2 years regarding labor

issues related to CAFTA-DR but is not required to report on the

implementation of labor provisions in other FTAs. For CAFTA-DR, DOL is

required to submit a biennial report to Congress on the progress made by

the CAFTA-DR partner countries in implementing the labor chapter

provisions and labor cooperation and capacity-building activities.

State. Every year, State provides Congress with the annual Country

Reports on Human Rights Practices, which covers all countries receiving

assistance and all United Nations member states, including all U.S. FTA

partners. Each of the country reports includes a section on labor issues,

covering topics such as internationally recognized individual, civil,

political, and worker rights, as set forth in the

DOL’s

2011 report on CAFTA-DR summarizes the progress made by each

CAFTA-DR partner country in implementing these provisions and

activities, although the report generally does not detail concerns about the

implementation of CAFTA-DR labor provisions.

Universal Declaration of

Human Rights and other international agreements. In addition, most of

the country reports for FTA partner countries that we reviewed include

information about unfavorable conditions faced by workers and any

19 U.S.C. § 4111(a).

Page 46 GAO-15-160 Labor Provisions in Free Trade Agreements

challenges to the partner countries’ implementation of their labor laws.

The reports generally do not—and, according to State, are not intended

to—detail concerns about the implementation of FTA labor provisions.

The United States’ recent FTAs have served as means of securing

commitments from trade partners to uphold and protect internationally

recognized labor rights. Although the FTA partners we selected for our

review have made some progress, with U.S. assistance, in implementing

their FTA labor commitments, enforcement weaknesses and problematic

labor conditions persist. In addition, nongovernment stakeholders we

interviewed in partner countries had little or no awareness of the labor

submission process that DOL established to allow such stakeholders to

extensions of its 6-month submission review time frame by an average of

nine months per submission has shown the time frame to be unrealistic.

Moreover, U.S. agencies’ work with the partners to resolve these

concerns has in some cases been very time consuming. For example, 6

years after DOL received the Guatemala labor submission, the

submission remains open, and according to U.S. agencies, Guatemala

has not fully addressed the weaknesses in its labor law enforcement or

the resulting hardships on workers.

Further, although USTR and DOL jointly pledged in 2009 to adopt a more

assertive, interagency approach to monitoring and enforcing FTA labor

provisions, in practice the agencies systematically investigate possible

inconsistencies with these provisions primarily in response to labor

submissions. In addition, despite ongoing interaction between USTR and

DOL—for example, in addressing submissions—they have not developed

a strategic approach to jointly set priorities and coordinate efforts to

respond to labor concerns such as those identified in the DOL

management reports. Without such strategic coordination, and given

constraints on resources, both agencies have focused their monitoring

and enforcement activities, apart from addressing labor submissions, on a

few priority countries. As a result, consistency with FTA labor provisions

in most partner countries is generally not monitored and enforced

systematically. Moreover, USTR may be limited in its ability to report to

Congress regarding concerns about FTA partners’ implementation of

their

respective FTA labor commitments.

Conclusions

Page 47 GAO-15-160 Labor Provisions in Free Trade Agreements

To improve the capacity of the U.S. government to monitor and enforce

FTA partners’ compliance with mutually agreed FTA labor provisions, we

are making four recommendations to the U.S. Trade Representative and

the Secretary of Labor.

• We recommend that DOL 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.

• We recommend that DOL take steps to better inform stakeholders in

FTA partner countries about its FTA labor submission process.

• We recommend 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.

• We recommend that USTR 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.

We provided a draft of our report to USTR, DOL, State, and USAID.

USTR and DOL provided written comments, which are reproduced in

appendixes V and VI, respectively. USTR, DOL, and State also provided

extensive technical comments, which we incorporated or addressed as

appropriate. USAID did not provide comments.

In their written comments, USTR and DOL expressed general agreement

with our recommendations. USTR wrote that it embraced the

recommendation to improve coordination with the Departments of Labor

and State, to identify and address areas of concern, and to ensure that its

reporting to Congress effectively reflects the results of these efforts. DOL

committed to reevaluate its internal submission review process, in

consultation with USTR and State, to determine whether internal

adjustments may be necessary. DOL also said that it will evaluate

additional available actions to expand its ability to inform stakeholders in

FTA partner countries about the FTA labor submission process. Finally,

DOL said that it will evaluate additional options to increase its proactive

Recommendations for

Executive Action

Agency Comments

and Our Evaluation

Page 48 GAO-15-160 Labor Provisions in Free Trade Agreements

monitoring and enforcement of labor provisions in FTAs and its

coordination with USTR and State on such issues.

Nevertheless, USTR and DOL took issue with our findings that the

agencies do not systematically monitor and enforce labor provisions for

all FTA partners and lack a coordinated strategic approach to monitoring

and enforcement. Although we made some adjustments in response to

new information that USTR and DOL provided with their comments, we

maintain that, in general, the two agencies have not systematically

implemented all key elements of monitoring and enforcement with regard

to FTA labor provisions. (See app. V for our full response to USTR’s

written comments and descriptions of our adjustments to the report in

response.) We acknowledge that USTR, DOL, and State generally

collaborate in engaging with partner countries on labor issues and in

addressing submissions. However, the evidence that we reviewed, such

as agendas for interagency meetings and our interviews with USTR and

DOL staff, did not show that the agencies have developed a coordinated,

strategic approach to systematically address possible inconsistencies

with FTA labor provisions in most partner countries that have not been

the subject of labor submissions. For example, we did not see evidence

of a coordinated approach to address issues such as those identified by

USTR in the partner countries it designates as high risk or that DOL

identifies in its management reports.

As agreed with your office, unless you publicly announce the content of

this report earlier, we plan no further distribution until 30 days from the

report date. At that time, we will send copies to the U.S. Trade

Representative, the Secretary of Labor, the Secretary of State, and other

interested parties. In addition, the report is available at no charge on the

GAO website at http://www.gao.gov.

Page 49 GAO-15-160 Labor Provisions in Free Trade Agreements

If you or your staff have any questions about this report, please contact

me at (202) 512-8612 or [email protected]. Contact points for our

Offices of Congressional Relations and Public Affairs may be found on

the last page of this report. GAO staff who made key contributions to this

report are listed in appendix VII.

Kimberly Gianopoulos

Acting Director, International Affairs & Trade

Appendix I: Objectives, Scope, and

Methodology

Page 50 GAO-15-160 Labor Provisions in Free Trade Agreements

This report examines (1) steps that selected partner countries have taken,

and U.S. assistance they have received, to implement free trade

agreement (FTA) labor provisions and other labor initiatives and the

reported results of such steps; (2) complaints—known as submissions—

about possible violations of FTA labor provisions that DOL has accepted

and any problems related to the submission process; and (3) the extent to

which the Office of the U.S. Trade Representative (USTR), Department of

Labor (DOL), and Department of State (State) monitor and enforce

partner countries’ implementation of FTA labor provisions and report

results to Congress. In addition, appendix II describes reported violence

against labor unionists in selected FTA partner countries as well as steps

that the countries have taken to address such occurrences. Appendix III

describes U.S. agencies’ efforts to monitor implementation of other labor

initiatives. Appendix IV describes the status of labor submissions received

by the Department of Labor.

We chose to concentrate our review on four FTAs and five partners to

these FTAs, so that we could examine the unique set of circumstances

for FTA partner countries with some specificity. The FTAs and partner

countries on which we chose to focus—the Dominican Republic-Central

America-United States (CAFTA-DR), among whose six partner countries

we selected El Salvador and Guatemala; the Colombia FTA; the Oman

FTA; and the Peru FTA—are FTAs that contain labor provisions and

countries with regional dispersion across Central America, South

America, and the Middle East. We also selected CAFTA-DR because of

the CAFTA-DR White Paper labor initiatives, and we selected El Salvador

and Guatemala among CAFTA-DR countries because of the extent of

U.S. assistance for labor programs and, in Guatemala’s case, the FTA-

related Enforcement Plan. In addition, we selected the Colombia FTA

because of the Labor Action Plan, and we chose the Colombia and Peru

FTAs because they contain language echoing the Bipartisan Trade

Agreement of May 10, 2007, popularly known as the May 10th

Agreement. However, the results of our review of these selected FTAs

and partner countries cannot be generalized to all FTAs and partner

countries.

In gathering information for each of our objectives, we engaged in three

types of activities:

• We obtained information and perspectives from U.S. government,

foreign government, nongovernmental organization (NGO), labor

union, and private sector officials; stakeholders such as umbrella

business associations; and experts.

Appendix I: Objectives, Scope, and

Methodology

Appendix I: Objectives, Scope, and

Methodology

Page 51 GAO-15-160 Labor Provisions in Free Trade Agreements

• We obtained information and analysis from legal and secondary

literature sources.

• We obtained information through visits to partner countries.

During our visits to Colombia, El Salvador, Guatemala, Oman, and Peru,

we met with U.S. officials; foreign government officials responsible for the

implementation of labor provisions of the FTAs and other labor initiatives;

umbrella business groups, such as chambers of commerce; officials of

international organizations such as the International Labour Organization

(ILO), trade unions, NGOs, and other subject matter experts. Additionally,

we visited Costa Rica to meet with ILO officials in their Central America

regional office, in San Jose. The views expressed by these officials and

organizations cannot be generalized to all officials or organizations

knowledgeable about labor provisions in the selected FTAs.

To examine the steps that the selected FTA partner countries have taken

to implement labor protection commitments under the respective

agreements and other labor initiatives in the context of the respective

FTAs, as well as the reported results of these steps, we obtained,

reviewed, and analyzed documents from a variety of sources, including

the four selected FTAs and their associated labor annexes as well as the

CAFTA-DR White Paper and the Colombia Labor Action Plan. For this

analysis, we included steps taken by partner countries, beginning with

FTA negotiations for each FTA through May 2014. We also reviewed

congressionally mandated reports, such as State’s Country Reports on

Human Rights Practices (Human Rights Reports), of which the 2013

reports were the latest available; USTR’s annual trade agenda and trade

report; and DOL’s biennial Progress in Implementing Chapter 16 (Labor)

and Capacity Building under the Dominican Republic-Central America-

United States Free Trade Agreement. In addition, we reviewed reports

submitted to Congress in conjunction with FTA implementing legislation,

such as DOL’s Labor Rights Reports for each of our selected FTAs.

Additionally, we interviewed officials from DOL’s International Labor

Affairs Bureau and the Office of Trade and Labor Affairs; USTR’s Labor

Affairs office; and State’s Bureau of Democracy, Human Rights, and

Labor. We also interviewed State desk officers responsible for selected

partner countries and labor, political, and economic officers at U.S.

embassies. In each of the selected countries, except Colombia, we

interviewed officials from the relevant ministries, including the ministry of

labor. (Colombia’s Ministry of Labor chose to provide written responses to

Objective 1: Examine

Steps That Selected

Partner Countries Have

Taken, and U.S.

Assistance They Have

Received, to Implement

FTA Labor Provisions and

Other Labor Initiatives and

the Reported Results of

Such Steps

Appendix I: Objectives, Scope, and

Methodology

Page 52 GAO-15-160 Labor Provisions in Free Trade Agreements

our questions.) We did not independently identify or evaluate FTA partner

countries’ enforcement or compliance with laws and procedures but

rather relied on evidence obtained from U.S. and partner government as

well as stakeholder sources. Because of the ILO’s role in interpreting,

assessing, and improving signatories’ compliance with ILO Conventions

and Fundamental Principles, we conducted a series of meetings at the

ILO in Geneva as well as with umbrella organizations participating in the

ILO’s tripartite (government-business-labor) governance structure.

To examine U.S. funding for labor-related assistance projects, we

collected data on such funding obligations—from the date when Congress

passed the respective FTA implementing legislation through 2013—from

relevant officials at State, DOL, and USAID and publicly available data on

trade-related labor assistance from USAID’s Trade Capacity Building

Database. We assessed the reliability of the data by (1) interviewing

agency officials knowledgeable about the data sources and (2) tracing the

data to source documents. We determined that the data were sufficiently

reliable for the purposes of describing U.S. assistance for labor provisions

in FTA countries.

In addition, to identify any changes in levels of reported violence against

workers exercising labor rights in the selected countries and the partner

governments’ responses (see app. II), we obtained, reviewed, and

analyzed documents from USTR, DOL, and State, such as State’s

Human Rights Reports and DOL’s Labor Rights Reports. During our

fieldwork in each selected country, we interviewed U.S. and foreign

government officials, labor unions, and NGOs to learn of any violence

against unionists. Of the countries we selected for review, violence

against unionists was reported only in Colombia and Guatemala. During

our fieldwork in Colombia, we interviewed and obtained information from

entities responsible for collecting and reporting data on violence against

unionists, including the Colombian Prosecutor General’s office; ENS

(Escuela Nacional Sindical)—a labor rights NGO—and State’s Human

Rights and Labor officers at the U.S. embassy in Bogota. We assessed

the reliability of ENS’s and the Colombian Prosecutor General’s data by

(1) interviewing officials from each entity about their criteria and data

collection methodology for determining whether a victim’s union activity

was a motive in the killing and (2) interviewing State’s Human Rights and

Labor officers, who report ENS and Colombia’s Prosecutor General’s

data in the annual Human Rights Report for Colombia. We determined

the data to be sufficiently reliable for the purposes of describing reported

violence against unionists in Colombia. In Guatemala, we interviewed,

and obtained information from, the Guatemalan Prosecutor General’s

Appendix I: Objectives, Scope, and

Methodology

Page 53 GAO-15-160 Labor Provisions in Free Trade Agreements

Office, which is responsible for prosecuting crimes against unionists, and

the Guatemalan Ministry of the Interior, which investigates crimes against

unionists at the direction of the Prosecutor General’s Office. Because

Guatemala did not collect data on violence against unionists, we did not

review such data on homicide rates over time. We also interviewed

State’s political officer responsible for labor affairs at its embassy in

Guatemala City, labor unions, and NGO officials. We reviewed ILO

reports and discussed steps by Colombia and Guatemala to address

violence with ILO officials. Our analysis was based on reputable

secondary sources. We did not make any independent determination

regarding the merit of any evidence of violence against unionists.

To examine labor submissions that have been filed under FTA

agreements and any problems related to the submission process, we

obtained, reviewed, and analyzed documents, including each labor

submission filed with DOL. We interviewed officials from DOL’s Office of

Trade and Labor Affairs—the office responsible for investigating and

reporting on submissions—as well as USTR and State officials who

review DOL’s reports and are involved in following up with FTA partner

countries, if needed. During our fieldwork, we interviewed union and NGO

representatives involved in filing submissions, as well as relevant

government ministries, including the Ministries of Labor in Peru and

Guatemala.

To examine the extent to which USTR, DOL, and State monitor and

enforce implementation of FTA labor provisions and associated

commitments (see app. III) and report results to Congress, we requested,

reviewed, and analyzed documents from each agency. These documents

included strategic plans and documents reflecting monitoring activities,

such as DOL’s management reports for 13 selected FTA partner

countries, State cables, and USTR monitoring documents. In addition, we

interviewed selected members of the USTR-chaired Trade Policy Staff

Committee and its subcommittee on FTA labor monitoring and

enforcement. To examine the resources that USTR, DOL, and State

dedicate to monitoring labor provisions in FTAs, we obtained and

analyzed data on staffing and other resources such as travel. We

interviewed officials from DOL’s International Labor Affairs Bureau and its

Office of Trade and Labor Affairs; USTR; and State’s Bureau of

Democracy, Human Rights, and Labor, as well as State’s in-country

labor, labor reporting, political, and economic officers at U.S. embassies

during our fieldwork. In addition, during our fieldwork, we interviewed

Objective 2: Examine

Submissions about

Possible Violations of FTA

Labor Provisions That

DOL Has Accepted and

Any Problems Related to

the Submission Process

Objective 3: Examine the

Extent to Which USTR,

DOL, and State Monitor

and Enforce Partner

Countries’ Implementation

of FTA Labor Provisions

and Report Results to

Congress

Appendix I: Objectives, Scope, and

Methodology

Page 54 GAO-15-160 Labor Provisions in Free Trade Agreements

officials from the partner countries’ various ministries, including the

ministries of labor, as well as representatives from labor unions and NGO

officials implementing programs funded by U.S. agencies. To determine

whether USTR, DOL, and State report the results of their monitoring

activities to Congress, we reviewed and analyzed the agencies’ reports,

such as USTR’s Trade Policy Agenda and Annual Report (2009 to 2013),

DOL Annual Performance Reports (2010 to 2013), and State’s Human

Rights Reports (2009 to 2013).

We conducted this performance audit work from May 2013 to November

2014 in accordance with generally accepted government auditing

standards. Those standards require that we plan and perform the audit to

obtain sufficient, appropriate evidence to provide a reasonable basis for

our findings and conclusions based on our audit objectives. We believe

that the evidence obtained provides a reasonable basis for our findings

and conclusions based on our audit objectives.

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 55 GAO-15-160 Labor Provisions in Free Trade Agreements

U.S. and Colombian officials and representatives of unions,

nongovernmental organizations (NGO), and private sector groups we met

with reported that violence against unionists continues to exist in

Colombia, which union leaders and NGOs reported undermines workers’

ability to freely associate because of the fear that their union activities

may lead them to become victims of violence.

Data collected by the NGO Escuela Nacional Sindical (ENS) and the

Colombia Prosecutor General’s Office, as reported in the U.S.

Department of State’s Human Rights Reports, show that murders of trade

unionists have generally decreased over the past decade, although

homicides continue to occur (see fig. 4).

NGO officials in Colombia

reported that although murders of unionists are a serious concern, threats

of violence against union members also create a significant deterrent to

workers organizing, with one NGO official noting a greater impact in rural

areas than in major cities. According to this NGO official, authorities are

less likely to have the capacity to investigate and respond to threats made

in rural areas, with the result that victims flee the area or disengage from

labor activities.

Of the countries we selected for our review, violence against unionists was reported only

in Colombia and Guatemala.

For example, according to DOL,

as of July 2014 ENS had recorded 35 murders in 2013, compared with

102 murders of union members and labor activists in 2003. This trend

continued in the period since the Labor Action Plan—which contains

specific commitments to address labor violence—was announced in

2011. Labor union officials acknowledged the number of homicides has

decreased, but they noted that violence continues to exist.

ENS and Colombia’s Prosecutor General’s Office have used different methodologies to

determine whether a victim was murdered because of union affiliation. In some cases,

ENS has considered a murder union related, while the Prosecutor General’s Office has

classified the murder as unrelated to union activities. For more information on the

differences in data collection methodologies, see Congressional Research Service, U.S.-

Colombia Free Trade Agreement: Labor Issues, RL34759 (Washington, D.C.: January

2012).

Appendix II: Reported Violence against

Trade Unionists in Colombia and Guatemala

Colombia

Violence and Threats of

Violence against Unionists,

Undermining Freedom of

Association, Have Been

Reported in Colombia

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 56 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 4: Murders of Unionists in Colombia, 2003-2013

Further, according to ENS, as a result of the Labor Action Plan, ENS and

the Prosecutor General’s Office have developed a collaborative

relationship, with the Prosecutor General’s Office consulting with ENS on

cases involving murders or threats that may be linked to the victims’ union

activities.

Government officials and labor groups we met with in Colombia all

reported that threats of violence against unionists have been increasing.

However, ENS is the only source of such threat data, and its reports do

not show a clear pattern over the past decade.

We did not determine the cause of the variation, because it was beyond the scope of our

work.

ENS’s data represent

only reported threats; threats of violence against unionists may go

unreported.

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 57 GAO-15-160 Labor Provisions in Free Trade Agreements

The government of Colombia committed to a number of reforms related to

labor violence in April 2011 in the Labor Action Plan. Such commitments

included broadening the scope of the government of Colombia’s

protection program, Unidad Nacional de Protección (UNP), to include

labor activists, union members, and people engaging in efforts to form a

union, increasing the budget for the additional resources necessary to

support the expansion of the protection program, eliminating the backlog

of protection applications awaiting risk assessments, completing future

risk assessments within a 30-day period (as described below), and

reforming the Colombian interagency committee that reviews risk

assessments. In addition, Colombia committed to criminal justice reforms

in the Labor Action Plan, which included

• assigning 95 additional full-time judicial police investigators to support

the investigations of criminal cases involving union members and

activists;

• analyzing closed cases of union member homicides to determine

patterns relating to targets, criminal methods, and any evidence of

motives;

• identifying budgetary needs for training investigators and prosecutors

on issues related to labor cases; and

• instructing investigators to determine whether a homicide victim was

an active or retired union member, or was actively engaged in union

formation and organization, during the initial phase of the

investigation.

According to the Office of the U.S. Trade Representative (USTR) and the

Department of Labor (DOL), in accordance with Colombia’s Labor Action

Plan commitments, the Colombian government has implemented

changes to a number of institutions and programs. For example, union

members, in addition to union leaders, are now included in the UNP’s

jurisdiction. As of April 2014, the UNP protects more than 670 unionists,

with about 24 percent of its budget dedicated to the protection of unionists

and labor activists.

Additionally, USTR has reported that the Colombian government

reformed the risk assessment process at the UNP and eliminated the

backlog of hundreds of applicants to the protection program. During our

fieldwork in Colombia, UNP officials described changes to the risk

assessment process. For example, when an application is received,

instead of a single individual investigating the case, as occurred before

the process’s reform, a committee now conducts interviews and fieldwork

Colombia Has Taken Agreed

Steps to Prevent and

Investigate Violence against

Trade Unionists, but Unions

Report That Violence Persists

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 58 GAO-15-160 Labor Provisions in Free Trade Agreements

to investigate the nature of the threat and determine a risk score. The

case is then forwarded to another committee, comprising representatives

from organized labor, other vulnerable populations, and government

agencies, that determines the risk level in each case as ordinary,

extraordinary, or extreme. UNP officials reported that, based on the

outcome of the risk assessment, protection measures ranging from

providing a cell phone to providing an armored car and armed

bodyguards are taken. State’s 2013 Human Rights Report notes that

between January 1 and October 31, 2013, the UNP conducted 565 risk

assessments of union leaders or members. Of those, the UNP classified

203, about 36 percent, as having an extraordinary threat or extreme

threat and provided the leaders or members with protection measures.

According to UNP officials, prior to the Labor Action Plan–related reforms,

about 10 to 15 percent of risk applicants were determined to be under

extraordinary or extreme risk. Additionally, according to State,

approximately one-half of the unionists enrolled in the program were

provided with “hard” protection measures that included a bodyguard.

According to USTR, Colombia increased the budget of its Prosecutor

General’s Office, in part to investigate and prosecute cases involving

union members or labor activists as victims. Further, USTR has reported

that the Prosecutor General’s Office has issued a mandate that assigned

over 20 prosecutors exclusively to crimes against union members and

labor activists. In addition, the National Police have assigned an

additional 100 full-time judicial police investigators to support the

prosecutors in investigating cases involving union members and labor

activists. To implement the Labor Action Plan commitments to identify

and effectively prosecute intellectual authors of labor homicides, the

Prosecutor General’s Office created a context and analysis directorate

tasked with investigating the patterns and context of similar cases,

including labor homicides. Officials from this unit we met with during our

fieldwork in Colombia described the unit as taking an integrated approach

to analyzing cases across the spectrum of human rights crimes to

determine common themes and perpetrators.

Despite the actions Colombia has taken to reduce violence against union

members and labor activists, Colombian union and NGO officials, as well

as USTR officials, report that violence and impunity remain problems.

Union members we met with during our fieldwork in Colombia reported

the existence of a high impunity rate for violent crimes against unionists.

According to DOL, of the 100 unionist murders that have occurred since

2011, Colombia’s Prosecutor General’s Office has obtained only one

conviction. Union officials we met with acknowledged that the government

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 59 GAO-15-160 Labor Provisions in Free Trade Agreements

of Colombia has taken positive steps to address violence, that the

number of labor-related homicides has decreased, and that reforms have

been implemented at the UNP. However, they also reported they are

concerned for their safety because of their union activities. Additionally,

union officials voiced the concern that risk was not being assessed at the

UNP in a way that accurately captured the dangers union leaders and

members face. UNP officials we met acknowledged that two union

leaders who were receiving “light” protection were murdered and another

union leader was murdered while he awaited the UNP’s risk assessment.

In support of reducing violence in Colombia, including violence against

unionists, U.S. agencies have funded multiple assistance projects.

According to U.S. Agency for International Development (USAID) officials,

from 2001 to 2010, the agency provided about $11.6 million in funding

through its Human Rights fund to establish and support Colombia’s UNP.

The UNP, which is under the Colombian Ministry of Interior, received

between 10 and 18 percent of its total annual budget from USAID funding

from 2001 to 2005 (ranging from about $916,000 in 2001 to about $2.5

million in 2005). According to USAID, its assistance for the UNP has

steadily decreased as budget support from the government of Colombia

and the effectiveness of the UNP have increased. For example, from

2011 to 2014, USAID provided approximately $150,000 per year in

assistance to the UNP.

In support of Colombia’s Labor Action Plan commitment to seek

cooperation, advice, and technical assistance of the International Labour

Organization (ILO), DOL is currently funding a 5-year (2011 to 2016),

$7.82 million technical cooperation project implemented by the ILO. The

objectives of this project include strengthening the institutional capacity of

the Colombian government to enhance protection measures for trade

union leaders, members, activists, and organizers and combating

impunity for perpetrators of violence against them. Under this project, the

ILO is training Colombian prosecutors, investigators, and judges on labor

rights and investigating crimes against union leaders and labor activists.

In addition, Colombia’s Prosecutor General’s Office officials reported that

the office has received assistance from the U.S. Department of Justice on

broad criminal justice reforms, including transitioning from an inquisitorial

to an accusatory legal system. USTR reports that State has funded, and

the Department of Justice has implemented, assistance to train

investigators and prosecutors throughout Colombia in best practices for

crime scene investigation, including forensic evidence handling,

investigating threats, and prosecutorial management of cases for trial.

The Department of Justice’s and State’s programs are aimed at broader

U.S. Government Has

Provided Assistance to

Colombia to Address

Violence, Including

Violence against Unionists

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 60 GAO-15-160 Labor Provisions in Free Trade Agreements

criminal justice reform; however, Colombia’s Prosecutor General’s Office

reported to us that the reforms apply to investigating and prosecuting

violence against unionists.

U.S. and Guatemalan government officials and ILO and union

representatives reported that violence against unionists exists in

Guatemala; however, the extent of the problem is unclear because

disaggregated statistics on violence against unionists are not collected.

Nevertheless, a union collected information on 63 cases in which union

leaders or members were killed from 2007 through 2013. The unions

alleged that the motive for these murders was related to the victims’ union

activities and that the government of Guatemala has not done enough to

investigate and resolve the cases. In addition, ILO officials stated that

they have detailed extremely serious and systematic violations of the right

to freedom of association in Guatemala, including murder.

A 2012 ILO complaint against the Guatemalan government cited 63

murders of trade unionists and called for the establishment of an ILO

commission of inquiry.

A commission of inquiry, the ILO’s highest-level investigative procedure, is generally

established when a member state is accused of committing persistent and serious

violations and has repeatedly refused to address them. According to DOL, as of August

2014, 12 commissions of inquiry had been established.

Guatemalan officials confirmed that violence

against trade unionists exists but reported that many of the cases cited in

the ILO complaint were the result of general, extensive violence and

crime in the country rather than violence directed against trade unionists.

According to Ministry of the Interior officials, the ministry’s initial

investigation of the 63 murder cases was unable to identify any link

between the perpetrators’ motives and the victims’ union activity.

Furthermore, as part of a cooperative agreement with the Guatemalan

Attorney General’s Office, the International Commission against Impunity

in Guatemala (CICIG) began a review of the 58 cases cited in the ILO

Guatemala

Instances of Violence and

Threats of Violence against

Trade Unionists Have Been

Reported in Guatemala

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 61 GAO-15-160 Labor Provisions in Free Trade Agreements

complaint to ensure the adequacy of the investigations.

In addition, unions reported other violent acts, such as threats, bribes,

and intimidation against union members. According to union

representatives we interviewed, threats of violence begin with harassing

phone calls to a union leader or member. The union representative stated

that if the phone calls do not get the desired results, the harassment is

escalated to include physical intimidation and threats of kidnapping. If the

physical intimidation fails, then kidnapping or murder occurs.

According to

DOL, as of June 2014, CICIG had completed its review of 56 cases and

concluded that 6 of the cases indicated a possible link to union activity.

To address the complaint filed by the unions, the ILO initiated the process

to establish commissions of inquiry.

To avoid the establishment of the

commission, the government of Guatemala signed a memorandum of

understanding in March of 2013, committing to take specific steps to

address the issues in the complaint and establishing a plan called the

Road Map that outlined the actions needed. In response, the ILO decided

to postpone the establishment of the Commission of Inquiry and has been

working with Guatemala to implement the Road Map.

According to information that the government of Guatemala provided to

the ILO, as of March of 2014, steps that the government had taken to

address violence against unionists included

• a cooperative agreement signed with the International CICIG to

support the Public Prosecutor’s Office in analyzing cases of violence

against trade unionists;

• the transfer of 20 trained investigators to the Attorney General’s Office

and the creation of the new post of assistant prosecutor in the special

unit investigating crimes against trade unionists;

• improvement in the time periods for trial and convictions, including

those for some of the 58 murders reported to the ILO; and

As a result of a 2006 agreement between the United Nations and the government of

Guatemala, CICIG was established as an independent international body designed to

support the Guatemalan Public Prosecutor's Office, National Civil Police, and other

government institutions in the investigation of crimes committed by members of illegal

security forces and clandestine security structures and, in a more general sense, to help

disband such groups.

Guatemala Has Taken Steps

to Prevent and Investigate

Violence against Unionists in

Response to ILO Review

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 62 GAO-15-160 Labor Provisions in Free Trade Agreements

• submission by the Ministry of the Interior, in the context of analyzing

assaults on trade unionists, of a draft protocol for implementing

immediate and preventive security measures for trade union leaders,

unionized workers, and workers from trade unions in the process of

being established.

Following are descriptions of some of the Guatemalan government’s

ongoing efforts to address violence against trade unionists.

Cooperative agreement with CICIG. According to a March 2014 ILO

report, the Guatemalan Attorney General’s Office signed a cooperative

agreement with CICIG on September 24, 2013.

Additional trained investigators. The Ministry of the Interior and the

Attorney General’s Office established interinstitutional links for

cooperation to strengthen the investigations and criminal prosecution.

Through this mechanism, the Ministry of the Interior transferred 20 trained

investigators to the Attorney General’s Office, with the effort to provide

additional support to investigate cases of violence against unionists.

As part of the

agreement, the Attorney General’s Office established a coordination

mechanism with CICIG for the analysis of specific cases of violence

against trade union members. CICIG agreed to support the Attorney

General’s Office in the analysis of specific cases of violence against union

members, providing recommendations to strengthen the investigation of

those cases. Under the new coordination mechanism, the 58 murder

cases cited in the ILO complaint were transferred to CICIG to continue

the investigation process. In addition, the Attorney General agreed to

cooperate with CICIG in the analysis of crime trends based on landmark

cases of attacks and violence against union members known to the

different units and offices of the Public Prosecutor’s Office.

Timely trials and convictions. The government of Guatemala has

worked to improve the length of time it takes to bring perpetrators of

crimes to trial and issue convictions. In regard to the 58 murder cases

cited in the ILO complaint, the Attorney General’s Office provided an

International Labour Organization Governing Body, Complaint Concerning Non-

Observance by Guatemala of the Freedom of Association and Protection of the Right to

Organise Convention, 1948 (No. 87), Made by Delegates to the 101st Session (2012) of

the International Labour Conference under Article 26 of the ILO Constitution,

GB.320/INS/9 (Mar. 19, 2014).

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 63 GAO-15-160 Labor Provisions in Free Trade Agreements

update of the status of the 28 cases that have been brought to court and

reported that extinction of criminal liability has been applied in 4 cases,

arrest warrants have been issued in 13 cases, rulings have been handed

down in 6 cases, and 5 cases are pending trial.

Strengthening analysis of attacks against human rights defenders.

The Attorney General’s Office restructured and strengthened the unit that

analyzes attacks against human rights defenders, a category that

includes unionists. As part of this process, representatives of unionized

workers will meet regularly to study trends in attacks against human rights

defenders and draw up recommendations for investigations by the

Attorney General Office to assist both criminal investigations and the

conviction of the perpetrators. An adequately staffed office will be created

to carry out the relevant investigations.

The government of Guatemala reported several other steps it intends to

initiate or has initiated to address the issues in the ILO complaint. For

example, according to the ILO’s March 2014 report, the Ministry of Labor

and Social Welfare proposed amendments to the Labor Code and other

relevant laws, incorporating the amendments proposed by the ILO

supervisory bodies.

The Guatemalan Attorney General’s Office stated that extinction of criminal liability is

defined as an instance in which the government is unable to prosecute as a result of the

death of the offender.

The ILO’s report stated that legislative reforms have

also been proposed by the Ministry of Labor to enable the general labor

inspectorate to fulfill its mandate to ensure the effective application of

labor legislation. On the basis of the progress demonstrated in addressing

points in the Road Map reported by the government of Guatemala, the

ILO decided in March 2014 to again postpone the implementation of the

Commission of Inquiry and reevaluate progress in November of 2014.

International Labour Organization Governing Body, Complaint Concerning Non-

Observance by Guatemala of the Freedom of Association and Protection of the Right to

Organise Convention.

Appendix II: Reported Violence against Trade

Unionists in Colombia and Guatemala

Page 64 GAO-15-160 Labor Provisions in Free Trade Agreements

The United States has provided some funding through State’s Bureau of

International Narcotics and Law Enforcement (INL) to assist Guatemalan

authorities to provide better protection to unionists. INL provided

Guatemala $2 million dollars in assistance for fiscal years 2012 through

2016 to implement reform and capacity-building projects. The goal of the

INL funding is to increase the investigative capabilities of law enforcement

officers within the Ministry of the Interior. Part of the funding focuses on

defenders of human rights, including addressing violence against trade

unions. Assistance provided by INL has ranged from the provision of

equipment to technical training and exchanges. For example, INL

provided the Ministry of the Interior’s recently established security

division, División de Protección de Personas y Seguridad (DPPS), with

filing cabinets to organize files on union leaders for which it was providing

protection. INL officials stated that DPPS lacked a tracking system and

had rooms stacked with disorganized files and, as a result, could not

accurately track the number of people receiving protection. According to

INL officials, as of December 2013, DPPS was providing protection for

about 1,000 union leaders and members. INL officials also stated that

they had discussed the possibility of creating a risk analysis unit in DPPS,

similar to Colombia’s UNP.

U.S. Government Has

Provided Assistance to

Guatemala for Law

Enforcement Reform and to

Address Violence, Including

Violence against Unionists

Appendix III: U.S. Monitoring of

Implementation of Other Labor Initiatives

Page 65 GAO-15-160 Labor Provisions in Free Trade Agreements

In addition to being responsible for monitoring partner countries’

implementation of free trade agreement (FTA) labor provisions, U.S.

agencies are responsible for monitoring the implementation of labor

initiatives such as the White Paper

and the Labor Action Plan,

which

were developed in the context of, respectively, the Dominican Republic-

Central America-United States Free Trade Agreement (CAFTA-DR) and

the United States-Colombia Trade Promotion Agreement (Colombia

FTA).

U.S. agencies are also responsible for monitoring Guatemala’s

Labor Enforcement Plan, developed in response to a CAFTA-DR labor

submission to the Department of Labor (DOL).

To discharge its responsibility for monitoring implementation of the

CAFTA-DR White Paper projects, in 2007 DOL provided a $10 million

grant to the International Labour Organization’s (ILO) Verification

Project.

The ILO Verification Project tracked spending and implementation of

every White Paper project, requiring grant recipients to submit periodic

reports to ILO for the biannual report. ILO staff provided the reports to

DOL, which used the reports to ensure transparency and progress of the

The Verification Project prepared reports every 6 months from

2005 through 2010 regarding the implementation of the White Paper

projects. The Verification Project and most White Paper projects

concluded in 2012.

Working Group of the Vice Ministers Responsible for Trade and Labor in the Countries of

Central America and the Dominican Republic, The Labor Dimension in Central America

and the Dominican Republic: Building on Progress: Strengthening Compliance and

Enhancing Capacity (April 2005), accessed June 7, 2013, http://www.ilo.org/sanjose

/lang—es/index.htm.

Colombian Action Plan Related to Labor Rights (April 7, 2011), accessed May 29, 2013,

http://www.ustr.gov/webfm_send/2787.

These labor initiatives were created outside an FTA framework. Consequently, matters

arising from these initiatives would not be addressed through the dispute settlement

provisions of an FTA.

Mutually Agreed Enforcement Action Plan between the Government of the United States

and the Government of Guatemala (2013), accessed August 1, 2013,

http://www.dol.gov/ilab/programs/otla/guatemalasub.htm.

According to DOL, its funding for the ILO Verification Project in 2007 and subsequent

years totaled $11.6 million. According to ILO staff, the Verification Project represents one

of the ILO’s most comprehensive evaluation efforts in the region.

Appendix III: U.S. Monitoring of

Implementation of Other Labor Initiatives

CAFTA-DR White Paper

Appendix III: U.S. Monitoring of

Implementation of Other Labor Initiatives

Page 66 GAO-15-160 Labor Provisions in Free Trade Agreements

U.S.-funded projects. Entities implementing White Paper projects

included, among others, the U.S. Agency for International Development

(USAID), partner countries’ ministries of labor and labor courts, and

nongovernmental organizations. According to ILO staff, although the

Verification Project did not measure the impact of the projects on labor

conditions, the reports reflected improvements of government institutions

and other entities and demonstrated the benefit of addressing some

issues faced by workers. ILO officials noted that, besides providing

accountability for the expenditure of funds and tracking the progress of

projects, the Verification Project led to improvements in data gathering

and reporting capabilities of the ministries of labor.

The Office of the U.S. Trade Representative (USTR), in cooperation with

DOL and the Department of State (State), is responsible for monitoring

the implementation of the Colombia Labor Action Plan, most of which

Colombia was required to implement by 2012. The plan listed steps to

improve labor conditions, mutually agreed on by the U.S. and Colombian

governments, that the Colombian government agreed to take before the

President of the United States would put the FTA forward for

congressional consideration. The conditions that the Labor Action Plan

addressed included violence against Colombian labor union members,

inadequate efforts to bring to justice perpetrators of crimes against labor

union members, and insufficient protection of workers’ rights in Colombia.

According to USTR staff, the plan continues to serve as a framework for

cooperation with Colombia. The plan includes regular meetings between

officials from both countries to monitor and implement the plan through

2013, and both governments announced an extension of these meetings

through at least 2014.

On April 2012, USTR announced that the Colombian government had

taken important steps to fulfill the Labor Action Plan and that the FTA

would go into effect. USTR officials did not provide records or

documentation of these steps, stating that they did not request such

records because the website for the Presidency of Colombia supplied

documentation of all actions taken. On reviewing some of the

documentation on the website, we found that the documents were not

structured so as to readily provide information about steps that the

Colombian government had taken to meet its Labor Action Plan

commitments. In written responses to our questions, Colombia’s Ministry

of Labor indicated that the government had met all Labor Action Plan

commitments, and the ministry provided examples of the government’s

actions to meet these commitments.

Colombia Labor

Action Plan

Appendix III: U.S. Monitoring of

Implementation of Other Labor Initiatives

Page 67 GAO-15-160 Labor Provisions in Free Trade Agreements

USTR officials reported that USTR, DOL, and State had engaged

extensively with the Colombian Ministry of Labor and other government

institutions in Colombia to discuss and confirm Colombia’s progress in

implementing each element of the Labor Action Plan. According to USTR,

as of August 2014, USTR and DOL staff had made seven visits to

Colombia since the FTA entered into force to address these issues.

USTR fact sheets and a USTR and DOL report from April 2014 provided

information about Colombia’s accomplishments under the Labor Action

Plan—for example, the report detailed the number of labor inspectors

hired, the number of special prosecutors and investigators hired, and the

number of convictions in cases of violence against labor leaders—as well

as remaining challenges. In addition, according to DOL, a DOL staff

member, detailed to the U.S. embassy in Bogota from 2011 to 2012 to

oversee implementation of the Action Plan, met during that period with

Colombian government officials, nongovernmental organizations, union

representatives, and other stakeholders to discuss the Labor Action

Plan’s implementation, among other topics.

USTR, in cooperation with DOL and State, is responsible for monitoring

implementation of the Guatemala Enforcement Plan, agreed to by the

U.S. and Guatemalan governments in April 2013, to address concerns

identified in a labor submission filed under CAFTA-DR. USTR provided us

with internal documents that it had used to track Guatemala’s progress in

taking the steps required by the plan. For example, USTR provided a

matrix tracking the status of legal instruments required under the

Enforcement Plan; USTR also provided quarterly progress reports

submitted by the Guatemalan Ministry of Labor, identifying steps that the

ministry had taken to address commitments in the Enforcement Plan.

USTR officials said that since 2009, USTR and DOL had directly engaged

with Guatemala on the labor case through 17 trips, including 7 trips that

involved staff at the Assistant Secretary level or higher. In addition,

officials at the Guatemalan Ministry of Labor told us that they had

interacted extensively with DOL and USTR, including through multiple

video-teleconferences, meetings in person, and correspondence, to

update them on progress in implementing the Enforcement Plan.

Guatemala Enforcement

Plan

Appendix III: U.S. Monitoring of

Implementation of Other Labor Initiatives

Page 68 GAO-15-160 Labor Provisions in Free Trade Agreements

In April 2014, USTR told us that although it recognized steps that

Guatemala had taken under the Enforcement Plan, it had not seen

sufficient progress to close the case. USTR officials stated that if the

Guatemalan government did not take the steps delineated in the plan by

the specified dates, USTR might decide to pursue arbitration. In

September 2014, USTR announced that the U.S. government was

pursuing dispute settlement proceedings against Guatemala because it

had not met the terms of the Enforcement Plan.

Appendix IV: Status of Labor Submissions

Page 69 GAO-15-160 Labor Provisions in Free Trade Agreements

The following provides details about the status of the five labor

submissions that the Department of Labor (DOL) has accepted since

2008.

In June 2011, DOL accepted a labor submission regarding Bahrain, 50

days after receipt. The submission remains open, with consultations

ongoing. The submission, received from the American Federation of

Labor and Congress of Industrial Organizations (AFL-CIO) with a

statement from the General Federation of Bahrain Trade Unions, alleged

that Bahrain had violated free trade agreement (FTA) labor provisions

regarding the right of association, particularly nondiscrimination against

trade unionists. In December 2012, DOL issued a public report that found

that the government of Bahrain’s actions appeared inconsistent with its

commitments under the labor chapter. Specifically, the report found that

trade unionists and leaders were targeted for dismissal, and in some

cases prosecuted, in part for their role in organizing and participating in a

general strike and that the dismissals reflected discrimination based in

part on political opinion and activities. The report also found sectarian

discrimination against Shia workers. The Department of Labor’s (DOL)

report outlined nine recommendations focused on legal and

administrative changes to Bahraini labor law for the U.S. government to

pursue during consultations with Bahrain and also recommended that the

parties develop a plan of action.

On May 6, 2013, more than 4 months after DOL issued its report, the U.S.

government formally requested cooperative labor consultations with the

government of Bahrain in a joint letter from the Acting Secretary of Labor

and the Acting U.S. Trade Representative. Consultations began when an

interagency delegation met with the government of Bahrain in Manama,

Bahrain, on July 15 and 16, 2013. However, according to DOL, the first

round of consultations did not resolve all issues DOL had identified, and

consultations were ongoing as of September 2014. The Office of the U.S.

Trade Representative (USTR) attempted to schedule second-round

consultations but agreed to a request from Bahrain to delay them. The

United States and Bahrain held a second round of consultations on June

22 and 23, 2014, according to DOL. During the consultations, the two

DOL has also accepted other labor submissions under the North American Agreement on

Labor Cooperation, which we did not examine.

Appendix IV: Status of Labor Submissions

Bahrain

Appendix IV: Status of Labor Submissions

Page 70 GAO-15-160 Labor Provisions in Free Trade Agreements

parties used the recommendations in the DOL report as a basis for jointly

developing an action plan, which includes concrete steps for the

government of Bahrain to address the concerns that the report raises.

USTR officials noted that the allegations raised in the submission are

subject to resolution through the consultation procedures but are not

subject to dispute settlement.

Figure 5 shows the timeline and status of the Bahrain labor submission.

Figure 5: Timeline and Status of Labor Submission Regarding Bahrain

Legend: DOL = U.S. Department of Labor.

In February 2012, DOL accepted a labor submission regarding the

Dominican Republic, 62 days after receipt. The submission remains open

and unresolved while DOL monitors the Dominican Republic’s progress in

Pursuant to the Bahrain FTA Labor Chapter, parties may only have recourse to dispute

settlement under the FTA for matters arising under the commitment to not fail to effectively

enforce its labor laws, through a sustained or recurring course of action or inaction, in a

manner affecting trade between the parties. Seeking recourse through the dispute

settlement chapter of the FTA could lead to the imposition of a monetary assessment or

other trade measures. Matters arising under the other commitments in the labor chapter

cannot have recourse to dispute settlement under the FTA, but parties are entitled to

request consultations on any matter arising under the chapter in an effort to find a

mutually agreeable solution. Bahrain FTA, art. 15.6 and ch.19.

Dominican Republic

Appendix IV: Status of Labor Submissions

Page 71 GAO-15-160 Labor Provisions in Free Trade Agreements

addressing concerns that the submission raises. The submission,

submitted by a private individual, alleged the failure of the Dominican

Republic’s government to enforce its labor laws in the sugar sector as

required under the Dominican Republic-Central America-United States

Free Trade Agreement (CAFTA-DR). The submission alleged nine

violations, ranging from human trafficking and forced labor to retaliatory

firing of workers for affiliation with, or attempts to organize, labor groups

or unions. In September 2013, DOL issued a public report that found

evidence of apparent and potential violations of the Dominican Republic’s

labor laws pertaining to the sugar sector. DOL’s report also identified

significant concerns about procedural and methodological shortcomings

in the inspection process that undermine the government’s capacity to

effectively identify labor violations. In addition, the report cited concerns

regarding freedom of association, the right to organize, and collective

bargaining. DOL’s report offered 11 recommendations to the government

of the Dominican Republic to address the report’s findings and improve

enforcement of Dominican labor laws in the sugar sector and stated that

DOL would reassess the situation in 6 and 12 months after the report’s

publication. The recommendations range from administrative changes to

help the government of the Dominican Republic improve its enforcement

of Dominican labor laws to outreach suggestions for better informing

sugar sector workers about their labor rights.

In April 2014, DOL issued its 6-month assessment, noting that the

Dominican Republic’s Ministry of Labor had committed to measures that,

if instituted, would begin to address some of the recommendations in

DOL’s public report. DOL’s assessment also noted that the government of

the Dominican Republic had not yet indicated plans or taken actions to

address most of the public report’s recommendations.

Figure 6 shows the timeline and status of the Dominican Republic labor

submission.

Appendix IV: Status of Labor Submissions

Page 72 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 6: Timeline and Status of Labor Submission Regarding the Dominican

Republic

Legend: DOL = U.S. Department of Labor.

In June 2008, DOL accepted a submission regarding Guatemala, 50 days

after receipt. The submission remains open and unresolved and is

currently in arbitration. The submission, from the AFL-CIO and six

Guatemalan worker organizations, alleged that Guatemala had violated

its obligation under CAFTA-DR to effectively enforce its labor laws

regarding freedom of association, the rights to organize and bargain

collectively, and acceptable conditions of work. In January 2009, DOL

issued a public report that found significant weaknesses in Guatemala’s

labor law enforcement. The report outlined 10 recommendations for the

government of Guatemala, including administrative and technical

changes, to address the issues raised in the submission. The report also

recommended that DOL reassess Guatemala’s progress in implementing

the recommendations within 6 months after the publication of DOL’s

report to determine whether further action is warranted.

USTR and DOL engaged with the Guatemalan government in an effort to

address DOL’s recommendations for systemic improvements in the

enforcement of labor laws in Guatemala. In July 2010, after Guatemala’s

actions proved insufficient to address the concerns raised in the report,

USTR and DOL jointly requested cooperative labor consultations with

Guatemala under the CAFTA-DR Labor Chapter. The consultations failed

to resolve the matter, and on May 16, 2011, USTR requested a meeting

of the CAFTA-DR’s free trade commission pursuant to the agreement’s

Dispute Settlement Chapter. The commission met in June 2011 but did

not resolve the dispute, and in August 2011, the United States requested

Guatemala

Appendix IV: Status of Labor Submissions

Page 73 GAO-15-160 Labor Provisions in Free Trade Agreements

the establishment of an arbitral panel. After the panel was constituted in

November 2012, the parties agreed to suspend it to allow for additional

negotiation. In April 2013, the parties reached agreement on a

comprehensive 18-point Enforcement Plan with concrete benchmarks

and timelines for implementation. The plan extended the arbitration

panel’s suspension for 6 months, with the possibility of an additional 6-

month extension based on Guatemala’s progress in implementing the

plan. In October 2013, 6 months after the signing of the Enforcement

Plan, USTR, in consultation with DOL, determined that Guatemala had

taken sufficient steps to enact the legal instruments called for under the

plan. USTR and DOL granted the 6-month extension, noting that

significant work remained to ensure the full implementation of the

Enforcement Plan.

In April 2014, USTR, in consultation with DOL, granted Guatemala a 4-

month extension to continue its implementation of the Enforcement Plan

but retains the right to reactivate the arbitration panel at any point during

this period. In September 2014, the United States reactivated the panel

after determining that Guatemala had not met the terms of the

Enforcement Plan and that concerns over the enforcement of

Guatemala’s labor laws had not been resolved.

Figure 7 shows the timeline and status of the Guatemala labor

submission.

Appendix IV: Status of Labor Submissions

Page 74 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 7: Timeline and Status of Labor Submission Regarding Guatemala

Legend: DOL = U.S. Department of Labor; CAFTA-DR = United States-Dominican Republic-Central

America Free Trade Agreement.

In May 2012, DOL accepted a submission regarding Honduras, 49 days

after receipt. The submission remains open and unresolved, pending

publication of DOL’s report. The submission, from the AFL-CIO and 26

Honduran organizations, alleged that the government of Honduras had

violated its obligation under CAFTA-DR to enforce its labor laws relating

to freedom of association; the right to organize; child labor; the right to

bargain collectively; and the right to acceptable conditions of work in the

Honduran apparel and auto manufacturing, agriculture, and port sectors.

According to DOL officials, DOL has received over 1,200 documents in

Spanish and visited Honduras four times to meet with stakeholders,

reflecting the breadth of the allegations and detailed information reviewed

and analyzed. As of May 2014, DOL was continuing to review

documentation of the allegations and, according to DOL officials, is

preparing its report.

Figure 8 shows the timeline and status of the Honduras labor submission.

Honduras

Appendix IV: Status of Labor Submissions

Page 75 GAO-15-160 Labor Provisions in Free Trade Agreements

Figure 8: Timeline and Status of Labor Submission Regarding Honduras

Legend: DOL = U.S. Department of Labor.

In July 2011, DOL accepted a submission regarding Peru, 202 days after

receipt, which DOL closed as resolved in August 2012. The submission,

from the Peruvian National Union of Tax Administration

Workers (SINAUT), alleged that Peru’s National Superintendency of Tax

Administration (SUNAT), an executive branch agency of the Peruvian

government that oversees both customs and tax administration, had

failed to comply with Peru’s labor laws as they relate to collective

bargaining, in violation of the United States-Peru Trade Promotion

Agreement. In August 2012, DOL issued a public report finding that

although the Ministry of Labor and Promotion of Employment appeared to

have fulfilled its duties during the collective bargaining processes at issue,

SUNAT had failed to comply with certain elements of the Peruvian

Collective Bargaining Law, including deadlines for launching

negotiations. Further, with regard to all other issues raised in the

submission, DOL determined that important legal ambiguity during the

period at issue prevented a finding that SUNAT had failed to comply with

the law or that the government of Peru had failed to comply with, or

enforce, its own labor laws during that time. DOL’s report did not

recommend formal consultations between the U.S. government and the

Peruvian government. According to DOL, because the government of

Peru had taken important steps to address some of the issues raised in

the submission, including issuing legal instruments to help clarify legal

ambiguity and facilitate collective bargaining, DOL did not believe that

formal consultations were needed to continue positive engagement and

progress on these matters. As a result, DOL closed the submission as

resolved in August 2012.

Peru

Appendix IV: Status of Labor Submissions

Page 76 GAO-15-160 Labor Provisions in Free Trade Agreements

In September 2011, according to DOL, while it was reviewing the

submission, the government of Peru issued two executive orders that

clarified the parties’ collective bargaining duties in this and similar cases.

DOL’s report on the submission explained that on March 29, 2012, after

applying the recent executive orders, an arbitral panel reached a decision

favorable to SINAUT that contained both economic and noneconomic

awards for the union. Moreover, DOL reported that the government of

Peru appealed the ruling, contending that the ruling reflects a

misapplication and misinterpretation of the Public Sector Budget Law.

According to the DOL report, on appeal, the Peruvian labor courts

overturned the economic elements of the arbitral award, based on a ruling

that those elements conflicted with Peru’s Public Sector Budget Law, but

sustained the noneconomic elements of the award.

Figure 9 shoes the timeline and status of the Peru labor submission.

Figure 9: Timeline and Status of Labor Submission Regarding Peru

Legend: DOL = U.S. Department of Labor; USTR = Office of the U.S. Trade Representative.

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 77 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix V: Comments from the

Office of the U.S. Trade Representative

Note: GAO comments

supplementing those

in the report text

appear at the end of

this appendix.

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 78 GAO-15-160 Labor Provisions in Free Trade Agreements

See Comment 1

See Comment 2

See Comment 3

See Comment 4

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 79 GAO-15-160 Labor Provisions in Free Trade Agreements

See Comment 5

See Comment 6

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 80 GAO-15-160 Labor Provisions in Free Trade Agreements

See Comment 7

See Comment 8

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 81 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 82 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 83 GAO-15-160 Labor Provisions in Free Trade Agreements

See Comment 9

See Comment 10

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 84 GAO-15-160 Labor Provisions in Free Trade Agreements

See Comment 11

See Comment 12

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 85 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 86 GAO-15-160 Labor Provisions in Free Trade Agreements

The following are GAO’s comments regarding the Office of the U.S. Trade

Representative’s (USTR) letter dated September 16, 2014.

In its letter, USTR questions our evaluation of its monitoring and

enforcement of free trade agreement (FTA) partners’ compliance with their

labor commitments and expresses concern that we do not give sufficient

credit to U.S. agencies for their multifaceted work to help FTA partners

comply with their labor commitments. We acknowledge in our report that

the agencies have given, overall, greater political and organizational

priority to monitoring and enforcement of FTA labor commitments since we

last reported on this topic in 2009.

The evidence that USTR and the

Department of Labor (DOL) provided demonstrate that their monitoring

and enforcement activities have sometimes led to a strengthening of FTA

partners labor laws and practices that might not have occurred absent

these activities. Nevertheless, we stand by our current assessment that

USTR and DOL have not demonstrated a proactive and systematic

approach to monitoring and enforcing FTA partners’ compliance with their

FTA labor commitments, with the exception of a few partner countries.

Our review focuses on steps that USTR and DOL have taken, with support

from the Department of State (State), to monitor and enforce the labor

provisions in the FTAs. In reviewing USTR’s and DOL’s monitoring and

enforcement of the provisions in the FTA labor chapters, we looked for

the contrary, the evidence that the agencies provided shows that USTR’s

and DOL’s approaches and actions are generally ad hoc and leave

important gaps.

• evidence that USTR and DOL took steps to ensure that each FTA

partner had the requisite laws in place by the time the President

determined that the FTA could enter into force, as well as

• evidence that USTR and DOL have taken steps to ensure that the

partners are enforcing their laws and maintaining labor rights in law and

practice since the FTAs entered into force.

GAO, International Trade: Four Free Trade Agreements GAO Reviewed Have Resulted in Commercial

Benefits, but Challenges on Labor and Environment Remain, GAO-09-439 (Washington, D.C.: July 10,

2009).

At the same time, we stand by our prior decision to close recommendations from our 2009 report

because USTR and DOL had taken steps to increase engagement with all FTA partners on labor

matters and to identify and address labor compliance concerns in several partners.

GAO Comments

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 87 GAO-15-160 Labor Provisions in Free Trade Agreements

Further, because USTR announced in 2009 that it would not wait for

complaints (e.g., labor submissions) to investigate and address possible

inconsistencies with FTA provisions, we looked for evidence that the

agencies had established means or mechanisms to anticipate, analyze,

and resolve problems in the absence of a submission.

We consider the approach to monitoring and enforcement that USTR

outlines in its letter to be broadly compatible with the definitions of

monitoring and enforcement and with the key elements of monitoring and

enforcement that we have identified in our report. That is, enforcement

involves taking action to secure compliance by the partner, and monitoring

and enforcement typically involve six key steps: (1) gathering and

analyzing information, (2) setting priorities, (3) identifying compliance

problems, (4) developing and implementing responses, (5) taking

enforcement actions, and (6) coordinating with agencies.

Following are specific comments in response to USTR’s letter.

Comment 1: Throughout our year-long review process, we requested

documentation of USTR’s monitoring and enforcement of labor provisions.

However, USTR provided a large number of documents very late in the

process and provided most documents only after receiving our draft report.

We thoroughly reviewed and considered all documents that USTR

provided and made changes in our report as appropriate to ensure its

accuracy and completeness. Several of these changes are described in

the comments that follow.

Comment 2: The evidence that we obtained from USTR and DOL does

not support USTR’s assertion that the two agencies actively and

systematically monitored and enforced labor provisions in all 20 FTA

countries, implementing all of the key elements that we identified,

regardless of whether the country had been the subject of a submission.

USTR and DOL submitted evidence that they had taken some of these key

steps in several FTA partner countries, three of which—Colombia, Jordan,

and Panama—were not the subject of labor submissions. In addition, to

support its technical comments about a draft of our report, USTR

submitted further evidence of certain proactive steps, which we have

incorporated in our report as appropriate. However, in the absence of

evidence that USTR and DOL have taken steps to analyze and address

possible inconsistencies with FTA labor provisions in most partner

countries that have not been the subject of a labor submission, we could

not conclude that the agencies had implemented a systematic approach to

monitoring the implementation of all labor provisions in all FTAs. Moreover,

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 88 GAO-15-160 Labor Provisions in Free Trade Agreements

according to DOL—on which USTR relies for day-to-day monitoring of the

FTA partners—the division’s staff spent 80 percent of their work hours in

the past year monitoring implementation of the Guatemala Enforcement

Plan, addressing submissions for five other countries, and following up on

activities initiated under the Colombia Labor Action Plan. This left the

employees’ remaining work hours available to monitor and engage the

other 14 FTA partner countries. With the exception of Colombia,

stakeholders in countries we visited indicated that their recent interactions

with USTR and DOL had been very limited. Stakeholders in these

countries also told us that the FTA labor affairs councils in their countries

had been largely inactive and that the councils’ meetings were considered

a formality.

Comment 3: Having reviewed all of the cables that State provided, we

consider them a useful tool for DOL and State to obtain information about

labor conditions in partner countries. Our report acknowledges that USTR

is an addressee on such cables and is generally well informed about labor

conditions in partner countries as a result of this and other input. Obtaining

and analyzing information from credible sources such as State is integral

to completing the first step of the monitoring and enforcement process.

Comment 4: USTR states that it deploys a range of tools to try to resolve

concerns, whether they were identified formally or informally. However, we

found that USTR’s and DOL’s approach to addressing concerns that were

identified formally, such as by a submission, is more systematic than their

approach to addressing concerns that they have identified informally. For

example, in responding to a labor submission, DOL conducts a formal

review and issues an official report, which generally identifies any possible

inconsistencies with labor provisions in the FTA and contains specific

recommendations to resolve the issue. DOL and USTR typically use the

report’s findings to further engage with the FTA partner country and

develop an action plan, such as in the case of Guatemala. When they

have identified a concern informally, USTR and DOL may engage with the

partner country to discuss the concern, usually in the context of an

established FTA mechanism such as the FTA labor affairs council or free

trade commission. However, we found that USTR and DOL use these

mechanisms infrequently, and USTR and DOL officials told us that except

for a few high-priority countries such as Colombia, the agencies do not

typically perform in-depth analysis of a partner country’s compliance with

its FTA labor commitments unless the country has been the subject of a

submission.

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 89 GAO-15-160 Labor Provisions in Free Trade Agreements

Comment 5: We acknowledge that USTR’s work with Colombia did not

end with the ratification of the FTA. We added text to our report to indicate

our concurrence with this point and to illustrate USTR’s postratification

monitoring and enforcement activities.

Comment 6: We acknowledge that USTR and DOL have engaged

extensively with the government of Colombia to monitor the

implementation of the Labor Action Plan, in the process addressing

several of the key elements of monitoring and enforcement FTAs.

However, we cannot conclude that a systematic approach to monitoring

and enforcement labor provisions is in place, because we did not see

evidence of certain key elements—for example, an approach to respond to

outstanding issues identified since the implementation of the Labor Action

Plan.

USTR also indicates that its level of engagement to monitor and enforce

labor provisions in Colombia is not unique and that USTR and DOL have

engaged with other FTA countries to a similar extent as with Colombia.

However, we did not see evidence of such a level of engagement with

other countries that have not been the subject of a submission. In fact,

DOL reported that in the last year, its monitoring division staff spent 80

percent of their time following up on the Colombia Labor Action Plan

activities and addressing submissions.

Comment 7: We do not assume or indicate that a tailored, country-specific

approach to labor monitoring and enforcement is inappropriate, and we do

not exclude such approaches from our evaluation. We reviewed the

documentation that USTR and DOL provided, looking for evidence that key

elements of monitoring and enforcement have been implemented. We

recognize that USTR and DOL have successfully implemented certain

steps, such as gathering information and identifying compliance problems,

using different methods in different countries. However, we did not see

evidence of an overarching strategy that assures that priorities and

problems are systematically addressed.

Comment 8: We evaluated all evidence that USTR and DOL provided,

including documentation that USTR provided with its technical comments,

and we made changes to our report. Specifically, we incorporated

language acknowledging that in some partner countries, the agencies took

steps before and after FTA ratification that were consistent with key

elements of monitoring and enforcement and that likely contributed to

assuring that the partners met certain labor commitments.

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 90 GAO-15-160 Labor Provisions in Free Trade Agreements

Comment 9: We acknowledge that the labor submission process is a

central component of USTR’s and DOL’s approach to addressing possible

inconsistencies with FTA labor provisions in partner countries and that the

agencies have done extensive work to investigate allegations in the

submissions that DOL has accepted. However, in our view, reliance on

labor submissions to assess compliance and take enforcement actions is

inconsistent with USTR’s 2009 commitment to no longer enforce FTA

partners’ labor commitments “only on a complaint-driven basis” but instead

to “immediately identify and investigate labor violations.”

Comment 10: As stated, the report acknowledges that labor submissions

are a key component of USTR’s and DOL’s monitoring and enforcement of

FTA labor provisions and that the agencies undertake considerable

research and analysis in the process of addressing submissions We

modified the text of the report to clarify that after DOL receives a

submission, it works with USTR and State to engage diplomatically to

address concerns, as well as independently to investigate and analyze the

issues.

Comment 11: We acknowledge that USTR and DOL work together to

address labor concerns identified in submissions and to engage with

partner countries regarding labor matters. Our review of evidence obtained

from the agencies and in FTA partner countries generally confirmed that

USTR and DOL also coordinate on an ad hoc basis. However, the

evidence that we reviewed did not show that the agencies have developed

a coordinated, strategic approach to systematically address the key steps

of monitoring and enforcing labor provisions in all FTAs and to address

labor conditions that may be inconsistent with FTA provisions, such as the

conditions identified in DOL’s management reports. For example, agendas

that USTR provided for two meetings of the interagency Subcommittee on

Labor Monitoring and Enforcement list meeting topics but do not detail

expected actions or outcomes; USTR provided no record, beyond a

general description, of what transpired at the meetings or of any intra-

agency correspondence following the meetings. Further, during our

interviews with USTR officials, the officials discussed items that the

interagency process had not produced, such as up-to-date assessments of

risk; agreed-on priorities; and formal action plans for partners other than

Office of the U.S. Trade Representative, “Ambassador Kirk Announces New Initiatives for Trade

Enforcement” (press release), July 16, 2009, accessed July 18, 2013, http://www.ustr.gov/about-

us/press-office/speeches/transcripts/2009/july/ambassador-kirk-announces-new-initiatives-trade.

Appendix V: Comments from the

Office of the U.S. Trade Representative

Page 91 GAO-15-160 Labor Provisions in Free Trade Agreements

Colombia, Guatemala, and Jordan. For example, USTR officials indicated

that a previous interagency effort to develop a comprehensive risk-based

approach had been overtaken by events and not revised. DOL officials

indicated that in general, there had been no discussion of cross-agency

resource use However, our

work on best practices in collaboration has

shown that agencies can enhance and sustain their collaborative efforts by

engaging in the following eight practices: (1) define and articulate a

common outcome; (2) establish mutually reinforcing or joint strategies; (3)

identify and address needs by leveraging resources, (4) agree on roles

and responsibilities; (5) establish compatible policies, procedures, and

other means to operate across agency boundaries; (6) develop

mechanisms to monitor, evaluate, and report on results; (7) reinforce

agency accountability for collaborative efforts through agency plans and

reports; and (8) reinforce individual accountability for collaborative efforts

through performance management systems.

Comment 12: Our report does not state that USTR should explicitly

accuse partner countries of trade violations in its annual report to

Congress. Our report states that, reflecting in part USTR’s and DOL’s

limited monitoring and enforcement of these provisions, USTR’s annual

report generally does not detail concerns about the implementation of FTA

labor provisions by partner countries that have not been the subject of

labor submissions. Our report also states that appropriate information

resulting from more extensive monitoring and enforcement could help

inform Congress and other U.S. stakeholders about the extent to which

trade partners are fulfilling their FTA labor commitments.

Appendix VI: Comments from the

Department of Labor

Page 92 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix VI: Comments from the

Department of Labor

Appendix VI: Comments from the

Department of Labor

Page 93 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix VI: Comments from the

Department of Labor

Page 94 GAO-15-160 Labor Provisions in Free Trade Agreements

Appendix VI: Comments from the

Department of Labor

Page 95 GAO-15-160 Labor Provisions in Free Trade Agreements

Page 96 GAO-15-160 Labor Provisions in Free Trade Agreements

Kimberly Gianopoulos, (202) 512-8612 or gianop[email protected]

In addition to the contact named above, Kim Frankena (Assistant

Director), Francisco Enriquez (Analyst-in-Charge), Juan P. Avila, Nicholas

Jepson, Jill Lacey, Reid Lowe, Grace Lui, and Oziel Trevino made major

contributions to this report.

Appendix VII: GAO Contact and Staff

Acknowledgments

GAO Contact

Staff

Acknowledgments

(320980)

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