Albion Monitor /News

NAFTA Flaw Leaves Workers Without Rights

by Peter Zirnite

Foundation of NAFTA depends on the exploitation of workers

(IPS) WASHINGTON -- The first three years of experience have proven that NAFTA fails to protect workers, largely because the accord lacks an adequate enforcement mechanism.

And addressing the shortcomings of the labor side agreement, will be a formidable task because the free-market economic policies that serve as the foundation for NAFTA depends on the exploitation of workers, according to a study released on November 21.

"Unless labor rights are given the same importance as corporate property rights, workers are going to be pitted against each other in country after country"

The 27-page report of "NAFTA's Labor Side Agreement: Lessons from the First Three Years" analyzes the performance of institutions that are charged with handling labor rights violations under the trade accord, focusing on the failed efforts of workers to form an independent union at a Mexican electronics plant.

What author Jerome Levinson, former general counsel at the Inter-American Development Bank, found was a "story of betrayal" in which the labor provisions didn't provide workers with the protections NAFTA advocates assured them they would receive when the side agreement was negotiated.

The "fatal flaw" in the labor accord is that there is "no legal bridge from the side agreement to the main agreement," according to Levinson, who recommends that it be renegotiated so that trade sanctions can be applied to ensure that "core labor rights," freedom of association, collective bargaining and strikes are not violated.

Levinson, currently a professor at American University law school, said the woeful inadequacies of the labor side agreement were illustrated clearly by the unsuccessful unionizing efforts of workers at the Magneticos de Mexico (MDM) plant in Nuevo Laredo.

The some 1,700 workers at the MDM plants, which produce computer disks, video tape, and audio cassettes tapes for Sony Electronics, a U.S. subsidiary of the Japanese conglomerate, were represented by the Mexican Workers Confederation (CTM). In late 1993, workers attempted to use a change in local leadership to break with the CTM, which is closely affiliated with the ruling Institutional Revolutionary Party, a form an independent union.

"The MDM workers, and their attempt to elect their own union leadership on fair elections never had a chance," writes Levinson, who represented the workers during their legal struggle. "The deck, from the beginning of their effort, in both Mexico and Washington, was stacked against them."

The eventual election, he says, was "rigged" by CTM official "in collusion with the company" in an effort assure continued dominance of the government-backed union. Unionizing efforts were also hurt by the fact that "Mexico was in violation of the labor side agreement from day one" because members of the tribunal charged with enforcing national labor law had a "vested interest" in maintaining CTM's dominance, Levinson argues.

Independent union activists, many of whom had been fired, then took their grievances to the dispute panel established under the labor side agreement -- formally known as the North American Agreement on Labor Cooperation (NAALC).

The panel found that many of the workers' allegations about company intimidation were "plausible," but the only remediation that it could offer was "ministerial consultations" because the side agreement lacked enforcement powers.

"The story that emerges out of the MDM experience is a story of betrayal," Levinson writes in the study, published here by the Institute for Policy Studies and the International Labor Rights Fund.

But it also is a story that provides labor activists with many lessons, the most important being the need to link enforcement of basic workers rights to NAFTA and other trade accords.

"Without this, countries face a strong temptation to compete for scare investment capital by creating or maintaining a repressive labor relations system," the study says, emphasizing that such a link must be made as part of the main agreement.

"Unless you insist that labor rights are given the same importance as corporate property rights, workers are going to be pitted against each other in country after country," Levinson said.

Unlikely that U.S. will take a strong pro-labor stance at upcoming WTO meeting

Applying the lessons of the past three years will be difficult, Levinson concedes, mainly because free-market economic policies are inherently biased against workers.

"Having committed itself to an economic strategy focused on privatization and attracting foreign capital, the Salinas Administration was determined not to allow potentially recalcitrant labor union to obstruct these objectives," Levinson writes.

Once implemented, he adds, this neoliberal economic program created "massive unemployment and job insecurity," which "puts a damper on any worker protests against working conditions or salary levels."

Levinson blasts the World Bank, one of the leading advocates of neoliberalism, for having "an almost paranoid preoccupation with the 'monopoly power' of unions to set wages and conditions of work in the present international environment, where core worker rights are barely respected."

Many Bank policies, he argues, are "simply disguised attacks on the capacity of unions to negotiate effectively on behalf of their members," he argues.

Whether Washington has learned the lessons of the NAFTA labor side agreement will be put to test this month at the World Trade Organization ministerial meeting in Singapore. Levinson pointed out that so far President Bill Clinton has opposed efforts to exclude the formation of a WTO "working group" on labor rights.

What remains to be seen, he said is "will the administration stick to that position, or will it capitulate, as it has in the past."

With officials from the multinational corporations and investment firms that have benefited from free trade now serving in key administration posts, and donating liberally to both major political parties, Levinson said he's skeptical about the chances of the United States taking a strong pro-labor stance at the WTO meeting.

The fight to "put on the s plane of importance as corporate property rights" now rests in the hands of union activists, according to Levinson. "The question," he said, "is how much of a stink will labor make."

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Albion Monitor December 3, 1996 (

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