The United States’ LTAs

Bilateral and Regional Approaches

In the area of trade, as in many other areas, the United States has always favoured multilateralism to further their agenda, and the multilateral trading system has been preferred to other cooperation forums, in particular since the Uruguay Round negotiations and the creation of the WTO. Nonetheless, the bilateral approach has never been dismissed.

Since the 1980s, the bilateral approach has been used systematically as a secondary strategy to further a new trade agenda, while also adding pressure for progress on the front pf multilateral trade negotiations. New issues such as the protection of intellectual property rights, investment protection, services and new technology made their way into the scope of negotiations. A first major defining moment occurred in 1988, with the signing of a free trade agreement with Canada, and it was followed by a second in December 1992, with the signing of the North American free trade agreement (NAFTA), with Mexico and Canada. These two agreements created precedents and contributed significantly to the conclusion of the Uruguay Round. Since then, the United States has multiplied bilateral and regional initiatives, changing strategies in favour of the "hub and spokes" approach, and promoting competition among free trade agreements.

The United States has taken the same approach in the area of labour. After attempting in vain to bring labour issues to the GATT trade negotiations agenda on several occasions, the United States began to include labour standards in the eligibility criteria for general preference systems in the 1980s. Two major objectives were sought : on the one hand, to ensure that countries did not use labour laws to create an artificial competitive advantage in export markets, and on the other hand, to promote foreign investments and development through trade, thus generating economic and social progress for the participating countries and workers. All major regional initiatives of a preferential nature incorporate labour standards into the eligibility criteria, including – since the Trade Act of 2002 – the mandatory criteria.

These innovative initiatives have a strong symbolic value. Yet their impact is nevertheless limited due to objectives and their minimal importance in American trade. In particular, objections have often been raised regarding the fact that the criteria go against the objectives of preferential programs, that their enforcement gives rise to useless controversy, that geopolitical or trade interests generally come before the improvement of working conditions, and that cooperation is preferable to trade sanctions. Countries are only very rarely and temporarily deprived of their privileges in the event of non-compliance with labour commitments. With the free trade agreements, the problem presents itself differently.

NAFTA is the first agreement signed by the United States with a developing country, namely Mexico. This agreement marked a turning point in their North-South relations, as well as in the debate on social clauses. Despite its weaknesses, NAFTA, with its side agreement on labour cooperation (NAALC), played a precursory role in the area of labour, and furthermore in that of the environment. The free trade agreement with Jordan, signed in 2000, amended two of its major flaws : on the one hand, labour standards are included in the text of the agreement, and on the other, the contracting parties are required to comply with these provisions in the same way as the other provisions in the agreement. However, a letter of agreement between the two countries replaced the trade sanctions with financial penalties. Since the Trade Act of 2002, the United States has signed several free trade agreements with developing countries. They all include the same obligations to comply with labour standards. The United States has however abandoned any vague desire to harm trade, and the unilateralism which some feel is aggressive has made room for bilateral cooperation, capacity building and a wider involvement of civil society.