Sanctions or No Sanctions: Enforcing Labour Provisions in Free Trade Agreements

The inclusion of labour provisions in trade agreements which commenced with the North American Free Trade Agreement (NAFTA) in the 1990s and other developed countries such as Canada and the EU saw the reaffirmation and implementation of commitments undertaken as part of the International Labour Organization (ILO) Conventions that these countries have ratified – with specific emphasis on respecting, promoting and realizing the core labour standards. While the general commitments and the nature of labour standards included in different agreements are largely similar, the approaches to enforce these standards under various agreements have differed widely. While the major developed economies (US, Canada and the EU) all include substantive labour provisions in their trade agreements as a standard practice now, their approaches to enforcement of these provisions are strikingly different (with US-Canada approach largely similar). These two contrasting approaches are – (1) that entails a possibility of monetary assessment, countermeasures or suspension of preferential benefits (sanctions based) and (2) that is based exclusively on recommendations and directions by a Panel of Experts as part of the dispute resolution process without any possibility of economic assessment (non-sanctions-based). This article provides an overview of these two main approaches towards enforcement of labour provisions in trade agreements. In light of the recent emphasis placed on including stronger enforcement mechanisms within the Free Trade Agreements (FTAs’) on sustainability, specifically in the EU this article examines the two approaches and highlights the approach which would be better suited for enforcing labour standards. Labour Standards, occupational safety and health, TSD, Dispute Settlement, Enforcement, NAFTA, NAALC, USMCA, Labour Provisions in FTAs’, Rapid Response Labour Mechanism, ILO Conventions, EU-Korea Labour Dispute, countermeasures, monetary assessment, suspension of benefits.