NAFTA was conceived as an economic agreement focusing solely on reducing tariff and non-tariff barriers to trade and investment, however, nations are not merely economic entities. In addressing economic factors trade agreements bear influence not only the on the global economy, but the social and political life as well. Social inequalities among nations and groups within nations are becoming more and more evident as explained by Molly Scott in Chapter 6 of this section and by David Cagen in the economic section. This chapter looks instead at policy alternatives to the present problems facing labor and communities in the context of free trade. There are three components of the alternative vision presented in this chapter. Initially this chapter will examine the European Union as a model to build and learn from to help strengthen the North American Free Trade Agreement. Secondly, this chapter will illustrate how the NAFTA side accords have failed to be an effective way of addressing labor and immigration issues. Lastly, this chapter will draw policy alternatives from the European example and lessons from the failure of the NAFTA side accords
This chapter will demonstrate that the improvement of NAFTA rests on the incorporation of policies, which enforce labor standards, strengthen democratic governance and set requirements for nations to stay in NAFTA. The NAFTA signatories must take such actions, as this is an integral component of the transition into this era of free trade. By encouraging nations to enforce labor standards, standards of living will increase and inequalities will decrease allowing NAFTA to be a fair as well as free trade agreement.
Economic decisions affect not only our economy, but our society as well. The earlier section on economics and financial stability in this volume (Chapters 1 - 5) illustrates how financial stability is linked to free trade. The financial stability of a country directly influences the stability of the job market and therefore is directly linked to society. As Molly Scott illustrates, in Chapter 6, NAFTA claimed it would insure job growth in all three countries. Rather than raising the quality of work, the implementation of the agreement resulted in the exacerbation of the gap between high and low skilled workers. This has led to job displacement and a downward trend of living standards in developing countries. According to the United Nations, 41 percent of people in Latin America and the Caribbean live below the poverty line, and their ranks have gown rapidly over the past decade. (1) Social implications of NAFTA are examined in detailed case studies by Yasmin Azam in her chapter titled "NAFTA and Migration ".
Any lessons learned from the European model must be accompanied by the recognition of the basic differences between the North American and European policy choices. Many of the policy decisions made in Europe are made with a strong political as well as economic driving force. The policy choices Europe has made are with the ultimate goal of promoting economic and social progress and gradually removing differences in living standards. The European Union 's integration process has with it a strong social dimension whereas the integration of the North American economies was primarily based on economic free-market ideology.
"Between flexibility and security, between competitiveness and solidarity " are the words used by Commission President Jaques Santer to describe the structure of the regional and national framework the European Commission is aiming to achieve for future Europe (in his speech on "Employment and Structural Policies in Europe " at the meeting of the Committee of the Regions, Brussels, June 13, 1996). The ultimate goal of the European Commission is a system that would solve economic and social problems. The Commission President focused his speech mainly on the unemployment issue and the importance of broad mobilization of partnership. (2)
Europe and the America 's are facing the similar situations, therefore we can gain knowledge from the European experience, and draw lessons for alternative ways to strengthen NAFTA. This section will examine Europe 's chosen course of action and policy choices. First, the Maastricht Treaty of 1993 established rules and directives to member countries regarding health and safety. Secondly, funds were redistribution from wealthy to poorer regions to reduce economic disparities. Third, support for the creation of councils, cross-national information committees at large multinational firms which stimulate cross-national union collaboration.
The rapid integration of unequal economies without adequate social and environmental safety nets results in large corporations taking advantage of the low wages in developing nations and moving their factories there. To maintain an attractive labor force the governments of the developing countries often fail to enforce labor rights. The standards of living in those nations are therefore driven down. The Council of Economic Advisors argues that, "(Reducing inequality is) ... important in the more limited objective of promoting economic growth." (3) To reduce inequalities in the Americas among Mexico, Canada, and the Untied States it is necessary to raise the living standards in Mexico while maintaining the standards of living in the United States and Canada.
Economic inequalities of countries, which are being, integrated economically influences the social well being of workers in both the more stable and unstable nations. This is felt not only in the Americas with the implementation of NAFTA, but in Europe as well. Acknowledging this link between social and economic stability the Maastricht Treaty of 1993 set out the goals for achieving the Economic Monetary Union.
One social area affected is the employment. In Europe regional variation in unemployment is considerable. In southern Spain for example unemployment was almost three times the EC average of 9.4% between 1991 and 1993. During the same time period in Luxembourg and parts of Bavarian Germany it was close to 2.5%. (4) In the early 1970 's the European Community addressed these problems with structural funds otherwise referred to as "compensatory financing ". This means that the EU has stimulated economic growth in the less developed countries and sectors by providing them with billions of dollars worth of development funds (regional and structural).(5) The Maastricht Treaty of 1993 provided for a Fund to channel financial assistance to the member states in need: the Cohesion Fund. (6) Other such funds to help social cohesion include the European Regional Development Fund (ERDF), the European Social Fund (ESF), and the European Agricultural Guidance and Guarantee Fund (EAGGF). (7)
The following is a demonstration of how these funds work and focuses on the Burgundy Region of France.
At the end of 1994, the EC approved the Single Programming Documents (SPDs) for 18 regions in France, which have eligible areas for funding under Objective 5b of the Structural Funds. On December 6, 1994, the SPD for the Burgundy region was approved. Contribution amounts from the EC amounts to 112 million ECU for the 1994-1999 funding period. The expected results are the creation of 1,000 new jobs and the maintenance of 16,000 jobs which were threatened, and tangible improvements in living conditions for 40% of the affected population. These results are expected to be realized by the year 1999. (8)
The following measures are outlined to achieve these goals as addressed in ERDF program # 94.03.13.006. 27% of overall estimated costs are being contributed by the union. Various funds contribute as follows: the ERDF contributes 34.96%; the ESF contributes 10.75%; and the EAGGF contributes 54.29%. (9)
|
Sub-programs/Measures |
Total Cost (in MECU) (10) |
EC contribution (in MECU) |
|
Agricultural adaptation and enhancement of forests |
84 .390 |
24 .043 |
|
Development of industry, trade and crafts |
129 .140 |
13 .410 |
|
Enhancement of tourist, cultural and environmental potential |
84 .210 |
27 .878 |
|
Living Conditions |
74 .780 |
31.639 |
|
Human resources and local planning |
28 .330 |
12 .349 |
|
Technical assistance |
6 .760 |
3 .381 |
|
Total |
407 .610 |
112 .700 |
This type of program for the development and structural adjustment of rural areas in need is effective in 18 regions of France and affects close to 451,700 inhabitants. (11)
The percentage put in by the EC differs for each region. The Burgundy case received 27.64% of the total overall estimated costs (as noted above) whereas the following case for Crete received 71.4% of the total investment from the EC. (12)
The following case has different goals than the Burgundy case and demonstrates the differences of each ERDF program. Each program is designed to meet the specific needs of that region making the program more effective.
Economic development in the region of Crete was in need of support during the 1994-1999 period. This program # 94.08.09.007 is implemented under the programming agreement (Community support framework) for Greece concluded between the EC and the Greek authorities. It was decided on July 29, 1994 with the following goals:
|
Sub-Programs/ Measures |
Total cost (in MECU) |
EC contribution (in MECU) |
|
Tourism and culture |
59 .600 |
43 .800 |
|
Quality of life and urban environment |
162 .100 |
121 .600 |
|
Rural development |
61 .400 |
40 .900 |
|
Human resources |
32 .000 |
24 .000 |
|
Total |
315 .100 |
230 .300 |
The ERDF contributed 82.20%; the ESF contributed 4.80%; and, the EAGGF contributed 13.00% for this program. (13)
As these examples show, the task to accomplish social and economic cohesion among Europe is an extensive one. The Structural Funds for 1994-1999 amount to a total of 154.5 billion ECU at the 1994 prices, which is close to one third of the Community budget absorbing 1.2% of EC GNP in 1994 (1.27 in 1999). (14) About half the EU population is affected by the structural funds. This effort, extensive as it may be, is modest when compared to the resources deployed at the national level by the Member States.
The mentality of the European Commission as well as the economic development fund Europe has implemented could be used as a model for North America to create an environment of free and fair trade with economic prosperity and social equity. Strengthening the economies of underdeveloped countries affords political and social areas greater stability. The link between social unrest and economic problems is too relevant to ignore. Yasmin Azam 's previous chapter demonstrates the social effect the economically based NAFTA document had on Mexican workers. Structural funds allow all countries of Europe to gain. Individual nations are able to strengthen socially and economically by reducing social and economic inequalities among the EU 's participatory nations, as demonstrated in the prior examples of the effects of the Structural Funds in Europe.
North America does not have as many funds available for such use as Europe (although see Erin Hallock 's discussion of the Tobin Tax, Chapter 2). It is possible to ease economic disparity within NAFTA members by employing existing funds with greater efficiency in conjunction with the application of domestic and foreign contributions for the purpose of easing economic (and hence social) polarities. The North American Development Bank could also help in this area by addressing the needs of the poor in all three countries (see Nisha Thirumurthy 's Chapter 4 for more information on NAD bank).
Financing development funds is not only beneficial to the country being directly funded, economic integration of all participating countries is enhanced due to a more stable economic and social environment of member nations. The result of integrating countries of unequal economic stability is social unrest and a shift in the entire economy of the weaker nation. (15)
Reasonable consideration looms within the discussion of reallocating funds following the European model how can funds be diverted to ease economic disparity in less developed nations like Mexico while the U.S. has a number of social problems left unsolved? The act of strengthening NAFTA 's economic partners stabilizes the U.S. as well. Providing a more stable business environment for multinational corporations secures U.S. jobs. (Erin Hallock 's discussion of the Peso Crisis better illustrates the need for economies of equal strength before integration). The European Commission 's goal of economic and social cohesion acknowledges this link. European social policy has the goal of unity at its base. Instead of seeing the economic and social hardships of other neighboring countries as "their " problem, Europe as a whole has begun to view "their " problems as "our " problem.
For Europeans, a critical domestic issue was jobs. The unemployment rate in Europe has been high, up to 12.7% in France during 1997. (16) The primary cause of the problem was said to be labor market rigidity, which stems from government policy and industrial practice. In the United States it was thought that the flexibility of the labor market assured jobs. The general course of action was "... strategies of nationalization with state investment, (and) strategies of deregulation with privatization ". (17) The United State 's flexibility includes the ability to fire workers and reduce real wages, this seemed to assure jobs whereas in Western Europe, "... the basic postwar political bargain involved governmental responsibility for full employment and welfare net ". (18) Consequently certain European companies have "... shown a growing reluctance to hire, particularly as dismissing anyone is, in the words of one Paris-based international economist, 'long, tedious and expensive '". (19) European companies were faced with competing against more flexible American companies and Japanese companies who were more market-oriented. Becoming aware of this helped put into motion the new political basis of a more market-oriented system.
The European countries were also faced with influences from neighboring areas (i.e. the oil shocks). In an effort to create a zone of currency stability, the European Monetary System (EMS) was created thereby enabling the expansion of trade inside Europe to continue. Creating a common form of currency stabilizes the economy within Europe because it allows for the strengthening of Europe 's interior by minimizing outside influence. As mentioned earlier in this Chapter, being influenced by an outside country can have severe social and economic affects on the interior countries, if the economies are not of equal strength. As the Commissioner, Monica Wulf-Mathies said in her speech to the Labor party Congress in Blackpool, September 30, 1996, "... the importance of participation in the EMU...(is for) a stable economy and stable employment... ". (20)
The creation of the EMU was to bring about an area of stability as was the creation of the EC. The European Commission 's goal is the creation of an area in which goods, persons, services, and capital can move about freely. The process allowing this integration was based on the basic concept of "mutual recognition " meaning only minimum standards would be harmonized. This would create a stable environment slowly so as to make the process smooth with more safeguards while maintaining national sovereignty.
European leaders have been faced with a variety of issues, which come up during an integration process. Such issues could consist of future economic and social conditions within the countries, social programs, retirement age, unemployment, etc... Controversy in the UK over European Union Integration was met by Commissioner Mrs. Wulf-Mathies speech presenting her view of the EU as "... a structure which preserves national and cultural identities, is genuinely democratic and reinforces mutual solidarity and partnership between its institutions ". (21) The effort by the Commission and national leaders to focus on social as well as economic issues has assisted the integration process by showing the people of Europe what could lay ahead in their futures. The path thus far has definitely presented the leaders with significant social issues to deal with. The desired end result however is enough for them to grind out a feasible way to approach the issues and deal with solving them.
As mentioned in the prior quote from the Commissioner, one key point to a successful integration of economies is the maintenance of national identity. National Sovereignty is not taken away with the EU structure, nations still have the responsibility of enforcing the law, law enforcement remains domestic. For the cases in which nations fail to provide adequate enforcement however, the EU has safeguards to protect the people.
The European Court of Justice is set up to ensure uniform application and interpretation of the EC law. It is a separate entity from the International Court of Justice. (22) The individual member nations of the EU do not relinquish power to a international powerhouse. Each national government maintains sovereignty, the international courts and committees exist to ensure that the agreed regulations are followed. The European Court acts as just that, a court; once the verdict is decided the case is turned over to local law enforcement. As stated earlier in this chapter, one failing aspect of NAFTA is the lack of enforcement regarding labor standards. The structure of the European Unions Court system could by implemented in North America, still maintaining national sovereignty and democratic governance.
A primary cause for the uneven labor standards found between Mexico, the United States and Canada is the economic disparity existing prior to NAFTA 's implementation. (23) To make the transition in Europe more successful European leaders chose to set three stages in the creation of the EU. The slow integration lessened the social impacts felt throughout Europe by allowing time for the European Community to create safeguards against large economic and social impacts from integration (i.e. the Structural Funds). Gradual integration also provided member nations with the opportunity to stabilize individual national economies before becoming members of the European Union. Gradual integration also effectively protected politically and economically stable member nations from being negatively influenced by less stable members. The first two stages of the three stage process have already been realized.
The third stage requires that each member country fulfill fiscal requirements by the year 1999 when the Monetary bank will fix exchange rates and introduce the Euro. The requirements were set to ensure that each country joins as a stable economic and social entity so as to facilitate a smooth transition into an interdependent economic era. The fiscal requirements are as follows: 1) the ratio of government deficit to GDP must not exceed 3%; 2) the ratio of government debt to GDP must not exceed 60%; and 3) that the long-term interest rate not exceed 2%. (24) A strength of the EU, which must not be ignored, is these prerequisites to joining. By bringing the nations closer financially before lowering tariff barriers the risk to the workers declines. With financial stability social sustainability is more likely.
An underlying concept during the creation of the EU political structure was the idea that any action taken by one nation state would affect another. If labor standards differed among nations (taking into consideration the proximity of the nations and their economic interdependency), labor in other nations would feel the impacts as well. (Yasmin Azam 's Chapter 7 of this volume illustrates the result of this in North America). To ensure the well being of all workers, EU regulations ensured that nations follow similar labor standards. This task was accomplished while maintaining national sovereignty. Three levels of EU law provide the solution.
EU law can take on the form of three instruments according to article 48. These are: 1) regulations, which bind each state; 2) decisions, which address specific situations and therefore influence only those concerned; and 3) directives, which give a desired end result which each state can achieve however they choose. Recommendations, or opinions, are non-binding declarations of EU policy. (25) This assures that nations do not loose sovereignty while ensuring the well being of all laborers in Europe. Requirements, which are necessary for stability within the EC, are met but democracy is not undermined. Similar instruments could be established within NAFTA so that basic workers rights are enforced, standard minimum wage, unemployment protection and trade-union rights for example.
Labor is directly tied to migration and immigration. Falling labor standards in Mexico correlate to the standard of living. People choose to immigrate to the northern countries or to migrate to regions within Mexico where working conditions are more bearable. (26) We can look to Europe and see similar situations. After the post war economic spurt Europe was left with a new social group; illegal immigrant laborers. (27) The different national response to this influx in immigration caused increased illegal immigration among the European countries. European nations shortly realized two important facts; " every government 's actions affected the nature of migratory pressures on its neighbors ", and that " European governments seemingly lacked the political will or the resources, or both, to respond individually to what was becoming a continental problem ". (28) A "continental problem " is what they found, and a joint action was agreed upon. This lead to social policy for the EU, and labor rights for EC workers.
Immigration within the EC is possible for EC workers since the mid 1960s. (29) EC workers at the same time gained protection such as, equal treatment in housing and social assistance, trade-union rights, the right to remain in another member state after suffering permanent disability (unrestricted if the injury was work related) or involuntary unemployment, the right to retire in another member state (only after either living there for three years or working there for one year), and the right to remain and look for work for a limited time (between three and six months). Articles 48 and 51 of the Treaty of Rome also allow for the aggregation of social security contributions and limited exportability pensions. Upon demand, legal EU workers receive a residence permit, valid for five years and automatically renewable. (30) This does not however take all power away from the nations states, which continue to restrict movement for reasons of public safety and order, national security and public health. (31)
These workers protections maintain a stable social environment within the EC. This is not to say that there are not immigration problems in Europe, but the immigration problems that exist are for the most part immigrants from outside the EU.
Enforcement of basic workers rights is also necessary for NAFTA. The international standards should be enforced within NAFTA for the sustainability the society. This would ensure that the comparative advantage Mexico is now practicing would be a fair. Without ensuring that workers rights are granted NAFTA promotes an unfair way of practicing business instead of promoting free trade.
Labor standards in one country influence not only the domestic society but others as well. The labor standards in Germany affect the English and similarly the labor standards in Mexico and Canada affect the workers in the United States. With the unequal labor enforcement within the NAFTA members, corporations have moved factories south to Mexico, removing those jobs from the United States. This encourages the lack of labor rights in Mexico and salaries drop affecting not only the standard of living of those workers but of workers in the United States who had gone unemployed as a result of this trend.
The social situation in the Americas is not identical to that in Europe, however similarities exist. Social tension mounted in Europe similar to among laborers within the NAFTA. Continental problems should be responded to with continental action. No singular government can solve the social inequalities found today in the Americas. National sovereignty needs to remain, as demonstrated by European labor and migrations policies as well, but defined limitations of standards of living and workers rights needs to be enforced among the Americas as in Europe.
This section will demonstrate that in order to improve NAFTA we must start by incorporating policies that enforce labor standards, strengthen national sovereignty and set requirements for nations to stay in NAFTA. These actions need to be taken by the three governments in question; they need to be an integral part of the transition into this era of free trade. By encouraging nations to enforce labor standards, standards of living will increase and inequalities will decrease allowing NAFTA to be a fair as well as free trade agreement. (32)
This section will start by examining North America 's addition of the labor side accords to NAFTA. It will then demonstrate how and why the side accords have failed to help labor issues resulting from NAFTA. (33) Ways to strengthen NAFTA by strengthening the side accords with ideas from the EU structure will then follow.
President Clinton has acknowledged the link between economic and social change by implementing the labor side accords to protect workers rights. These labor provisions were introduced into NAFTA in September 1993 with the NAALC. (34) This existing agreement does address labor issues but has failed to efficiently meet it 's goals which were to improve working conditions, and to promote compliance of each nations labor laws. (35) What is needed is an effective policy that provides for much needed improvements outlined by the NAALC.
The NAALC needs to be effectively incorporated into NAFTA. Powerful incentives and sanctions are needed to back up and enforce the standards. Free trade cannot be expanded without the enforcement of policies that effectively protect the rights of workers and promote social sustainability.
The government of Canada, the government of the United Mexican States and the government of the United States of America addressed the issues of labor rights among the three nations. The goals included the creation new employment opportunities and improved working conditions and living standards in their respective territories as well as the protection, enhancement and enforcement of basic workers rights.
The objectives of the agreement are sound; to improve working conditions and living standards in each party 's territory; to promote (to the maximum extent possible) the labor principles set out in Annex 1; to encourage cooperation to promote innovation and rising levels of productivity and quality; to encourage publication and exchange of information, data development and coordination and joint studies to enhance mutually beneficial understanding of the laws and institutions governing labor in each party 's territory; to pursue cooperative labor-related activities on the basis of mutual benefit; to promote compliance with, and effective enforcement by each party of, its labor law; and to foster transparency in the administration of labor law. (36)
These goals are very worthy, and each country is encouraged to enforce the labor principles outlined in the NAALC. Article 3 of the Labor preamble states that, "... each Party shall promote compliance with and effectively enforce its labor law through appropriate government action." (37) Article 3 continues to outline specifically appropriate government actions: appointing and training inspectors, monitoring compliance and investigating suspected violations, including through on-site inspections; seeking assurances of voluntary compliance; requiring record keeping and reporting; encouraging the establishment of worker-management committees to address labor regulation of the workplace; providing or encouraging mediation, conciliation and arbitration services; or initiating, in a timely manner, proceedings to seek appropriate sanctions of remedies for violations of its labor laws. (38)
Not only do they outline what the governments need to do, but also what the laborers should do in the case that their government fails to fulfill these enforcement methods. The NAALC states that should any employer or employee, or any interested person allege a violation of this agreement that the competent authorities give the allegation due process. (39)
The NAALC does set goals and states that governments are responsible for the enforcement of these standards. Since the implementation of the NAALC however the goals have not been achieved. This section will examine why it has failed and suggestions for policy change.
One reason the NAALC is ineffective is that it fails to ensure that the obligations set are followed. The agreement failed to lead to cooperation of the three governments. The recognition of labor rights and the implementation of the NAALC was not enough.
All complaints and allegations are addressed by a trinational commission set up to facilitate the achievement of the objectives by dealing with the issues in a cooperative and consultative manner. The structure of this system has been proven to lack in effectiveness. (40) For example when Mexican laborers have complained about workers rights being violated, the complaints have proceeded through all the required steps by the "competent authorities " outlined by the agreement. Such complaints have resulted with the labor organization coming to a decision that the alleged neglect of workers rights were not severe enough to risk trade with the United States and Canada. (41) The NAFTA side accords have outlined the obligation of enforcement but lacks policy backing. It states requirements without requiring that they be followed.
Being a part of NAFTA not only opens up trade markets but requires responsibility from the government enforcement as well. Failing to comply with the responsibility should come with a punishment. This way the incentive to comply with workers rights and the government the incentive to ensure that the corporations met the standards required.
The most effective incentive for governments to enforce labor rights would be to directly tie the governmental cooperation with the NAALC in enforcing the rights to the monetary gains of free trade. If the corporations are not following the agreed guidelines and the local government fails to enforce them, sanctions should be enforced so that the corporations would be kept from reaping the benefits of NAFTA. With enforcements there are long term positive effects for workers, governments, and companies. They would ensure that the risk of loosing trade would no longer override the importance of workers rights. This would benefit not only workers but governments and corporations as well by providing a stable economy.
The ability to apply sanctions would take the agreement from asking governments to cooperate to ensuring that they follow through with their responsibilities. NAFTA and the NAALC would then be backed with the assurance that they be followed.
This enforcement of workers rights must be taken by the governments and not by a separate entity. In order to assure that national sovereignty be preserved each government is responsible for enforcing their own labor laws. Under the agreement each country is only responsible for enforcing the domestic labor laws.
The fact that NAFTA supersedes all other international agreements, other agreements that contain higher labor standards, are irrelevant for members of NAFTA. (42)
While sustaining national sovereignty however this responsibility to enforce only domestic law creates an unequal working conditions among the three countries because domestic labor laws are unequal. This allows for the constant downward spiral of working conditions in Mexico in order to become more competitive by appearing more attractive to big corporations.
International standards of labor rights should be enforced as well as domestic labor laws. All three governments should be required to enforce the United Nations Declaration of Human Rights as well as their own domestic labor regulations. The United Nations Declaration of Human Rights include the right to decent work, to shelter, political, economic, and environmental rights of their citizens. The local governments so as to ensure international standards are either met or surpassed by every country should enforce the most stringent standard. Thus maintaining that workers rights are respected even if the domestic labor regulations failed to take them into consideration. Failing to be responsible for the implementation of these rights should result in the sanctioning of the corporations as well.
The NAALC also fails to ensure that corporations follow the agreement. Their focus is on the governments. Some cases which have arose have failed to be solved because the NAO is not able to regulate and punish actions of companies, only actions of governments. (43)
International corporations can not be regulated completely by domestic law enforcement since such corporations cross national borders. Corporations with factories in Mexico and offices in the United States for example can not be governed efficiently by the Mexican government. There therefore needs to be increased trigovernmental cooperation implemented so that member NAFTA governments would be able to regulate more efficiently.
The NAALC implements the necessary structures as well as a commission to regulate government actions but there is no structure in place to regulate and punish corporate actions. For this reason as well, sanctions should be implemented as means of punishing companies who fail to follow labor regulations.
Another weakness of the agreement is the extended amount of time permitted in enforcing labor rights. The time required from complaint to sanctioning is a minimum of 1,225 days. (44) The reason behind this was to allow adequate time for government cooperation and collaboration, the result however is the failure to have quick punishment. This minimum requirement not only permits slow action but it assures it. This reinforces the lack of effective enforcement.
Another weakness that needs to be addressed is the exemption of Canada from the agreement. Canadian labor law falls under the jurisdiction of each province instead of the federal government. Three provinces exist in Canada: Ontario, British Columbia, and Quebec. Two of these provinces need to approve of the NAALC for it to be applicable in all of Canada. The way it is set up today, Canada has agreed to the NAALC, but it only affects laborers being paid by the federal government. This would be: federal government employees, bank and grain elevator employees, employees of private enterprises whose operations cross provincial boundaries, and employees brought under federal jurisdiction by declaratory power (nuclear power for example). The labor side accord only affects 10 - 15% of the Canadian work force as a result of their domestic power structure. (45)
Since the NAALC has been implemented into NAFTA it has lacked not only been structurally inadequate to meet the desired goals, but it also lacks political backing. The NAALC remains a separate agreement therefore potential new members can chose to either become part of the NAALC or not. Joining NAFTA does not require becoming part of the NAALC. This not only opens the doors for new members to violate labor laws and create an unfair environment for competition, but it also makes a clear statement that labor laws are a choice, not a necessity.
By entering into the North American Free Trade Agreement the government of the United States, the government of Mexico, and the government of Canada enter into a membership which brings with it not only access to markets but a responsibility as well. New members as well as the present members in joining NAFTA gain access to new markets and just as present members, new members need to assume the responsibility to their citizen 's well being.
NAFTA has implemented labor rights through its side accords but as earlier explained in this chapter, the enforcement of these standards is not effective, creating an unstable social environment. It is evident that the situation will not change unless the national governance voluntarily enforces these side accords. The side accord on labor is now just a piece of paper, there are no "teeth " in it.
Writing the side accord on labor is not enough. As responsible members of NAFTA, the U.S. needs to create an environment in which Mexico will voluntarily enforce the standards of labor. The Mexican government will not comply with international labor laws if their sovereignty is threatened, sanctions would be an efficient mean to ensure that the side accords are followed. Sanctions alone however are not enough. Sanctions on the corporations will indeed encourage corporations to comply with workers rights, however, in order to make the side accord and possible sanctions more efficient requires the formation of committees of experts to advise all three governments on the "best " course of action for their respective citizens.
Recommendations are used in the EU as a way to help guide countries in the processes necessary to achieve the standards in smooth efficient ways. This is especially helpful for countries that do not have the technically trained bureaucracy or developed organizations of labor and capital. Committees of experts advising courses of action would work in the same way, "... reliance on committees of experts to deal with problems that might otherwise be dealt with in political-adversarial ways " and, "... although their adoption is entirely voluntary for both member states and market participants, recommendations may draw attention to ways of dealing with difficult problems, which may ultimately result in national legislation or voluntary adoption of 'best practice'." (46)
Policy directions that could be used to strengthen NAFTA (by protecting workers rights and resolving employment and migration problems) need to stem from an acknowledgment of a continental problem, and joint responsibility. This would promote joint action and enforcement.
First, North American countries need to create councils and cross-national committees of experts at large multi-national firms and to advise governments, as in Europe, to help find ways to meet the required standards in the best manner. Second, an effective Structural Fund needs to be created so that there can be a redistribution of funds from richer to poorer regions, (more developed to less developed regions), for social and economic cohesion. Third, establish enforceable rules and directives to member countries regarding health and safety of workers. Fourth, we need to require that the side accords be agreed to for all new member nations of NAFTA. By following this direction we could strengthen NAFTA by solving the problems free trade has lead to.