This year, the 111th Congress and the Obama Administration are preparing to move forward on pending trade agreements with Panama, Colombia and South Korea. Passage of these trade agreements have stalled due to a variety of concerns including labor rights practices, especially in Colombia and Panama. The current discussion is on charting a course of action for governments prior to a vote in the U.S. Congress on the trade agreements such as establishing reasonable and timely benchmarks that demonstrate improvements in a given area and authorizing an international body to monitor compliance.

Similar congressional concerns over labor rights nearly caused the defeat of the Dominican Republic-Central America Free Trade Agreement in 2005 in both chambers. To guarantee its passage, former U.S. Trade Representative Robert Portman and Senator Bingaman (D-NM) agreed to provide roughly $20 million to improve labor rights practice and enforcement, based on the recommendations outlined in the White Paper “The Labor Dimension in Central America and the Dominican Republic — Building on Progress: Strengthening Compliance and Enhancing Capacity.” WOLA began monitoring DR-CAFTA, labor conditions and the U.S. funding of the White Paper projects in the six countries in mid-2006 and believes that this report will also provide useful insight and recommendations for the debates on the Panama and Colombia trade agreements.

WOLA finds that while the funds directed towards implementing the White Paper recommendations support novel and commendable projects, the money is insufficient to resolve the long-standing labor problems plaguing the region. Despite the promises by the governments and U.S. funding, labor conditions in the DR-CAFTA countries have not improved and violations continue unabated. WOLA also finds that the governments are unable or unwilling to reform the labor legislation identified in the White Paper, and that the judicial systems continue to be inefficient and incapable of enforcing judgments.

WOLA believes that the Obama Administration and Congress have unique opportunities to make changes that can have a direct impact on labor rights in the DR-CAFTA countries. The recommendations include strengthening enforcement mechanisms through employer sanctions; providing direct support to labor unions; and urging the governments to establish laws that regulate employment subcontracting. The Obama Administration should also strengthen the trade agreement to make labor violations equal to commercial ones, as was done in the Colombia and Peru trade agreements. Finally, WOLA urges both the Administration and the Congress to work with the governments to create formal sector employment in order to reduce poverty and stabilize labor markets. Taking these steps will improve labor rights practices in the Dominican Republic and Central America, and the lessons learned from this study should inform the debates on pending trade agreements.