Twenty Years of Progress at Risk: Labor and Environmental Protections in Trade Agreements

Antigua, Guatemala. Photo by Rodrigo Escalante via Unsplash.

Over the last two decades, many governments have incorporated clauses in free trade agreements that commit treaty members to promoting good labor and environmental laws as well as outcomes. The logic is that countries should not gain competitive advantage in trade by undermining or failing to protect workers’ rights and the environment. The commitments typically require adherence to national and international labor and environmental standards, laws or conventions.

To the shock of most observers, the US lost its case against Guatemala for repeated violation of labor rights and labor laws. Negotiators now appear to be advancing the very language that eviscerated labor commitments in the US-Dominican Republic-Central America Free Trade Agreements (CAFTA-DR) and would do the same with regard to environmental obligations.

A policy brief by Sandra Polaski outlines how two limiting clauses in the labor template torpedoed the effort to protect workers in Guatemala and draws lessons for the renegotiation of the North American Free Trade Agreement (NAFTA) and changing template for global trade policy more broadly. Polaski concludes that if a renegotiated NAFTA is to protect workers and the environment more effectively than trade agreements have done to date, negotiators will need a much bolder approach on labor and environmental clauses. The outcome of the renegotiated NAFTA will demonstrate whether lessons have been learned from the failure of the Guatemala labor case and whether the NAFTA governments have the will to ensure that their trade agreements protect labor and environmental rights as vigorously as they protect intellectual property rights, investment and other interests.

Read the Policy Brief