Caribbean Basin initiative: setting labor standards

Monthly Labor Review, Nov, 1984 by Steve Charnovitz

On January 1, 1984, the Caribbean Basin Initiative went into effect, eliminating tariffs for most products exported by that region to the United States. This preferential access to American markets is expected to increase the flow of investment into Caribbean countries with high unemployment, and thus create additional jobs.

The Caribbean Basin Economic Recovery Act lists 27 countries as potentially eligible for the trade benefits, but directs the President of the United States to undertake a rigorous process of designation. This process includes a review of 18 criteria for designation. The criteria are quite varied; they range from whether a country is Communist to whether commercial stations in that country pirate U.S. television broadcasts.

Although only 7 of the 18 criteria are mandatory, the Administration has persuaded each designated country--20 as of mid-1984--to meet all of the criteria. At the end of the bilateral discussions, each country interested in being designated was asked to submit a letter to the United States explaining how each of the 18 criteria were met. These letters contain both declarations and commitments regarding present and future policies. In some cases, governments are required to take specific actions before the designation letters are accepted. The labor criterion

One of the most controversial criteria is that regarding labor. This provision requires the President to consider the degree to which workers in the country are afforded "reasonable workplace conditions" and enjoy the "right to organize and bargain collectively." In practice, this has meant that in countries with restrictive labor policies, the U.S. negotiating teams have encouraged the governments to agree to changes in their policies.

The primary reason for the labor criterion is a concern that the labor laws and conditions in some countries would prevent the benefits of the Caribbean Basin Initiative from reaching the workers. By promoting free trade unions, the United States intended not only to contribute to democratic pluralism, but also to provide foreign workers the institutional base needed to earn their rightful share of the income generated by the Initiative. A second reason for the labor criterion is to safeguard American workers from unfair foreign competition. By using the statutory labor criterion, the United States would have leverage against a participating country that exported to the American market products made under "sweatshop style" working conditions.

Aside from the narrow provision in U.S. trade law that prohibits the importation of products made by convict or forced labor, the Caribbean Basin Initiative is the only U.S. law that makes foreign labor conditions a specific consideration in providing trade benefits to other countries. While international fair labor standards have been a longtime goal of organized labor in the United States, the Initiative is the first time this concept has been incorporated into U.S. tariff legislation. Defining the standard

In implementing the labor criterion, the Administration faced 27 countries with a wide range of labor conditions--from very good to very poor. Realizing that it could not apply the same standards to countries with different cultures and legal systems, the United States adopted a two-step procedure. One, all countries are reviewed with respect to a few very basic labor standards. Two, countries with inadequate labor rights are asked to make some improvements. The approach the United States takes in each country, of course, also depends on the number of negotiation issues involving the other Caribbean Basin Initiative criteria.

The first area of concern is freedom of association, or the right to organize unions, form labor federations, and affiliate with international trade union organizations. In defining this standard, the United States relied heavily on the Freedom of Association Convention (Convention 87) of the International Labor Organization (ILO).

The second area of concern is workplace conditions. At a minimum, this means freedom from forced labor and child labor abuses--a universal standard applicable to all countries. The United States also looks at laws on minimum wage and occupational health and safety, but each country's laws are judged on an individual basis. This approach was suggested by the legislative history, because the House had considered but failed to enact a bill to make U.S. occupational safety and health laws the standard for the labor criterion.

The third area of concern is government protection of unions from harassment and nonrecognition by employers. In each country, the United States looks for laws to promote collective bargaining, to protect union organizers from being fired, and to permit peaceful strikes. Where these laws do not exist, the countries are urged to consider reforms.

The fourth area of concern is the Export Processing Zones in many of the Caribbean Basin Initiative countries. Such zones, also called "free trade zones," are exempt from many of the commercial laws that apply in the rest of the country. Because these zones serve as platforms for export to the American market, the United States seeks assurances that the labor standards in these zones are not less than the standards in the rest of the country. This issue came up because, in the past, some of these zones had abusive labor conditions, compared with the rest of the country, that gave the zone's production an unfair competitive advantage in international markets. For example, in some of these zones, the governments prohibited trade unions.