Labour‐standard setting and regional trading blocs. Lesson drawing from the NAFTA experience
| Published date | 01 October 2003 |
| DOI | https://doi.org/10.1108/01425450310490156 |
| Date | 01 October 2003 |
| Pages | 428-452 |
| Author | Paul Teague |
| Subject Matter | HR & organizational behaviour |
Labour-standard setting and
regional trading blocs
Lesson drawing from the NAFTA
experience
Paul Teague
School of Management and Economics,
Queen’s University of Belfast, Belfast, UK
Keywords Trade, Labour, Globalization, Standards
Abstract This paper examines the labour-standard-setting institution associated with NAFTA,
the North American Agreement on Labour Cooperation (NAALC), sometimes referred to as the
Labour Side Accord. The agreement is best described as a tri-national institutional arrangement
that grafts formal international procedures onto domestic labour market regimes. This feature
ensures that it stands apart from the EU social policy, which is best seen as a supranational
deliberative governance arrangement. The manner in which NAALC procedures have been used is
documented and the main discernible pattern of action explained. The paper argues that NAALC
is cumbersome and convoluted to operate. Yet it also argues that NAALC holds out interesting
lessons for other regional trading blocs and other global experiments in labour market standard
setting as its decentralised and “horizontal” character is more in keeping with the broad
institutional design of such arrangements. The paper concludes by suggesting that NAALC will
only reach its full potential when organised labour in the three participating countries adopt a more
active approach to transnational collaboration inside NAFTA.
Introduction
The number of regional trading blocs has increased in recent years. These
geographical based commercial and economic coalitions are partly an aspect of
the wider process of economic globalisation and partly a response to it. On the
one hand, these arrangements accelerate the dynamics of economic openness
by creating preferential commercial areas. On the other hand, closer economic
ties has encouraged the formation of a shared political understanding between
participating countries to promote joint action and pursue common policies to
obtain mutually beneficial outcomes. As a result, governments have come to
view regional trading blocs as a potential source of extra-national support in
the face of greater market interdependence. Moreover, an important domino
effect has opened up. Countries feel obliged to join these arrangements in
response to the participation by neighbouring countries. Thus regional trading
blocs are procedures to deepen market access and arenas for collaborative
activity between nation states.
That regional trading blocs may be more than market-making arrangements
has encouraged the view that they may be a possible site of social-standard
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ER
25,5
428
Received August 2002
Revised December 2002
Accepted January 2003
Employee Relations
Vol. 25 No. 5, 2003
pp. 428-452
qMCB UP Limited
0142-5455
DOI 10.1108/01425450310490156
setting, particularly on labour and environmental matters (Cook and Katz,
1994). Frequently in these discussions the EU is held up as the “best practice”
model of how an institutionalised labour-standard-setting arrangement can
develop as part of a regionalisation process. Without making allowance for
how these arrangements may vary both in terms of the interdependencies they
foster and the institutional design that holds them together, the demand is for a
social dimension that replicates EU experience. But the character of EU social
policies have been shaped by the interplay of many distinctive factors and thus
may not be suitable for another regional trading bloc with different
institutional features (Teague, 1989). Thus, it may be short sighted for those,
such as social actors, keen to see regional labour regulation to demand a
mechanical transfer of EU type social policies to other geographical settings.
They may find themselves running into a mobilising cul-de-sac.
To encourage more careful and innovative thinking about labour standard
setting at the regional level, this paper examines the operation of the North
American Agreement on Labor Cooperation (NAALC), the labour-standard
setting arrangement that has been grafted onto NAFTA. The working
assumption motivating the paper is that many EU social policies may reflect
the “deep” character of European integration and thus may be too advanced for
regional trading blocs which are more “shallow” in institutional design. Deep
forms of regional integration have more extensive common rules, regulations
and policies to govern the internal area than shallow regional integration
arrangements, which are more likely to have weak institutional centres
(Lawrence, 1996). In fact because NAFTA’s open and decentralised character is
more representative of the general institutional pattern of such arrangements
more pertinent lessons may be learnt from the implementation of NAALC. This
working assumption should not be taken as an endorsement of weak forms of
labour regulation outside the nation state and more a challenge to the view that
there is one best way to organise labour-standard setting in the global
economy.
The paper is organised as follows. The first section develops the theoretical
context for the analysis. The second describes the institutional character of
NAALC. Then the activities triggered under the aegis of this arrangement are
set out and analysed. Next, the paper discusses the strengths and weaknesses
of NAALC as a site for labour market regulation. The following section
compares and contrasts NAALC and the EU social dimension to pinpoint the
underlying properties that cause them to function in rather different ways and
to tease out the political and social significance of this diversity. The
penultimate section explains how the decentralised and tri-national character of
NAALC may be used to advance labour-standard setting in the new production
networks being established between USA, Canada and Mexico. The
conclusions bring together the arguments of the paper.
Labour-standard
setting
429
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