Free Trade Agreements, Due Diligence and Labor Relations

Abstract

Labour and employment relations are sensitive policy areas in any country. The strength of legal protections for workers' right to organize and bargain collectively influence the negotiating strength of labour and employers and thus the resulting distribution of profit and income. In the political realm, the relative strength of organized labour is a factor in shaping overall social policy. Thus when involved in interstate relations, governments typically resist any compromise of their sovereignty in the employment relations policy realm. Over recent years, however, trade agreements have increasingly addressed these issues, not least because the offshoring of jobs has made trade and the treatment of workers abroad a salient political issue in many industrialized economies. This chapter explores the approaches to labour taken by the United States (US) and European Union (EU) in trade agreements, with a particular focus on the integration of the US, Mexico and Canada. The chapter discusses the differences between the US and EU approaches, from the integration of the EU itself to its current emphasis on due diligence legislation as an alternative approach to regulating cross border corporate behavior, including labour rights. It concludes with a discussion of prospects for future trade and labour linkage.

Keywords: Trade and Labor, Corporate due diligence legislation, Cross-border governance of labor rights, USMCA, RRM