Nine Years of The Labor Side Agreements Show the Real Effect of NAFTA
on Mexican Workers
By Claudio Romano
In a campaign speech discussing his position on the North American Free
Trade Agreement (NAFTA) and his general philosophy on trade, then-Arkansas
governor and presidential candidate Bill Clinton committed the nation to
the improvement of labor rights in Mexico. Mr. Clinton proposed to the
leadership of America's unions a trade policy for the twenty-first century
that would "maintain U.S competitiveness and preserve the interest of
workers, who inevitably and often times are adversely affected by free
trade." The AFL-CIO and many union leaders grudgingly agreed with
this position at first, but ultimately, agreed to give it a chance. We
believe NAFTA has more than had its chance.
Following his election in 1992, President Clinton pursued this announced
course by negotiating a side accord to NAFTA called the North American
Agreement on Labor Cooperation (NAALC). Two stated objectives of the NAALC
are to "improve working conditions and living standards in each
Party's territory" and to "promote compliance with, and
effective enforcement by each Party of, its labor law."
Mexico lacks appropriated mechanisms to enforce its laws because
multinational and Mexican companies control the state apparatus for their
own benefit. Furthermore NAALC has failed to facilitate such enforcement.
Consequently, improvements in Mexican working conditions never took place.
Since its commencement, the procedural operation of the NAALC has
continually denied adequate recourse for demonstrated labor abuses in
Mexico. As a result, the abrogation of NAFTA is needed.
The convoluted Structure and Procedures of the NAALC.
The NAALC consist of a Commission for Labor Cooperation, which is
comprised of a Ministerial Council, Secretariat, and a National
Administrative Office (NAO) in each country.
The NAO is the entity with which outside parties file complaints alleging
labor abuses, thereby commencing the first stage of the dispute resolution
process. After a complaint is filed, the NAO has discretion to determine,
within sixty days of receipt, it review is warranted. Generally,. The NAO
Secretary is directed to accept submission for review when it appears the
side accord has been violated. However, the Secretary may decline
acceptance of submission under several specific circumstances. If a
submission is accepted for review, the NAO may conduct additional
examination or investigation to develop a factual record. Typically, the
NAO will conduct a public hearing to receive sworn testimony on the
Within four months of acceptance of the submission, the NAO Secretary is
require to issues a public report. If not violation in found the decision
stands as final. Following such a determination, further inquiry into the
participating nations. If the NAO finds a violation and concludes that the
matter has not been adequately resolved since the commencement of the
proceedings, the NAO Secretary may request Ministerial Consultations.
Recourses beyond the level of Ministerial Consultations depends, in large
part, on the nature of the violation and the NAO findings. If the
violation deals with general labor rights issues, no further recourse is
available beyond Ministerial Consultations. If the violation pertains to
"occupational safety and health or other technical labor
standards," and the matter remains unresolved following Ministerial
consultations, and Evaluation Committee of Experts (ECE) may be
established at the request of an involved party.
Once convened, the ECE conducts its own review of the initial findings,
and draft report on the matter must be presented to the Council within
four months, with a final report issued within another sixty days. If a
nation remains unconvinced that the matter is adequately resolved, it may
request additional consultations. If the consulting parties fail to
resolve the dispute, a special session of the Council may be convened.
This phase is designed to apply pressure on the involved parties to settle
the dispute. If the dispute remains unresolved, the Council may convene an
arbitration panel to facilitate final resolution of the dispute. However,
several factors significantly restrict the use of arbitration.
Theoretically, the arbitration panel is comprised of five members. Each
disputing party selects two panelists, who are nationals of the opposing
party. A final report is issued directly to the disputing parties within
sixty days of the initial report. Within fifteen days, the disputing
parties are required to transmit the final report to the Council. If a
violation covered under the NAALC is found, the parties may agree upon and
implement an action plan to resolve the dispute. If the disputing parties
are unable to reach agreement on an appropriate action plan carried out, a
party may call for the arbitration panel to reconvene. Once the
arbitration panel has reconvened, it may approve the agreed upon action
plan, impose a new plan, or issue a monetary fine no greater than twenty
million dollars. The agreement provides for additional recourse if the
fine is not paid, which includes suspension of NAFTA benefits for monetary
amount not to exceed the original assessment. At its most efficient level
of operation, this dispute resolution system can take well over two years
before final resolution. In reality, "efficiency" was never
NAALC Submissions On Violations of Workers' Rights
This article includes analysis of a representative six submission out of a
total of eleven that have been filed to date. These submissions have been
selected as a representative group based on the diversity of issues raised
in the complaints and as a broad sampling of the various ways to determine
if, after five years in practice, the NAALC has been effective in
redressing the non-enforcement of the labor standards it was designed to
On February 14, 1994, Submission No. 940001was filed against Honeywell
Manufacturas de Chihuahua, and Submission No. 940002 was filed against a
subsidiary of General Electric Corporation. The submission against the
Honeywell subsidiary alleged that workers' wages were significantly
depressed, company representatives made illegal threats of dismissal
against workers involved in union organizing, and the company dismissed
approximately twenty workers for union activities. Submission No. 940002
alleged that the General Electric subsidiary curtailed union organizing by
thwarting information dissemination, unlawful dismissing twenty workers
for union organizing activities, and violating several health and safety
regulations at the plant. The U.S NAO accepted the submission for review
on April 15, 1994, roughly sixty days after the initial filing.
On October 12, 1994, a full eight days after the initial filing, the NAO
issued a public report and made no findings regarding the substantive
allegation in either complaint. The NAO did suggest, with regard to the
Honeywell subsidiary case (no. 940001), that the timing of worker
dismissals at the plant coincided with union organizing efforts. As a
result of this "coincidence" and the suspicion that the workers'
complaints must be substantiated, the NAO recommended public information
exchange and other cooperative programs between the signatory nations to
discuss the matter raised in the report and to foster a better
understanding of each nation's labor laws. However, the NAO did not
recommend additional recourse for the dismissed and threatened workers.
On August 16, 1994, Submission No. 940003 was filed against Magneticos de
Mexico (MDM), a subsidiary of Sony Corporation.The complaint alleged
violations of Mexican labor laws regarding work hours an freedom of
association, including an allegation that the company fired workers due to
their union activities. The U.S. NAO accepted the submission for review on
October 13, 1994, and issued a public report of its findings on April 11,
1995, a full six months after submission. The NAO , employing the same
analysis as in its first two submissions, focused its inquiry on whether
Mexico adequately enforced its labor laws, rather than evaluating whether
a particular company violated those laws.
In the area of union elections, the NAO found "considerable
testimonial evidence" confirming allegations of irregularities in the
union election. The NAO labeled allegations of evidence against workers
"disturbing" and discovered serious deficiencies in the union
registration system. As a result of these findigns, the NAO recommended
Ministerial Consultations. The Ministerial Consultation resulted in an
"Agreement on Implementation" signed by the Labor Minister on
June 26, 1995. On May 10, 1996, twenty-one months after the initial
filing, the Mexican and U.S. NAOs announced that the agreement
requirements had been fulfilled. In a follow-up report, the NAO stated
that the consultation made progress but noted the workers fired from the
Sony subsidiary remained unemployed.
Submission No. 9601 was filed in June 13, 1996, against the Federal
conciliation and Arbitration Tribunal (FCAT), one of the Mexican
governmental agencies charged with arbitrating employment relations
issues. The allegations responded to an action by the government of
Mexico, which, in the process of consolidating some of its federal
bureaucracy, eliminated the independent majority union at one of its
governmental agencies. The complaint alleged that the FCAT violated
Mexican labor laws by failing to recognize the independent union. It also
alleged that Mexico failed to maintain its FCATs in an impartial
manner.The complaint went on to criticize Mexican public labor law, which
prohibits more than one union from being recognized in a public work
place. The U.S NAO accepted the submission for review on July 29, 1996.
Six months later, on January 27, 1997, the NAO issued a public report
finding that the governmental mechanisms in place provided adequate
recourse for workers, but the composition of the FCATs "crate[d] the
appearance of lack of impartiality."
Ministerial Consultations were recommended and commenced to promote an
understanding of rights related to freedom of association in Mexico and to
further study Mexico's ability to enforce those rights within its existing
administrative framework. The Ministerial Consultations are still pending,
and this nearly seven-year-old complaint has not yet been resolved.
Submission No. 9701 was filed on May 16, 1997, against various private
sector employers in several regions in Mexico. The complaint alleged
gender discrimination against pregnant women and a failure of the
government to respond. Specifically, the complaint alleged that
pre-employment pregnancy tests were utilized to intentionally screen out
pregnant women. Allegedly, women who became pregnant on the job faced
dismissal or harassment in employer efforts to avoid maternity leave
payments. The NAO accepted the submission for review on July 14, 1997, and
released its findings nearly six months later on January 12, 1998. The NAO
acknowledged that pre-employment pregnancy screening, which may be
violation of international law and is questionable under Mexican law, is
prevalent in the Maquiladoras. The NAO also discovered that post-hire
pregnancy discrimination is prevalent, and many Mexican women are unaware
of their available options to combat this form of illegal sex
discrimination. Because of these findings, the NAO recommended Ministerial
Consultation to "clarify the law and practice in Mexico on
pre-employment pregnancy screening and post-hire discrimination on the
basis of pregnancy." Action on this matter is still pending at the
Ministerial level twenty-one months after the original filing.
Submission No. 9702 was filed on October 30, 1997, against a Mexican
subsidiary of Han Young Corporation. The complaint alleged that the
company attempted to thwart employee efforts to form an independent union
through intimidation, coercion, and harassment. A supplemental complaint
was added to the Han Young case on February 9, 1998 to address alleged
health and safety violations at the same plant. The complaint alleged
violations of health and safety laws and regulations resulting in various
injuries and ailments and further alleged that the Mexican government
failed to enforce health and safety laws at the plant.
The NAO accepted the Han Young subsidiary case for review on November 17,
1997 and issued a report of finding on April 28, 1998. In its report, the
NAO substantiated many of the allegations, stating "[t]he workers in
question have expressed their union preference through two representation
elections, strikes, and fasts, and in the face of determined opposition
from the company, including intimidation threats, and dismissals."
Serious questions were also raised about the ability or willingness of
Mexico's Conciliation and Arbitration Board (CAB) to enforce freedom of
association rights to form ad independent union.
On August 11, 1998, the U.S. NAO issued a public report of its findings
regarding the supplemental complaint and again substantiated many of the
claims identifying details of a hazard filled work place. Specifically,
the report found,
The information from expert witnesses, workers ad inspection reports is
and credible in describing a workplace polluted with toxic airborne
contaminants, strew with electrical cables running through puddles of
water, operating with poorly maintained and unsafe machinery, and numerous
other violations and omissions of minimum safety and health standards.
The NAO also found that the health and safety inspections conducted by the
Mexican government were ineffective, and despite frequent inspections,
violations continued unabated. As a result of these findings, the U.S. NAO
recommended Ministerial Consultations, which never took place.
Mexico Does Not Enforce Its Labor Laws
Although substantive Mexican laws contain protections of worker rights, it
is apparent that Mexico does not adequately enforce its labor laws.
Sources of worker protection in Mexico include the Political Constitution
of the United States of Mexico, the Mexican Federal Labor Law, and many
international agreements to which Mexico is a party such as ILO
conventions. Although these laws provide a sufficient legal basis for
enforcement of basic worker rights, the U.S. NAO has found frequent and
continual corporation illegal operating in Mexico, in addition to a lack
of enforcement by the government of Mexico.
Most Mexican workers are unaware of their rights and that the
administrative and legal institutions in place have thwarted, rather than
assisted, workers attempting to utilize such mechanisms. This shows that
Mexico's administrative mechanism lacks the will to address worker rights
violations.Specifically, several of the submissions substantiate testimony
and evidence indicating that the CABs, the three-member government panels
empowered to prevent employer misconduct, lack impartiality and
discrimination against workers by overturning union certification votes
based on administrative minutia.
In the Han Young subsidiary case (No. 9702), the U.S NAO found significant
and unimpeded health and safety violations. In other cases, the use of
threats, fear, and intimidation by employers to quell union organizing
drives is common. The charges indicate that despite government
inspections, workers continued to be employed in a hazard filled workplace
and that although fines were assessed against the company, the NAO was
never able to ascertain if Mexican authorities collected the fines. In the
Sony subsidiary case (No. 940003), the NAO determines that Mexican
workers, who may have been wrongly dismissed and had their union election
tampered with, enjoyed little reasonable legal recourse.
These and other examples illustrate that even with the specter of public
attention and mounting pressure, Mexico continues to have a poor record of
enforcing its labor laws. The research demonstrates that when Mexico makes
and effort to enforce its laws, the institutions charged with enforcement
suffer from administrative indifference and bias. Furthermore, the cases
demonstrated that the legal goal of the NAALC in ensuring Mexico's
enforcement of its labor laws has failed.
NAALC's Failure to Promote Mexican Worker Rights
NAALC proved itself incapable of ensuring that Mexico's labor laws are
enforced and as a result, it has little or no effect in correcting
specific violation of individual worker rights.
The significant shortcoming of the NAALC fall into three sub-fields.
First, the NAALC is structurally flawed in that it exempts many alleged
abuses from condemnation under the NAALC system. Second the Ministerial
Consultation process has not provided for resolution of worker's issues.
This is evidenced by discover that the workers bringing complaints rarely
see any improvement in their specific situations. Third, administration of
the NAALC process utilizes an unreasonable amount of time and resources.
Under the side accords' matters of great significance, including those
related to freedom of association, the right to strike, the right to
organize, and other industrial labor issues, are given lower priority.
Thus, if raised in a complaint, these issues are not permitted to move
beyond the Ministerial Consultation phase of the NAALC process. In regard
to disputes covering these issues, the NAALC solely sets forth a system
fostering disciplinary action or alternative dispute resolution. In the
areas of child labor, occupational health and safety, and other concerns,
the NAALC expanded the alternatives by permitting the creation of a panel
of experts, followed by an additional series of consultation and
eventually an arbitration system that may administer sanction. The
consequence is that many significant worker rights issues go un-addressed.
Many of the issues excluded from protection, such as freedom of
association and the right to strike, are foundational rights, which permit
workers to advance their cause collectively.
Ministerial Consultations Do Not Facilitate Justice
The meeting of Labor Ministers, when they have been conducted, have not
resulted in meaningful resolution of the identified worker rights
violations. For example, in the Sony subsidiary case (No. 940003), the
Ministerial Consultation called for an examination of the laws applicable
to union registration and certification. They also called for a review of
the efficacy of each government in implementing and enforcing those laws.
While information exchange can be a valuable attribute by leading to a
broader understanding of each nation's labor laws, it does not directly
address the injustices experienced by the workers who failed the
submission twenty-one months prior, nor does it result in their
re-employment. The particular workers harmed did not witness any positive
change as a result of the consultations, but instead experienced reprisals
for filing a complaint in the first place.
Similarly, in the submission alleging pregnancy discrimination against
several employers in the Maquiladora region of Mexico (No. 9701) the NAO
discovered that this form of discrimination is prevalent on Mexican
society and that the Mexican government is aware of the problem. In
response to the findings, NAO recommended that Ministerial Consultations
"clarify the law and practice in Mexico on pre-employment pregnancy
screening and post-hire discrimination on the basis of pregnancy."
Nearly four years have passed since the complaint was filed and no
substantive action has alleviated the discrimination. If nothing else, the
international attention produced by the proceedings may caused Mexican
employers to discriminate more discreetly in order to avoid liability or
further international scrutiny. In this instance, the Ministers were
unable to develop a timely strategy to reverse the discrimination allowing
the abuses to continued unscathed.
The Han Young subsidiary case (No. 9702) illustrates a related problem. In
that submission, the NAO discovered severe health and safety violations
and employer abuses. Indeed, the case stands as an illustration of some of
the impudent abuses that the NAO has publicly reported. Yet, when the NAO
recommended Ministerial Consultations, it suggested that the meeting focus
of the implementation of proposals the Government of Mexico had itself
developed and on discussions of strategies Mexico might employ in the
future. These examples demonstrate that when Ministerial Consultations are
fully employed their performance is useless at best.
The evidence clearly demonstrated that consultations, though designed to
facilitate substantive results, amount to little more that high level
meetings that gloss over the issues in dispute by ordering reports,
studies, and other forms of information exchange. Additionally, the scope
of the recommended mandate the Ministers receive from the NAO often times,
as illustrated explicitly in the Han Young case, falls far short of what
is required to obtain substantive results. If Ministers were called upon
to resolve specific dispute as opposed to reviewing problems in the
abstract, more substantive results would be obtained.
NAALC Consumes Time and Resources
The procedures established in the NAALC result in an unjustly protracted
process an allow an unreasonable amount of time to pass before disputes
are resolved. Structurally, once a complaint is filed, the NAO is given
two months to decide whether to accept the submission and then has an
additional four months to issue a preliminary report. For most disputes,
six months may pass before Ministerial level meeting commence. If the
issue in dispute moves forward, the ECE is granted and additional six
months before its final report is transmitted. The inefficiency of this
skeletal structure is clearly illustrated through a review of the various
In the first two submission regarding the Honeywell and General Electric
subsidiaries (No. 940001and No. 940002, respectively), the NOA took
approximately eight months from the date of filing to issue its Public
Report thereby concluding the action. The Sony subsidiary case (No.
940003) took a full twenty-one months before final resolution was
Other submission, which have been ongoing for months, and some for years,
remain unresolved. The FCAT case (No. 9601), filed on June 13, 1996, is
still pending final resolution, nearly seven years after the filing date.
The Han Young subsidiary case (No. 9702), originally filed on October 30,
1997, has yet to be resolved. The NAO issued two reports with regard to
this submission on April 38, 1998 and August 11, 1998, respectively. In
both instances, the NAO recommended Ministerial Consultations, using
strong language to express concern over the labor abuses taking place.
Yet, as of April 1999, no additional findings have been made and no
strategy has been employed to resolve the matter.
The time frames established in the NAALC and the resulting prolonged
advancement of submission through the process indicate a system that is
neither efficient nor result-oriented.
It is clear that after eight years in practice, the NAALC has worsened the
standard of living of Mexican workers and made it more difficult for them
to organize to improve such standards. NAFTA and the NAALC must go.
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