Canada and Peru have just signed a free trade agreement which could mark a major step forward on the road to a humanization of international trade regulations. The future will tell whether – contrary to past experiences – governments, companies and unions will implement the new provisions aimed at promoting workers’ rights.
The agreement was announced ten days ago while the World Economic Forum’s annual meeting was taking place in Davos, and went totally unnoticed. Admittedly, this is not Canada’s first free trade agreement. With trade totalling only 2.4 billion between the two countries, there does not seem to be much to get excited about, except perhaps for Canadian mining companies interested in Peru’s rich mineral resources.
The treaty is nonetheless accompanied by a highly interesting environmental side agreement, aimed at reinforcing the preservation of Peru’s exceptional biological diversity, as well as the protection of the traditional knowledge of indigenous communities. It is also accompanied by another side agreement centred on labour regulations and working conditions, which aims to be the most ambitious of its kind ever signed between two countries.
The concept of side agreements is not new in itself. Over ten years ago, the North American Free Trade Agreement (NAFTA) was accompanied by the North American Agreement on Labour Cooperation and the North American Agreement on Environmental Cooperation. These two agreements were imposed on Canada and Mexico by Bill Clinton in order to reassure the American Congress that companies would not take advantage of NAFTA and the suspected lax enforcement of labour standards and environmental regulations in Mexico. The results obtained were disappointing, to say the least, often because there was no possibility for sanctions and a lack of interest on behalf of the governments, and because environmentalists and trade unionists preferred to fight other battles.
Since then, Canada has continued to include such side agreements in its free trade treaties. It has sought to improve the provisions to some extent, in view of the unsuccessful experiences of the past. The United States once again gave new impetus to this process last year.
There was in fact some talk of a draft free trade agreement between the United States and Peru. The new Democratic majority in Congress refused to ratify it unless significant improvements were made to the provisions on the protection and promotion of the rights and living conditions of workers. The final treaty signed by the Americans and the Peruvians places workers’ rights on the same footing as the other provisions in the agreement, which has never been done before, as pointed out by researcher Sylvain Zini from the Centre d’études sur l’intégration et la mondialisation at UQAM, during a roundtable this week. The promotion of workers’ rights and the improvement of their living conditions are considered to be factors of social progress as well as competitive factors.
Canada and Peru take a step forward
Taking advantage of the window of opportunity opened by the Americans, Canada and Peru have agreed to set the same requirements and even more, according to negotiators. The labour side agreement signed by the two countries requires them to respect the basic principles of the International Labour Organization as well as their own laws. This includes major principles such as freedom of association, the right to collective bargaining, the abolition of child labour, and the elimination of forced and compulsory labour and discrimination in the workplace. The countries have also agreed to provide protection in terms of occupational health and safety, and to establish standards for minimum wages and overtime pay.
The failure to comply with these international principles and national laws entails relatively moderate sanctions (a maximum of 15 million per year) which are allocated to a special fund for building the countries’ capacities to meet the set objectives. The complaints and dispute settlement mechanism is meant to be transparent, and is open primarily to local stakeholders such as companies and unions.
These regulations take into account the fact that the problem faced by several developing countries is not the ineffectiveness of their labour laws, but rather their incapacity as regards control and sanction. They may be considered a form of protectionism in the eyes of the champions of an unbridled free market and certain third-world militants, aimed at preventing poor countries from benefiting from the "comparative advantage" of their lower labour costs and standards. This criticism does not seem justified inasmuch as the obligations involve the adherence to basic principles and local laws, and not absolute limits such as, for example, a minimum wage set at $2, $5 or $10 per hour.
This new labour side agreement, which Canada now intends to include in all of its future free trade treaties, is not perfect. It still contents itself with minimum standards. As of yet, we do not know whether unions and companies will implement it or whether it will yield concrete results. It will not be useful to small-scale Peruvian farmers, who risk being blown away in the flurry of North American imports.
And one has to wonder whether trade agreements are appropriate opportunities to try to further causes other than those of trade. Would it not be better to devote our efforts and energy to national and international forums whose primary missions are the defence of workers’ rights, the protection of the environment and the promotion of cultural diversity?
Nevertheless, it is nice to know that Canada’s trade agreements are perhaps becoming more humanized.
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