Part V -  The “Fair Trade” Approach to International Trade Agreements

In the fifth and final installment of our examination of the potential impact of the Obama administration on the labor and employment legal landscape, we review changes that might be in store in trade agreements.

Throughout the presidential campaign, President-elect Obama frequently criticized various aspects of U.S. trade policy.  The president-elect repeatedly promised to change course from the Bush administration and pursue “fair trade” agreements.  While the precise definition of “fair trade” may prove to be somewhat malleable, likely provisions would include stronger enforcement regimes, particularly in the areas of labor and environment standards.  Obama trade policy will almost certainly include major reform of adjustment assistance programs as well-programs that aid workers displaced by foreign trade.  There is little doubt that the pursuit of expanding foreign markets will continue, but, compared to his predecessor, the pace and priorities of President-elect Obama’s trade policy are certain to reflect the concerns of a different constituency.

During the primaries, President-elect Obama said that renegotiating the labor provisions of the North American Free Trade Agreement (NAFTA) would be a high priority in his administration.  President-elect Obama has also condemned the Central American Free Trade Agreement (CAFTA), which passed in 2005, arguing that parties to the CAFTA have failed to live up to their obligations.  President-elect Obama has expressed concerns with the free trade agreements (FTAs) currently pending before Congress-FTAs with Colombia, Panama, and South Korea.  With respect to Colombia, President-elect Obama continues to call on the Colombian government to better protect its labor leaders from threats of physical violence and to better respect the rights of its workers to organize.  These actions are generally seen as a prerequisite in order for Congress to favorably consider the U.S.-Colombia FTA.

Despite the campaign rhetoric, the Obama administration will almost certainly pursue the continued expansion of trade liberalization, though it is widely expected that there will be an increased emphasis on labor and environment standards.  The extent of these changes remains unknown, but President-elect Obama voted in favor of the U.S.-Peru FTA last year.  The Peru deal incorporated enforceable, “state-of-the-art” labor and environment protections that obligate Peru to (1) practice the fundamental labor rights set forth in the 1998 International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work, (2) enforce existing domestic labor laws, (3) adopt tougher standards for the protection of intellectual property, (4) enforce existing domestic environmental laws and (5) meet internationally recognized environmental standards.  It remains to be seen whether this approach will become the new standard in future agreements, or whether it would be the U.S. negotiating position with respect to agreements already in force.  Nevertheless, current and potential trading partners should expect more stringent labor and environment policies.

Other trade policy priorities for President-elect Obama will likely include a major overhaul of worker assistance programs.  These programs, most notably Trade Adjustment Assistance (TAA), provide for worker training, health care benefits and other resources to help workers who have been displaced by trade deals.  Many reform proposals have already been circulated in Congress.  Possible changes include the extension of benefits to service workers displaced by trade, as well as an increase in funding for retraining programs and an expansion of the maximum allowance for job search and relocation expenses.  President-elect Obama has also pledged a tougher stance towards China.  In particular, U.S. trade policy will likely examine China’s currency valuation system, the protection of intellectual property and its consumer safety standards.