Australia - United States Free Trade

Australia-United States Free Trade Agreement - Guide to the Agreement

18. Labour

Purpose and structure

The labour Chapter sets out a number of provisions designed to ensure that neither Party fails to enforce its own labour laws in a way that affects trade between the Parties. The Chapter also provides for labour cooperation, including through the establishment of a consultative mechanism.

The Chapter consists of eight articles dealing with a Statement of Shared Commitment, Application and Enforcement of Labour Laws, Procedural Guarantees and Public Awareness, Institutional Arrangements, Labour Cooperation, Labour Consultations, Internationally Recognised Labour Principles and Rights, and Scope.

1. Why a Labour Chapter?

The underlying rationale for the Chapter is reflected in the text in Article 18.2.2: 'The Parties recognise that it is inappropriate to encourage trade or investment by weakening or reducing the protections afforded in their respective labour laws'

2. Core obligations (Article 18.2)

The core obligation for each of the Parties is contained in Article 18.2.1(a), which provides that 'neither Party shall fail to effectively enforce its labour laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties' This is the only obligation subject to dispute settlement (see Section 6). Labour laws are defined (in Article 18.8) as those directly related to the internationally recognised labour principles and rights set forth in Article 18.7 (see Section 4).

Under the Agreement only the government of each Party can bring such an action.

3. Labour standards (Article 18.1)

It reaffirms each Party's obligations as members of the International Labour Organisation and their intention to strive to ensure that the internationally recognised rights and principles defined at Article 18.7 (see Section 4) are recognised and protected by domestic law. Conformity with ILO obligations does not, however, have any implications for conformity with the obligations subject to dispute settlement under this Chapter.

The Chapter recognises the right of each Party to establish its own standards and adapt or modify its laws and regulations accordingly (Article 18.1.2). The shared commitment by each Party to strive to improve those standards 'consistent with high quality and high productivity workplaces' recognises that labour laws and regulations need to reflect broader economic goals such as enhancing economic competitiveness (Article 18.1.2).

The Parties 'recognise that each Party retains the right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other labour matters determined to have higher priority' (Article 18.2.1(b)).

4. Labour laws (Article 18.7)

The core obligation not to fail to enforce labour laws (see section 2) is limited to those labour laws 'directly related to the internationally recognised labour principles and rights set forth in Article 18.7' (Article 18.8) as defined in United States Trade Promotion Authority. Those internationally recognised labour principles and rights are set forth as:

(a) the right of association;

(b) the right to organise and bargain collectively;

(c) a prohibition on the use of any form of forced or compulsory labour;

(d) labour protections for children and young people, including a minimum age for the employment of children and the prohibition and elimination of the worst forms of child labour1; and

(e) acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

The footnote to sub-paragraph (d) refers to the fact that Australia does not have legislation concerning a universal minimum age for employment, but secures this objective through Federal, State and Territory government regulation on the age levels for compulsory education.

5. States and Territories (Article 18.8)

For the United States, labour laws are defined (Article 18.8.1) as 'acts of the U.S. Congress, regulations promulgated pursuant to an act of the U.S. Congress, or provisions of such acts or regulations directly related to the internationally recognised labour principles and rights set forth in Article 18.7 that are enforceable by action of the federal government'. This provision reflects the fact that, in the United States, the federal government exercises primary authority with respect to labour laws, and can enforce these laws at the state as well as federal level. US States are not, therefore, specifically included in the definition of US laws.

The situation is different in Australia as the Commonwealth Government is not able to enforce State laws. A definition of Australia that included only Federal Government laws would not cover state laws in a manner comparable to the undertaking made by the United States. For Australia, therefore, labour laws are defined (Article 18.8.2) as 'acts of a parliament of Australia, or regulations promulgated pursuant to such acts, directly related to the internationally recognised principles and rights set forth in Article 18.7.' This definition covers relevant Federal and State labour laws.

The Federal Government would be responsible for a failure to enforce effectively either State or Federal laws. Should the United States raise a concern about failure of an Australian State to enforce effectively its own laws in accordance with Article 18.2.1(a), the Commonwealth government would consult with that State government.

6. Dispute Settlement (Consultations) (Article 18.6)

The dispute settlement (consultations) provisions of the Labour Chapter (Article 18.6) mirror the general dispute settlement provisions of the Agreement (see Chapter 21).

Under the provisions of Article 18.6 a Party may raise with the other Party any matter arising under the Chapter (Article 18.6.1); Parties are encouraged to resolve the matter (Article 18.6.2); but if they cannot do so at that stage, they can convene the Sub-Committee on Labour Affairs (as described in Article 18.5.1) to help (Article 18.3). Only if the matter relates to Article 18.2.1(a) (failure to effectively enforce the Party's laws) may a Party initiate the general dispute settlement provisions of the Agreement (Articles 18.4 and 18.5).

A feature of the dispute settlement procedures applying to the labour and environment Chapters is that panelists chosen to determine the dispute are required to have expertise or experience in the relevant matter under dispute.

7. Penalties

The penalties for a failure to comply with Article 18.2.1(a) (effective enforcement of laws) are to be found in the dispute settlement Chapter (Article 21.12). Penalties take the form of a fine of up to US$15 million p.a. (adjusted for inflation) to be paid by the Party complained against into a fund, to be spent at the direction of the Parties on appropriate labour initiatives in the territory of that Party (Article 21.12.4).

8. Procedural Guarantees and Public Awareness (Article 18.3)

In the interests of transparency and procedural fairness, each Party shall ensure that persons with a legally recognized interest under its law in a particular matter have appropriate access to judicial, quasi-judicial, or administrative proceedings for the enforcement of the Party's environmental laws. Each Party will:

9. Institutional Arrangements (Article 18.4)

The Joint Committee established to supervise the implementation of the Agreement (see Article 21.1.1) will discuss matters related to the operation of the Labour Chapter and the pursuit of the labour objectives of the Agreement. The Joint Committee may establish a subcommittee on Labour Affairs to discuss matters related to the operation of the Chapter. Meetings of that subcommittee would normally include a public session (Article 18.4.1).

Each Party will designate an office to serve as a contact point with the other Party, and with the public to:

Each Party may consult, by whatever means it considers appropriate, with representatives of its labour and business organisations, and, as appropriate, other persons, on the operation of the Chapter (Article 18.4.3).

All formal decisions of the Parties concerning the operation of this Chapter will be made public, unless the Joint Committee agrees otherwise (Article 18.4.4).

10. Labour Cooperation (Article 18.5)

The Parties recognise that cooperation provides opportunities to promote respect for workers' rights and the rights of children consistent with the core labour standards of the International Labour Organisation, and agree to establish a consultative mechanism for such cooperation (Article 18.5.1).

These cooperative activities may include work on labour law and practice in the context of the ILO's Declaration on Fundamental Principles and Rights at Work, and such other matters as the Parties agree. In identifying areas for cooperation, the Parties will consider the views of their respective worker and employer representatives and other persons, as appropriate (Article 18.5.2).

Cooperative activities may be implemented through exchanges of information, joint research activities, visits or conferences, and such other forms of technical exchange as the Parties agree (Article 18.5.3).

18-1 Australia provides labour protections for children and young people primarily through laws and regulations that regulate age levels for compulsory education.

March 6, 2004

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