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'. , ._7 , ' , . HAMM&
.._ Plan B Paper ' ° . j . ”is”
' Droct, Heidi. 1997. ' ’ ' ' '

1 f The North American Free Trade
* Agreement
' and the Mexiea‘n Worker » ' w
by Heidi‘ Droét

May' 2,1997
Plan B

The North American Free Trade
Agreement
and the Mexican Worker
by Heidi Drost

May 2, 1997
Plan B

This Plan B Paper was written to meet the requirements for the
Master of Urban and Regional Planning and Urban Affairs degree at
Michigan State University.

Acknowledgnents

Thanks to everyone who supported and advised me on this paper, especially
Dr. Zenia Kotval who has served as my primary advisor, mentor, and friend.
Thanks to Dr. Rex Lamore for reading the paper for my Urban Affairs
specialization. Thanks to my mom and dad for supporting me through my
every endeavor, whether or not they understood my motivation. Thanks also
to my dearest companion, Kendall, who has graciously given his long-
distance support though his life is full of his own pursuits.

Abstract

The North American Free Trade Agreement (NAFTA) has provided an
opportunity for international inﬂuence on the labor laws of Mexico, Canada, and the
United States. As a subagreement of NAFTA, the North American Agreement on Labor
Cooperation (N AALC) has been established to promote cooperation on labor issues in the
three countries and to improve working conditions for labor. The issue of improved
working conditions is especially important for Mexico, as workers there have suﬂ‘ered
many exploitations in recent years. However, it seems, as the ﬁrst labor violations
submissions under the NAALC illustrate, that the labor side agreement has done little
more than provide the hope that labor conditions may improve. There have been some
cooperative eﬂ‘orts among the countries; however, there have been no strides toward
improving current laws. The laws are only (weakly) enforced under than NAALC, and
this does little when the laws themselves are inadequate.

Table of Contents

I. Introduction ..................................................... 5

Purpose of Study ............................................... 5
Relevance to Urban Planning/Urban Affairs ........................... 5
Statement of Problem ............................................ 6
Methodology .................................................. 7
II. Exploitation of Mexican Workers ..................................... 8
Pre-NAFT A ................................................... 9
Continuing Exploitation Under NAFTA .............................. 12
III. NAFTA and the Protection of Labor .................................. 15
NAFTA Provisions for Labor ..................................... 16
Submissions to U. S. NAO of Alleged Labor Violations in Mexico .......... 21
NAO Submissions #940001 and #940002 ....................... 21
NAO Submission #940003 .................................. 23
NAO Submission #940004 .................................. 26
NAO Submission #9601 .................................... 26
NAO Submission #9602 .................................... 31
General Analysis of the NAALC and Review of Submissions ............... 31
Analysis of the NAALC .................................... 31
Review of Submissions ..................................... 33
IV. Discussion/Analysis/Conclusion ...................................... 36
V. Works Cited ..................................................... 38

4

I. Introduction

Pumse of the Study

The purpose of this analysis is to determine whether the North American Free
Trade Agreement (NAFTA) adequately addressed the problem of exploitation of Mexican
labor in free trade zones which existed pre-NAFTA and to determine whether NAFTA
made progress toward eliminating this exploitation of Mexican labor. Although much
research has been conducted to establish that Mexican workers have been exploited, as
well as to show the various ways in which they have been exploited, no comprehensive
analysis has been completed on how NAFTA actually addressed these problems. Further,
it has been established that many of these exploitations are continuing under NAFTA, but
no analysis has been conducted on whether NAFTA has made progress toward reducing
or eliminating these exploitations. The focus of this paper will be on how NAFTA has

addressed labor and what the outcomes of the NAFTA for labor have been.

Relevance to Urbgn Planningzgrban Affairs

The subject of the exploitation of Mexican workers is distinctly an issue of labor.
However, planners need to take note of the issue as it greatly and directly affects their
work. Because the world is becoming more “global,” such as NAFTA illustrates, what
happens in other countries directly affects the United States. Further, labor issues directly
affect economic development initiatives, which are a focus for planners in many cities. If a

multinational corporation decides not to locate in a community in Michigan because it has

5

found greater incentive (through ﬂexibility with labor laws) to locate in Mexico, the
planning ﬁeld has been aﬁ'ected. Thus, it is important that planners know and understand

labor issues on a global scale.

W

The NAFTA has arguably created the largest world market, with 370 million
consumers (Los Pequeilos 1993, 5', US. President 1993, 3). Including Canada, the United
States and Mexico, the expectation of the agreement was to integrate the economies to the
beneﬁt of all three nations; however, many problems have developed in the formation of
NAFTA.

Although it may be argued that there are many balancing, positive attributes of
NAFTA, such as its potential to create US. jobs and increased exports (U .8. President
1993, 3), there are many violations of labor that have continued to occur since NAFTA
began, as will be the shown in, and the focus of, the next section. Although both U. S. and
Mexican workers have stories to tell of the ways in which NAFTA has negatively aﬁ‘ected
their lives, the focus of this analysis will be on labor violations and exploitations of
workers in Mexico.

0n the US. side, workers have mostly been faced with job loss due to migration of
U. S. multinational corporations to Mexico. Although this is a major problem, it hardly
compares with what has been taking place in Mexico. Mexican workers have faced
numerous exploitations by U. S. multinationals including poor working conditions,

substandard wages and health risks. These types of exploitation existed before the

legislation for NAFTA was ever written. Since the birth of the maquiladora, U. S.
multinationals have taken advantage of Mexican workers.

Thus, the questions which must be answered in this analysis are 1) Did NAFTA
adequately address the problems of exploitation of Mexican labor in free trade zones of
Mexico which existed pre-NAFTA; and 2) Did NAFTA make progress toward eliminating
the exploitation? This analysis will argue that NAFTA did not adequately address the
exploitation and that much more needs to be endoctrined and implemented before

signiﬁcant resolution to exploitation and labor violations will occur.

Methgology
This analysis will attempt to establish, through various means, how well NAFTA’s

mechanisms for labor deal with the many exploitations of Mexican workers. First, past
research will be examined showing the exploitation of Mexican labor pre-NAFTA under
free trade, and continuing through NAFTA. Next, the labor side agreement to NAFTA,
the North American Agreement on Labor Cooperation (N AALC) will be analyzed in
terms of both its objectives and major provisions for dealing with labor violations under
NAFTA.

Next, actual labor cases which resulted from allegations by Mexican laborers or on
behalf of Mexican laborers will be explored and analyzed in terms of how they were
handled by the U. S. National Administrative Ofﬁces (N A0), the agency formed under
NAALC to hear labor violations claims. The objectivein exploring these cases is to put

the NAALC and the NAG to the test - to examine the outcomes of the NAFTA provisions

7

for labor. The analysis will attempt to determine whether the NAFTA supplemental labor
agreement ensures that cases are adequately and fairly heard, in addition to whether the
mechanisms for dealing with violations under NAFTA are adequate in themselves.

Since there have been only six cases ﬁled with the US. NAO alleging labor
violations in Mexico, all six cases will be explored to varying degrees. Four of the six
cases have made it through the review process, one was withdrawn, and the latest case is
still pending with a ﬁnal report anticipated by June 6 of this year. This review of the
NAALC and the violations submissions will be the focus of this paper. Conclusions and
recommendations will be oﬂ‘ered about the eﬁ‘ectiveness of the NAALC in general, and in
dealing with the submissions. Finally, an assessment will be made as to whether NAFTA,
as the sum of all its parts, adequately addressed the issue of exploitation of Mexican labor

and how well, if at all, it has sought to reduce or eliminate exploitations and violations.

II. Exploitation of Mexican Workers

There were many arguments for the creation of NAFTA. In addition to creating
the largest market in the world, NAFTA was expected to level trade barriers among the
countries, create higher-wage jobs for U. S. workers, increase export opportunities to
Mexico, enhance environmental protection, and, most relevant to this analysis, improve
labor conditions and enforcement of labor law in all three countries (U. S. President 1993,
3). But much of the literature assessing the labor situation in Mexico under NAFTA

shows that many violations and exploitations are still taking place.

There is no question that NAFTA highly beneﬁts the eﬁ‘orts of U. S. multinational
corporations located in Mexico. What the multinationals do not tell the general public is
about the negative consequences suﬁ‘ered by Mexican workers who are making the

success of the US. multinationals possible.

Pre-NAFTA

Prior to NAFTA, evidence of such exploitation was clear in the maquiladoras
along the U. S.-Mexican border. In the maquiladora, or free trade, zones of Mexico
women were sought out to be the factory workers in multinational corporations.
Multinational industries sought out young, Mexican women because they could, and still
can, legally be paid less than men. It is believed that they could be easily made to do any
job at whatever cost (Ehrenreich & Fuentes 1984, 283). The industries helped to intensify
the sexual division of labor.

Mexican women working in the maquiladoras can be paid less than men because
the multinationals recruit women with little education and few skills. In addition to the
low pay they receive, Mexican women work long hours with few health standards and
little protection (Ehrenreich & Fuentes 1984, 283). And it seems the multinationals
planned for it to be this way, for this is the very nature of the “free trade” zone.

Industries that locate in Mexico can expect ”low wages, low transport costs, a
hospitable attitude toward foreign capital, friendly relations with the U. S. government, and
(after NAFTA) privileged access to the huge US. market (Koechlin and Larudee 1992,

23). " Free trade zones, and ultimately ﬁ'ee trade agreements emerge as nothing more than

9

areas of legal, international exploitation when the economies and labor standards of the
involved countries are not on equal ground.

In these zones, women are not the only group of Mexicans that suffers ﬁ'om this
exploitation. Mexican men, who have primarily agricultural rather than manufacturing
skills based on the traditional highly agrarian economy, lose jobs to the industrial sector
because they lack these types of skills (Koechlin and Larudee 1992, 24). Although many
of the manufacturing jobs are concentrated in unskilled and semi-skilled labor, men are
believed to lack the preferred traits for the tasks. It is this type of mentality that has
caused male resentment toward working women and causes tension in many Mexican
families (Ehrenreich & Fuentes 1984, 281).

More than 80 percent of manufacturing jobs in the “Third World” are occupied by
women (Ehrenreich & Fuentes 1984, 281). Many Mexican men who have lost their jobs
and cannot ﬁnd replacements may have a tendency to associate their job loss with working
women rather than with international exploitation. They may think the women have
"stolen” their jobs and may assert hostility toward them. In reality, these women were
forced to take the jobs.

If, in a family situation, the man cannot ﬁnd work, the woman must work for the
mere survival of the unit. She is not exerting power over the man, rather she is making up
for his joblessness which is a result of the international economy, not an innate inadequacy
as a provider (Ehrenreich and Fuentes 1984, 282).

This joblessness, besides causing tension, may eﬁ‘ectively destroy many families.

When men can no longer ﬁnd work in Mexico, many migrate to the US. in search of

10

employment, leaving their families behind. In their essay, "Life on the Global Assembly '
Line," Barbara Ehrenreich and Annette Fuentes give an example of this type of situation:

InCiudadJuarez, Mexico, Aan. risesatSanL tofeedhersonbeforestartingonthe
two-hombustriptothemaquiladora (factory). Hewill spendtheayalongwithfour
other children in a neighbor's one-room house. Anna’s husband, frustrated by being
unable to ﬁnd work for himself, left for the United States six months ago. She wonders, as
she carefully applies her new lip gloss, whether she ought to consider herself still married
It mightbegoodtotakeanightcourse,beoomeasecretary. Butsheseldomgetshome
beforeeightatnight, andthefactory, whereshestitchesbrassieresthatwillbesoldinthe
United States through J.C. Penney, pays only $48 a week (1984, 279).

This situation is not uncommon. In fact, maquiladoras may even draw men ﬁ'om the
interior of Mexico to the border region, and when they are unable to ﬁnd employment they
then move on to the United States (Davila and Saenz 1990, 97).

There are also health implications associated to ﬂee trade pre-NAFTA Since the
inception of the maquiladoras, companies have released toxic chemicals into drainage
ditches which have severely threatened, and even completely contaminated, the drinking
water for many villages. The toxins have been associated with cases of bone marrow
cancer and a disease which causes the immune system to attack the body, lupas (Shields
1995, 22).

There are many other examples of exploitations which occurred prior to NAFTA.
The few given here are offered only to establish that there have been exploitations and that
an investigation of the effectiveness of NAFTA in dealing with these problems is

warranted.

11

Continuing Exploitation Under NAFTA

Particularly since the start of NAFTA in January 1994, the situation of labor in
Mexico has changed, but not necessarily for the better. Working conditions in the
maquiladoras have improved little, and the hope of adequate union representation has been
marred by corruption. Union representatives often work to ensure there is no labor
unrest, rather than encourage positive organization (Shields 1995, 20). In fact, as will be
illustrated further in the cases, union representation, speciﬁcally the ﬁeedom of association
and the right to organize, are the largest issues emerging since the dawn of NAFTA.

Many labor activists in Mexico have ﬁled lawsuits against the US. multinationals
for alleged labor violations, but to little or no avail. National Administrative Oﬁices
(NAOs), organizations formed in Mexico, the US, and Canada, were set up to hear
complaints about labor violations. However, the very ﬁrst cases (reported to the U. S.
ofﬁce), in which US. and Mexican unions teamed up to ﬁle suit against two multinationals
for the alleged illegal ﬁring of 150 Mexican workers, ended with the NAG stating it was
not in the position to ﬁnd the Mexican government at fault for not enforcing labor laws.
The result: no action taken against the companies in question (Shields 1995, 21). In fact,
as will be shown in detail in the next section, no mechanisms are even in place under
NAFTA for any direct action to be taken against any company in violation of labor laws.

Other data show an increased shift in auto jobs ﬁom the US. to Mexico. Only a
year after NAFTA's inception, the US. was caught in a half a billion dollar trade deﬁcit
with Mexico, which translates into U. S. job loss. The number of jobs forfeited at this time

was about 30,000. This same period saw an increase in investment in Mexican factories

12

by US. manufacturers (Koechlin 1995, 26). The entrepreneurs saw this investment as an
opportunity for increased proﬁt due to low wages, increased market shares and ﬁxed
prices. Whether or not this created new jobs in Mexico was irrelevant, because the jobs
were anything but sufﬁcient.

At that time, Mexican workers received, on an average, $2 per hour compared to
an average $15 an hour for U. 8. workers. Further, these wages did not increase because
Mexico has a great deal of unemployed and underemployed workers that need these jobs,
however menial they may be (Burke 1993, 7). Additionally, in December 1994, less than a
year into NAFTA, the Mexican government was forced to devalue the peso due to a
balance of payments crisis (Dropsy 1995, 361). This devaluation was followed by a sharp
drop in Mexican wages and put the entire cross-border trade situation in jeopardy
(Seybold 1995, 45).

The US. manufacturers want the public to believe that there will be a great
redistribution of wealth because of the agreement, but they do not mention that the
redistribution will be in their favor. Multinationals are increasing investments while
striving to decrease accountability in the agreement. In 1994, US. multinationals invested
upwards of $4 billion in Mexico, compared to just under $600 million in 1988. These
numbers support that multinationals are not afraid to use the agreement to relocate from
the US. to Mexico, especially if US. workers become too demanding (Koechlin 1995,
26). This is not to say that Mexican workers are not demanding more from the
multinationals themselves, but it may be saying that the multinationals are more conﬁdent

in ignoring the demands of Mexicans than they are workers in the U. S.

13

The effects of NAFTA on the working class are great. Workers in the United
States face unemployment as they watch their jobs being moved to Mexico. Mexican
workers may have more jobs, but they are exploitive and stagnant. Workers in both
countries are bearing the burden of change.

As stated earlier, NAFTA has been disproportionately vile to women who are
highly represented in certain industries, especially textiles and apparel (Koecth 1995,
27). These industries particularly are sighted for leaving the U. S. for the cheaper labor of
Mexico. A phenomenon called ”807 Sourcing” is prevalent in the industry. It is the
cutting of material in the United States for assembly in other nations, including Mexico
(Murray 1995, 66). The American Apparel Manufacturers Association and the US.
Department of Commerce claim that sourcing is necessary to keep the industry ﬁ'om going
out of business and causing even more job loss. However, considering many
manufacturers in the industry have chosen to take advantage of the cheap labor, this calls
for a more impartial source to determine the actual effects complete domestic
manufacturing would have on the industry.

In the midst of all of this exploitation, an important question arises: why has the
Mexican government not stepped in to protect its workers? The answer is actually quite
simple. Mexican leaders have every reason to comply with NAFTA. Major corporations
are moving into its territory and it is reaping many beneﬁts. The Mexican government is
protecting its interests through extortion and physical assaults on its citizens. Economic
reform is taking precedence over social justice on both sides of the border (Cérdenas

1990,121).

14

In summary, Mexican workers have been exploited in a variety of ways. They are
exploited on a gender basis, with diﬁ‘erent problems affecting men. and women. Women
often face poor working conditions and low wages while, in many cases, the men are
barely able to ﬁnd work at all. And the industries are reaping enormous proﬁts at the
expense of the workers - that is U. S. industries and Mexican workers. The next section
will detail exactly what NAFTA has endoctrined to contend with these exploitations and

violations of workers.

111. NAFTA and the Protection of Labor

The purpose of this section is to explicitly show how NAFTA addresses labor and
labor violations issues in all three NAFTA countries, with a focus on cases alleging labor
violations in Mexico. It has been shown up to this point that there are many reasons why
NAFTA needs to directly address labor in its provisions, but it still remains to be shown
whether NAFTA fully addressed these problems. Further, it must be discovered whether
NAFTA has made progress toward eliminating any of the exploitation which still exists.

To begin, a description of the NAFTA supplemental document which deals with
labor, the North American Agreement on Labor Cooperation (N AALC), must be given,
detailing the parts of the document relevant to labor violations claims (resulting ﬁom
alleged exploitation and other violations) and the procedure for determining their validity
Second, a presentation and analysis of actual submissions of labor violations will be
completed. Finally, an analysis of the NAALC must be conducted, paying special

attention to what remedies are available for labor violations claims and with whom. A

15

determination will be made as to the eﬁ‘ectiveness of the NAALC in resolving labor
violations and digging to the root of the problem of exploitation of Mexican labor. This
determination will be based upon whether the process of hearing the claims is fair and
adequate, whether the process targets the responsible parties for the violations, and
whether the outcomes insure that labor violations are effectively being handled so as to
diminish the number of (alleged) violations and better the work environment for Mexican

laborers.

NAFTA Provisions for Qbor

Implicit in the NAFTA document itself are no provisions which address labor. The
labor side of the NAFTA is handled by a supplemental document - The North American
Agreement on Labor Cooperation (NAALC). Drafted in September 1993, it became
effective simultaneously with the NAFTA on January 1, 1994.

As stated in the preambles of both the NAFTA and the NAALC, under both
agreements the U. 8., Mexico and Canada pledge to “create new employment
opportunities and improve working conditions and living standards in their respective
territories” and “protect, enhance and enforce basic workers’ rights.” These are the main
objectives of the labor side agreement. The approach taken by the three countries to
promote these elements is cooperation, as explicitly stated in the title of the supplemental

agreement (U.S. DOL 1995b, 1).

16

Further, the NAALC explicitly states the “Levels of Protection (Article 2)” to be
given to workers under the agreement:

AﬂimingﬁrﬂrespeaforeachPany’sconsﬁmﬁonandmcognizmgthenghtofeach
Panymestabhshimowndomesﬁchborstandards,mdtoadoptmmodifymrdingly
its labor laws and regulations, each Party shall ensure that its labor laws and regulations
provide for high labor standards, consistent with high quality and productivity
workplaces, andshallcontinuetostrivetoimpmvethosestandardsinthatlight.

Essentially, the NAALC is establishing the responsibility of each country to ensure that its
labor laws are adequate and enforced.

Under the NAALC, international and domestic institutions have been created to
oversee that labor laws in each country are being enforced by their respective
governments. On the international side, the Commission for Labor Cooperation has been
established. The Commission is governed by a Council and given technical support
through a Secretariat lead by an Executive Director. The Council is a synthesis of the
three Cabinet-level labor ofﬁcials from each of the NAFTA countries with the mandate to
work cooperatively on a range of labor issues. The Secretariat reports directly to the
Council on the speciﬁcs of a number of labor issues like average wages, labor
productivity, labor laws, etc. (U .S. DOL 1995b, 1).

Of particular importance to the enforcement of the labor laws of each country
under NAFTA are the domestic institutions. National Administrative Oﬁces (N AOs)
have been established in each of the three countries as the primary administrators of the
labor agreement and primary contacts among the national governments (U .S. DOL 1995b,

2). Each NAO must receive and review submissions on matters of labor law in the other

17

two countries (U .S. DOL 1995b, 1). The NAALC does not speciﬁcally state to which
country a labor violation charge must be submitted.

After receipt of a submission, the NAO must issue a notice of acceptance or
declination for review within 60 days. Basic guidelines for determining whether a
submission will be accepted for review are if the issues it raises are relevant to the labor
law in the territory in question, and if it “furthers the objective of the agreement (as stated
earlier) (U .S. DOL 1995b, 5).” If accepted, within 120 days from that point a public
report must be issued. The report should summarize the submission, review the testimony
in the cases, and make recommendations for further action, if necessary.

In order to aid an NAO in making sound decisions about cases for publication in
the public report, consultations with the NAO of the territory in question may be
requested. The NAO of the requested territory must provide “(a) descriptions of its laws,
regulations, procedures, policies or practices; (b) proposed changes to such procedures,
policies or practices; and (c) such clariﬁcations and explanations related to such matters,
as may assist the consulting NAOs to better understand and respond to the issues raised
(NAALC 1993, Article 21(2))”

Additionally, it is assumed in the review process that public hearings are necessary
to obtain complete information about a submission. In such hearings, no wimesses are
examined as it is not a judicial proceeding. The Secretary of the reviewing NAO presides
over the hearings and is the only body allowed to question participants. Anyone wishing
to present testimony must submit a written notice of intent as well as a manuscript of the

anticipated testimony (U .S. DOL 1995b, 6).

18

If such procedures (consultations and public hearings at the NAO level) are not
suﬁcient to provide clarity and resolution to the matter at hand, then ministerial
consultations may be requested (NAALC 1993, Article 22). If the matter is still not
resolved, an Evaluation Committee of Experts (ECE) may be requested. The ECE’s job is
to analyze the ways in which each Party is enforcing its labor laws in application to the
matter at hand (NAALC 1993, Article 23). The ECE is to be comprised of three
members who should be objective, experts in labor matters, not aﬁiliated with any Party or
the Secretariat, and comply with a set code of conduct (NAALC 1993, Article 24).

Within 120 days, the ECE must a render a report assessing the matter and making
conclusions and recommendations (N AALC 1993, Article 25). The report is issued to the
Council for consideration (N AALC 1993, Article 26).

There are even more bureaucratic levels to the dispute resolution process;
however, of the cases which have been submitted thus far, none have reached even the
level of the ECE. The continuing procedure basically outlines the process for dealing with
a situation in which a Party has allegedly not actively enforced its labor laws on an
ongoing basis.

To date, as mentioned earlier, six submissions of labor law violations in Mexico
have been recorded with the U. S. NAO (one has been ﬁled with the Mexican NAO; none
have been ﬁled with the NAO of Canada). The job of the NAO in the matters is to
determine whether the Mexican government enforced its labor law effectively, not whether
the party (company) against whom the claim was made is at fault (NAALC 1993, Article

l(f)). Thus, in reviewing the cases, the NAO focused on the role the Mexican govermnent

19

took in remedying the situations and enforcing its own laws. The next subsection details
the Mexican cases which have been submitted to the U. S. NAO thus far.

In reviewing the submissions, a few things are important to note. As previously
mentioned, the objective of the submission review process is to determine whether the
Mexican govermnent enforced its labor laws. Even though many of the cases charge
certain unions and companies with committing injustices, these entities are not under
investigation in these NAO submissions. They are addressed in the submissions only to
establish the case that the Mexican government has allegedly not enforced its labor laws -
as evidence.

Charges against non-governmental parties are not addressed under the NAFTA
and the NAALC; they are handled under domestic law. The issues raised by the
submitters are presented to the NAO to show that they were not handled correctly within
Mexico, according to Mexican labor law, as enforced by the Mexican government.
Submissions are only accepted by the U. S. NAO if all domestic remedies of Mexico have
been exhausted without avail to the submitters and there is still grounds for investigation
(US DOL 1995b, 6).

The main vehicle for remedying labor violations claims in Mexico is the
Conciliation and Arbitration Board or Junta de Conciliacion y Arbitraje (CAB) (U .S DOL
1994b, 3). Jurisdiction for claims regarding maquiladoras is with the state CAB, not the
Federal CAB. All of these things will be discussed in the subsection on the analysis of the

cases.

20

Submissions to U.S. NAO of Allgged Labor Violations in Mexico
NA S bmissions #940001 #940002

As the issues raised in these two submissions are similar, and their dates of
submission coincide, the Secretary of the NAO ruled that the reviews of the submissions
would be consolidated (U. S. DOL 1994b, 14). Although the speciﬁc allegations and
information given by the submitters and the companies in question varies for each case, a
joint public hearing was held regarding freedom of association and right to organize, as
will be later noted. Additionally, the NAO produced joint ﬁndings and recommendations
for the cases.

The ﬁrst case brought to the U. S. NAO was submitted by the International
Brotherhood of Teamsters ([BT), a labor union, in February 1994 regarding the
operations of a Honeywell Corporation subsidiary in Mexico. One allegation was that
workers at the plant were not permitted by the company to organize into the unions they
so chose - a ﬁeedom of association and right to organize issue. The company allegedly
used threats and ﬁrings to discourage employees from unionizing. Honeywell is charged
with ﬁring 20 production workers in late November for wanting to join a union. Further,
the submission alleges that the employees were explicitly told this was why they were
being dismissed and that they each must sign resignation forms to be able to collect
severance pay. Coincidentally, this waives the employees’ rights to ﬁle claims against their
former employer (U. S. DOL 1994b, 3). It appears, if these allegations are true, that

coercion is an issue. This is also an issue in later cases.

21

The submission further alleges that coercion was used to solicit information about
other employees seeking union membership. Also, one of the ﬁred workers issued a
complaint to the CAB which was still pending at the time of this submission.

The second case brought to the U. S. NAO alleged the same charge - that workers
were not permitted their right to freely organize into their chosen unions by the company,
a General Electric Company (GE) subsidiary in Ciudad Juarez. The case was submitted by
the United Electrical, Radio, and Machine Workers of America (UE), a labor union, also
in February 1994. The main charge is that attempts to form an independent union with the
help of U. S. UE delegates were suppressed. Speciﬁc allegations include preventing the
distribution of union campaign literature, conﬁscating the literature ﬁom employees, and
actual ﬁrings of employees, some who had been in conversation with the UE delegation
(U.S. DOL 1994b, 5).

Additional charges center around health and safety violations. Speciﬁcally, the
charges are “failing to give light work to pregnant women, failing to provide adequate
ventilation in work areas and suitable protective equipment, and failing to test properly
employees for exposure to chemicals (U .S. DOL 1994b, 6).

After receiving information from the labor unions, the companies, the Mexican
NAO, expert consultants, and a public hearing by the NAO in September, a public report
was submitted the following October with the conclusion by the NAO that the information
submitted by the two labor unions was insuﬁicient to determine that the Mexican
government did not enforce its labor laws in either case (U .S. DOL 1994b, 32).

Essentially, the NAO ruled that the unions were not able to prove a lack of enforcement

22

on the part of the government - this does not mean that violations had not actually
occurred. These two casesraise many issues which will be addressed in the analysis.

NAO Sgbmissg‘ n #940003

The third submission (#940003) was ﬁled by four human rights and worker’s rights
organizations in August 1994. The issues raised in this submission deal with “ﬁ'eedom of
association, protection of the right to organize, and minimum employment standards
relating to hours of work and holiday work (U .S. DOL 1995a, 3).” The freedom of
association/protection of the right to organize allegation was that Magneticos de Mexico
(MDM), a Sony Corporation subsidiary in Nuevo Laredo, Tarnaulipas, Mexico, and the
Confederacion de Trabajadores Mexicanos (CTM), the oﬁcial Mexican labor
confederation, jointly interfered in an internal union dispute and in an election. They
allegedly acted in violation of Mexican labor law by joining forces against independent
union opposition (U. S. DOL 1995a, 3). The minimum employment standards allegations
were denied review by the Secretary of the US NAO based on the reason that
appropriate relief had not been sought under Mexican domestic laws. However, it was
noted that this current denial of review does not preclude that these allegations will not be
reviewed in the future if eﬁ‘orts to seek relief under Mexican law fail (U .S. DOL 1994a,
52992)

There are more speciﬁc allegations stemming ﬁ'om the one accepted for review.
First, there are allegations of improper suspensions or dismissals by the company. One
woman was allegedly suspended because she was complaining about work rule changes.

More severe charges are that a “campaign of intimidation” was geared at the workers for

23.

organizing against the official union, CTM. Seven altemative-union delegates were
allegedly ﬁred (U.S. DOL 1995a, 4-5).

Additionally, there are charges that the delegate election itself was contaminated.
According to the submitters, some workers were not notiﬁed of the election and there was
no secret ballot vote - both are allegedly methods of coercion to determine who was
aligned with the dissident slate. Further, there are allegations that a work stoppage and
demonstration by the workers was violently suppressed by police resulting in several
workers being injured (U .S. DOL 1995a, 5).

One speciﬁc charge is of particular importance as it will emerge again in a later
submission to the U. S. NAO. The submitters allege “that the Mexican government’ has
thwarted attempts by the workers to resister an independent union (U. S. DOL 1995a,
5).”2 Not only are the submitters saying Mexico did not enforce its labor laws, it is being
charged with actually interfering with the rights of workers to organize as they so chose.
Subsequently, the submission further “charges the Mexican government with violating its
obligations under the NAALC, and under ILO Conventions 87 and 98, which guarantee
freedom of association and the right to bargain collectively (6).” Among other types of
relief, the submitters ask that the Sony Corporation be required to comply with Mexican

labor law by the Mexican government (U .S. DOL 1995a, 6).

 

‘ My italics .
2 From the Federal Labor Law (FLL) of Mexico: “In order to be oﬂicially recognized, unions must
register with the Secretariat of Labor and Social Welfare (Secretaria Del Trabajo y Prevision Social,
STPS) in instances where the Federal Government has jurisdiction, and with the local CAB in instances
where local jurisdiction applies (U .S. DOL 1995a, A-4).” Further, “implementation of labor law is under
the purview of state authorities in their respective jurisdiction” with speciﬁc industry exceptions like the
electricity industry (Submissions #940001 and #940002) and the exception of “those that are under direct
of indirect administration by the federal government (Submission #9601) (U .S. DOL 1994b, A-9-A-10).”
24

After receiving information from the submitters, the company, the Mexican NAO,
an expert legal consultant, and a public hearing, the U. S. NAO offered many conclusions
and recommendations. Again, it should be noted that these conclusions are directed at the
Mexico’s enforcement of labor laws (or lack of), not at the company in question.
Concerning the dismissals, the NAO noted the similarities between this case and the ﬁrst
two in terms of coercion. Experts have testiﬁed that intimidation is a factor in getting
maquiladora workers to offer vohrntary resignations that are essentially ﬁrings. The NAO
found that the discharges did occur because of their organizing affiliations, which is illegal.
And because of the economic need for steady income on the part of the workers, many
opted for severance pay rather than protest the dismissals and possibly get nothing (U. S.
DOL 1995a, 27).

The NAO recommended that it “continue to pursue trinational programs under the
NAALC which emphasize exchanges on laws and procedures to protect workers ﬁom
dismissal for exercising their rights to organize and to ﬁ'eedom of association, and
proposes speciﬁc follow-up activities to the recently concluded trinational program on
industrial relations issues (U .S. DOL 1995a, 27-28). Further, the U.S. NAO will conduct
a study to explore the practices and ﬁndings of the local CABs with respect to workers’
complaints of unjustiﬁed dismissals (U.S. DOL 1995a, 28).

Concerning the union elections, the NAO found that it is unclear what recourse
workers have in such cases and if there are any applicable laws in place at all. Thus, the

NAO recommends this issue be place on the trinational exchange program agenda.

25

The work stoppage issue of violence remained unclear to the NAO at the time of
the report. It asked that the Mexican NAO offer information on the role of the police in
the incident. The union registration issue was more clear to the NAO, and it found the
issue to be serious enough that it recommended ministerial consultations “to ﬁrrther
address the union registration process (U .S. DOL 1995a, 32).”

NAO Submgg' ion #940004

The United Electrical, Radio, and Machine Workers of America (UE), like in the
second case, ﬁled this submission against a GE subsidiary in Mexico. There is no public
report available for this case as the submission was withdrawn by the UE before the
review process was completed (U .S. DOL, 1/28/97, 2).

NAO Submission #9601

This submission was ﬁled by Human Rights Watch/Americas (HRW), the
International Labor Rights Fund (IRLF), and the National Association of Democratic
Lawyers (Asociacion Nactional de Abogados Democraticos, ANAD) on June 13, 1996.
The issues raised are freedom of association, procedural guarantees of the NAALC
regarding impartial labor tribunals, and Mexico’s compliance as a signatory with
international conventions (U .S. DOL 1997b, 2). Because of the complexity of the case
under domestic remedy prior to the NAO submission, some background information is
warranted.

The submission originated from a dispute over what labor union would represent
the federal employees of the Ministry of the Environment, Natural Resources, and Fishing

(Secretaria de Medio Ambiente, Recursos Naturales y Pesca, SEMARNAP): the Single

26

Trade Union Workers of the Fishing Ministry (Sindicato Unico de Trabajadores de la
Secretaria de Pesca, SUTSP) or the National Union of Workers of the Ministry of the
Environment, Natural Resources and Fishing (Sindicato Nacional de Trabajadores de la
Secretaria de Medio Ambiente, SNTSMARNAP) (U .S. DOL 1997b, 2).

The story begins with the consolidation of parts of the Ministry of Agriculture and
Water Resources (Secretaria de Agricultura y Recursos I-Iidraulicos) and the Ministry of
Development (Secretaria del Desarollo). This consolidation was part of a larger
reorganization plan for federal ministries. The new ministry became SEMARNAP which
consisted of 2,300 Fishing Ministry workers (under SUTSP), 20,000 Agriculture Ministry
workers, and 3,000 Development Ministry workers. In response to this change, SUTSP
asked for a name change of the union to represent the new consolidation. The appropriate
governmental body they petitioned was the Federal Conciliation and Arbitration Tribunal
(Tribunal Federal de Conciliacion y Arbitraje, FCAT). The request for a name change was
denied because the Fishing Ministry for which SUTSP was established no longer ‘
remained; however, SUTSP was still registered and operational as a union (U .S. DOL
1997b, 3).

A few weeks after the request for a name change, the Federation of Unions of
Workers in the Service of the State (F ederacion de Sindicatos de Trabajadores al Servicio
del Estado, FSTSE)3 called for a new union to represent the newly consolidated
SEMARNAP. The new union would be SNTSMARNAP. After union elections,

SNTSMARNAP became registered with the FCAT (March 20, 1995). Noting that

 

3 rsrse is the only legal federal sector union federation.
27

SUTSP was still registered, SNTSMARNAP ﬁled with the FCAT for SUTSP’s de-
registration. SUTSP was canceled on June 27, 1995 (U .S. DOL 1997b, 4).

SUTSP appealed to the Seventh Collegiate Labor Court of the First District for
being canceled without a hearing and it won. SUTSP was reinstated on January 22, 1996
(U .S. DOL 1997b, 4). This reinstatement forms the basis for one of the allegations in the
case. According to the submitters, SEMARNAP (the new ministry) was not immediately
nude aware of the reinstatement, thus prohibiting SUTSP from participating in “union
representation ﬁlnctions (U .S. DOL 1997b, 4).”

SUTSP then petitioned the FCAT to acknowledge its executive committee, but it
only granted restricted recognition which did not allow union representation. It only
allowed representation of the committee to FCAT and the courts in its disputes. In April
1996, the Second District Labor Court ruled that SUTSP’s registration was illegally
restricted by the FCAT (U .S. DOL 1997b, 5).

SUTSP also fought the recognition of SNTSMARNAP without SUTSP being
granted a hearing. Subsequently, in May 1996, FCAT was order by the Second Collegiate
Labor Tribunal to cancel the new union’s registration. According to the submitters of the
case to the NAO, the new ministry still conducted business with SNTSMARNAP as if it
were registered (U .S. DOL 1997b, 5).

There was another union election in October 1996 and SNTSMARNAP won. The
following month it was registered and SUTSP was de-registered once again. The main
reason the SUTSP then decided to submit this case to the U.S. NAO is because it claims

SNTSMARN AP was given preferential treatment in and prior to the election through

28

“access to government facilities, paid time oﬁ‘ for union business, and control of union
ﬁnances” even though in was not in power (U .S. DOL 1997b, 5-6).

Based on this background, the ﬁrst speciﬁc allegation of the submission is that
FCAT was in violation of federal labor laws when it de-registered SUTSP.4 It also states
that Mexico failed to revise the Federal Law of Workers in the Service of the State (Ley
Federal de Trabajadores al Servicio del Estado, LFTSE) in accordance with its engaged
international treaties. The submitters assert that international treaties take precedence
over domestic law according to the Mexican Constitution and this mandates Mexico to
revise its domestic law accordingly (U .S. DOL 1997b, 6). The second speciﬁc allegation
is that the F CAT is biased in that its sole labor representation comes from FSTSE (the
union federation) which renders it all but impartial in ruling on cases in which FSTSE has
an interest (U.S. DOL 1997b, 7).

The submission was accepted for review on July 29, 1996. After receiving
information ﬁ'om the submitters, the Mexican NAO, legal experts, and a public hearing on
December 3, 1996, the NAO was able to make some speciﬁc remarks on each of the
speciﬁc allegations, as well as general recommendations about the submission as a whole.
First, it conﬁrmed that the Mexican Constitution recognizes treaties as the supreme law of
the land.’ Mexico is a party to Convention 87 of the International Labor Organization

ILO), the International Covenant on Civil and Political Rights, and the American

 

4Thisreferstotheﬁrstrte-registrationofSUTSPasthecasewasﬁledwiththeNAObeforetheseeondde-
registration occurred
5 Article 133 of the Mexican Constitution.

29

Convention on Human Rights. All three treaties provide for ﬁ'eedom of association (U. S.
DOL 1997b, 16).

Further, the issue of freedom of association in Mexico regarding SUTSP was
brought before an international body once before, the Committee on Freedom of
Association (CFA). The CF A found that the Mexican federal labor law policy of only one
union per workplace was problematic (U. S. DOL 1997b, 24), as this case brought to the
NAO seems to prove. The [1.0 also has pointed out in the past that there must be a
distinction made between government-forced unions (monopolies) and voluntary
groupings of laborers (U .S. DOL 1997b, 27). The ILO Committee of Experts on the
Application of Conventions and Recommendations 1991 Report noted that “the
imposition by law of a system of trade union unity at the level of federations is
incompatible with the right of workers’ organizations to establish federations and
confederations (U .S. DOL I997b, 28).”

The ultimate ﬁndings by the NAO in the submission are that the facts presented
“are not in dispute” and that they “raise questions not subject to a clear interpretation by
the NAO (U .S. DOL 1997b, 31,32)” Thus, concerning the enforcement of labor laws,
the NAO suggests ﬁlrther consultations to understand the legalities of the case better.
Concerning the FCAT’s rulings against SUTSP, the NAO found that the outcomes of the
union election was not aﬁ‘ected be the makeup of the FCAT. Its reasoning is that both
unions were affiliated to FSTSE, the official union federation which provides the labor
representation of the FCAT (U. S. DOL 1997b, 32). Overall recommendations by the

NAO are that the U. S. Secretary of Labor call for Ministerial Consultations with the

30

Mexican Secretary of Labor and Social Welfare to examine the relationship of
international treaties to domestic labor law and to review the constitutional provisions for
freedom of association on the labor law (U .S. DOL 1997b, 33).

NAO §ubmission #9602

This submission was ﬁled by the Communication Workers of America (CWA), the
Union of Telephone Workers of Mexico, and the Federation of Goods and Services
Companies (FESB S) regarding freedom of association for organizing workers. The
company in question is Maxi-Switch, a Taiwanese company, located in Cananea, Sonora,
Mexico. The submission was ﬁled on October 1 1, 1996, and was accepted for review on
December 10, 1996.

At the time of this paper, no public report has yet been issued. The report is due
for issuance on June 6, 1997, 120 days after its acceptance for review (U .S.DOL, 1/28/97,

2).

General Analysis of the NAALC and Review of Submissions

Anglysis of the NAALC
As stated previously, the NAALC, and NAFTA as a whole, seek to better working

conditions and living standards and to guard workers’ rights. What is rather unclear and
somewhat conﬁrsing is that there seems to be no actual article or part of the NAALC
which allows these goals to be realized.

The provisions of the NAALC do not set out to improve anything. The basis of

the document is enforcement of the labor laws which already exist in each country - this is

31

all the NAALC enables. It does not establish the ability of one government to say the
labor law itself is inadequate.

Further, the NAALC does not allow any action to be taken toward a particular
company for alleged labor violations. Even if the NAO ﬁnds that the Mexican government
did not enforce its labor laws, meaning that a labor violation has occurred at a particular
company, no action can be taken against the company under NAFTA and NAALC. It is
up to the Mexican government to deal with the company according to its own laws;
however, the rule of enforcement does allow the U. S. and Canada to ﬁne the Mexican
government, or in the extreme impose trade sanctions, so that Mexico does fully enforce
its labor laws (U .S. DOL 1995b, 4), although no ﬁnes have been imposed in any of the
ﬁrst six cases. Nevertheless, the U. S and Canada have no direct control over the labor
situation in Mexico. Inevitably, if the Mexican government chooses not to enforce its laws
and simply accepts ﬁnes and trade sanctions rather than having to deal with a situation,
violations and exploitations may continue to occur.

Another possible downfall to the way the NAALC violations submission process
has been established is the fact that the U. S NAO is hearing violations claims made against
U.S. corporations. Three of the six submissions to the U.S. NAO were alleged against
U.S.. corporations (#940001, #940002, #940004). This is potentially a conﬂict of
interests. In fact, as will be detailed in the case analyses, there is suspicion of this

occurring in one of the ﬁrst two cases reported to the NAO.

32

Review of Submissions

The ﬁrst two cases were classiﬁed under freedom of association and the right to
organize, but there were many more areas involved in the second allegation. In the GE
case, there were several charges of health and safety violations, which is covered by the
NAALC in its deﬁnition of labor law (1993, Article 49(i)). The charges again are “failing
to give light work to pregnant women, failing to provide adequate ventilation in work
areas and suitable protective equipment, and failing to test properly employees for
exposure to chemicals (U .S. DOL 1994b, 6).” Additionally, GE is charged with not
paying overtime according to Mexican law. This is covered in Article 49(t) of the
NAALC.

In essence, the allegations pertaining to these two elements of labor law were
overshadowed by the organizing claims. This also occurred in #940003 with the issue of
minimum employment standards. However, as was detailed in a previous section of this
paper, violations against or exploitations of Mexican labor in terms of health, safety and
wages are major issues that should not be placed on the back burner.

Additionally, the following question could be posed: would any information have
been sufﬁcient enough to prove a lack of enforcement? Janice Shields, author of the
article ‘“ Social Dumping’” in Mexico under NAFTA,” seems to believe that the answer to
this question would be no. She sites the hearings of the ﬁrst two cases stating that
testimony by Mexican labor lawyers seems to establish that Mexican government oﬂicials
would not necessarily enforce the labor law because they are trying to please U. S.

companies (1995, 21). Ifthis is valid, that the government purposely did not enforce labor

33

 

laws, then it seems that an associated governmental agency like the U. S. NAO may have
reason to conchrde “insufficient information” to protect Honeywell, a U. S. company. This
explicitly goes against a major tenant of the NAALC. Article 5 (4) states that “Each Party
shall ensure that tribunals that conduct or review such proceedings are impartial and
independent and do not have any substantial interest in the outcome of the matter (1993).”
In this scenario, the U. S. NAO could potentially be faulted for breaching the NAALC, if
an investigation were to prove the scenario true.

Further, Shields notes that no action was aﬂ‘orded against either company (1995,
21). While the major point here is that something should have been done and someone
made accountable, it must be noted that, ﬁom a U. S. government standpoint there were
no entreated options within the NAFTA and the NAALC that could be taken against
corporations. Again, only the government enforcement of the labor laws is at issue for
ruling in the NAO submissions. NAO Submission #940003 raises similar issues.

In the Sony case, the same types of issues emerge as with Honeywell and GE.
First, the NAO outright declined to review the charge regarding minimum employment
standards in the Sony case (U.S. DOL 1995a, 3). This is slightly diﬂ‘erent from the GE
situation because, in that case, the health and safety violations charges were accepted for
review; however, the NAO did not actually include the health and safety violations in its
“Findings and Recommendations” (Section V) (U .S. DOL 1994b, 28-32).

And, as stated earlier, the minimum employment standards charge in the Sony case
was declined review based on the fact that all domestic remedies had not been exhausted

(U. S. DOL 1994a, 52992). This rejection seems inappropriate based on the prior

34

discussion that international treaties are the supreme law of the land. It is understood that
the NAO was only following the provisions of the NAALC when it declined this tenant of
the submission; however, this says something about the NAALC itself and its lack of
authority to deal with important labor issues. In this sense, the NAALC (and subsequently
NAFTA) does not come across as an overriding legal doctrine when it has so little
jurisdiction in matters and only has authority “after the fact.” The NAO submission
process only comes into play after all domestic remedies have failed, but in many cases this
may be too late to achieve justice.

One of the main themes emerging throughout the cases is the dismissal of workers
and their receipt of severance pay. In three of the four cases for which public reports of
review were available (#940001, #940002, #940003 ), the issue of receiving severance pay
versus bringing a dismissal charge against the company before the presiding CAB was
prevalent. In the ﬁrst two cases, the NAO noted ‘Workers generally do not have the
ﬁnancial resources to pursue reinstatement before the CABs, often opting for the
settlement of their complaints in return for money (U .S. DOL 1994b, 29).”

Further, the UE asserted in #940002 that a main reason for this need for settlement
is the lack of unemployment insurance in Mexico. The NAO added to this statement with
the interpretation that “the right of workers whose employment has been terminated
because of their exercise of the right to organize is de facto limited by their inability to
survive economically until the process of reinstatement works its course (U .S. DOL
1994b, 30).” In #940003, a woman testiﬁed at the public hearing that workers often feel

pressure to resign and receive the severance pay offered or risk receiving no compensation

35

by disputing it (U. S. DOL 1995a, 16). Thus, the economic situations of many workers

demand that something be resolved immediately - the CAB process is not irmnediate.

V- W

As was witnessed in this analysis, NAFTA did take the initiative to encourage
improvement of working conditions and labor standards in all three NAFTA countries, and
to ensure the enforcement of the present labor laws. But it did not even begin to prevent
or remedy the ﬁll] scope of exploitation that exists toward workers in Mexico. As the
NAO submissions demonstrated, there are still many violations of labor law and many
exploitations resulting from poor working conditions and issues of wages. Thus, it must
be concluded that NAFTA did not adequately address the problem of the exploitation of
Mexican labor and, subsequently, has made little progress toward reducing or eliminating
these exploitations and violations.

There are a number of reasons why NAFTA needs to have more endoctrined
power to control the labor situation in Mexico. The NAFTA, through the NAALC, does
not provide any direct redress toward companies in violation of labor law. It does not
even address companies as its focus, rather it addresses the government, speciﬁcally that
agency of the government having jurisdiction over a particular case. The NAALC leaves
all retribution toward companies in Mexico in the hands of Mexico. This quite obviously
does not take into account that the Mexican government may have a vested interest in the

companies operating there and thus may not take action for that reason.

36

Conversely, the U. S. government, as the recipient of labor violations submissions
on behalf of Mexican workers through its NAO, may also have a vested interest if a U. S.
multinational is in question. It seems the only clear solution is for some mechanism for
dealing with companies to be in the NAALC so it is evident that some retribution must
occur, and not be left to the government within whose boundaries the company falls. This
may also help to ensure that domestic laws are fully enforced in the ﬁrst place, especially if
the NAALC provides for stricter action to be taken than mere governmental consultations.

The NAALC does need to become a more powerﬁrl tool on the international
scene. It seems it is the best mechanism to strengthen NAFTA’s control over labor laws
in the three countries, Mexico in particular. Each of the cases reviewed displayed the
inherent weakness of the NAALC and NAFTA to actually change anything for the better.
The doctrines basically allow only for encouragement of cooperation among the countries
and enforcement of present laws. But there is no mandate and this is needed. The
NAALC needs to include specific goals and objectives for accomplishing its main purpose
of improving working conditions and living standards because its present format is not

even close to achieving this end.

37

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