The labor provisions of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) protect core labor rights for workers in the United States and the Central American countries and require that labor laws are enforced effectively by all member countries. DR-CAFTA reinforces the importance of rights and protections for workers; establishes mechanisms for improving labor law and enforcement; and ensures that workers, like consumers and businesses, reap the benefits of liberalized trade.

DR-CAFTA includes unprecedented provisions to protect labor rights.

• DR-CAFTA goes beyond previous trade agreements in protecting workers’ rights and improving labor conditions:
  • DR-CAFTA requires that all member countries provide workers, and others with grievances related to labor rights, access to impartial tribunals for the enforcement of the relevant laws. It goes beyond previous agreements in specifically requiring that such tribunals for the enforcement of labor laws have certain procedural guarantees, such as being open to the public and governed by reasonable time limits and issuing written, appealable opinions.
  • DR-CAFTA creates an unprecedented cooperation- and capacitybuilding mechanism to improve protection of labor rights in Central American nations through training, public awareness programs and improved inspection programs. An important component of the cooperation- and capacity-building mechanism is the inclusion of public participation in the design and implementation of capacity-building programs.
  • DR-CAFTA incorporates all the key labor provisions of the Jordan, Chile and Singapore free trade agreements. Like these agreements, DR-CAFTA requires member countries to effectively enforce their existing labor laws. This obligation is enforceable through DRCAFTA’s Chapter 20 dispute settlement procedures. Countries that fail to enforce their labor laws could be subject to punishment by fines that will be used to fix the problems causing the dispute.
  • DR-CAFTA also contains provisions to protect and improve each country’s domestic labor law. As in the Jordan, Chile and Singapore agreements, parties are required to strive not to derogate from their existing laws to attract trade or investment. DR-CAFTA also obligates parties to work to integrate the core labor rights of the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work into their own labor laws.

DR-CAFTA meets Trade Promotion Authority (TPA) negotiating objectives for promotion and protection of labor rights.

• In the Trade Act of 2002, Congress identified four key labor negotiating objectives for free trade agreements:
  • promotion of ILO core labor rights,
  • provisions ensuring that countries do not weaken or reduce the protection afforded by their domestic labor laws or fail to enforce those laws,
  • promotion of ratification of the ILO convention prohibiting child labor, and
  • capacity building to promote respect for core labor standards.
• DR-CAFTA achieves all of these objectives and more.
  • DR-CAFTA requires member countries to work to include the core labor rights of the ILO declaration in their domestic laws. (Contrary to the assertions of DR-CAFTA’s critics, Congress did not require trade agreements to mandate adherence to ILO standards.)
  • DR-CAFTA requires member countries to effectively enforce their labor laws and provides for a dispute settlement procedure if a country fails to enforce its laws effectively. If a country is found not to be effectively enforcing its domestic laws, it will be fined, and the fine will be directed to improving protection for workers in that country. This innovative dispute settlement mechanism is consistent with the negotiating objectives articulated by Congress and provides a unique tool to fund improvements in labor rights rather than imposing trade sanctions that likely would result in lost jobs for the very workers the provision is designed to protect.
  • DR-CAFTA establishes an innovative cooperation- and capacitybuilding mechanism that has a primary objective of advancing “the principles embodied in the ILO Declaration and ILO Convention No. 182 Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor.” The capacity-building mechanism will develop specific multilateral and bilateral activities focused on such priorities as eliminating child labor, improving legislation and practice with regard to ILO core labor rights, and training to improve labor law enforcement.

Liberalized trade with Central America will help improve the rights of workers and working conditions in the region.

• Improvement of labor rights and working conditions in Central America is critical to the future economic development and political stability of the region. DR-CAFTA includes mechanisms to achieve those goals and already has provided a catalyst for improvement in Central America.
• According to the ILO, Central American nations already have laws in place that are largely consistent with core ILO labor standards. In a strong demonstration of their support for DR-CAFTA and improved labor standards, several countries in the region drafted new laws and regulations to improve labor protection and facilitate the creation of unions. Countries in Central America also have increased funding to their labor ministries to improve inspections and enforcement. The countries of Central America are working with the Inter-American Development Bank, the World Bank and the U.S. Department of Labor to develop programs to improve labor standards.
• Liberalized trade creates economic opportunities that give workers the freedom to choose to work for employers offering better pay and better working conditions. Liberalized trade also contributes to rising standards of living, which economic studies suggest is key to raising labor standards.
• In fact, an Organisation for Economic Co-operation and Development study of 44 developing countries that engaged in significant trade liberalization found that there was “no case where the trade reforms were followed by a worsening of association rights” for labor. The same study found that freedom-of-association rights improved in 32 of the countries in the study after trade liberalization. Liberalization through DR-CAFTA will create similar opportunities and improvements in the Dominican Republic and Central America.