Institutional bodies associated with the social clause

Trade agreements provide for the establishment of institutional bodies offering a formal framework in which partner states can discuss issues related to the implementation and application of a social clause. Specific functions are assigned to each body. For example, one serves as a first instance in the dispute settlement process, while another intervenes as a forum where partners develop and operationalize cooperation programs. Today there are three types of institutional bodies linked to the social clause.

  • The Permanent Secretariat. Closed since 2012, the NAALC Permanent Secretariat presented annual reports and comparative research on labour law and labour market of partner countries in order to assist the Ministerial Council in making informed decisions. The Secretariat also provided support for the cooperation activities implemented.
  • The Ministerial Council. Each agreement provides for the creation of a forum in which labour Ministers (or their designees) of partner States can meet on a regular basis. This is the main decision-making body in the implementation of a social clause. It serves as a forum for the development of cooperation activities, for negotiations when a dispute arises and for defining the dispute settlement mechanism parameters. It also assesses the effective implementation and provides mechanisms for civil society participation (public, employers, trade unions) in the decision-making process of the Ministerial Council.
  • The permanent forum of interministerial consultation. This institution is embodied differently from one agreement to another: the national administrative offices (NAO, NAALC), the national secretariats (Canada-Chile) or the national contact points (Canada-Costa Rica, etc.). These bodies act as contact points for the reception and evaluation of civil society complaints in each country. They represent a tool for cooperation allowing partners to exchange information about their labour market and to clarify their legislation if necessary.

Ways to strengthen the effectiveness of institutional bodies

  • Establishing an independent permanent Secretariat. As of today, no permanent independent body is in charge of ensuring the implementation of the social clause included in the agreements. A permanent, autonomous Secretariat would be responsible for the implementation of the social clause, and could also have the power to investigate violations and impose sanctions.
  • Increasing financial resources to the Ministerial Council and / or the Permanent Secretariat. More financial resources would strengthen the institution’s capacity to assist parties in the enforcement of their labour laws.
  • Promoting civil society participation. Ministerial Councils provide mechanisms for public participation, however, little is known about such mechanisms. Wider dissemination of information on these mechanisms would allow for a more sustained involvement of civil society in the Ministerial Council activities, while increasing the legitimacy of the decisions taken.
  • Expanding the mandate of the institutional bodies responsible for the implementation of trade agreements. By entrusting the mandate of ensuring the implementation of a social clause to main institutions in trade agreements, rather than to institutions created solely for the social clause, the mandate would then rest with institutions already active and with adequate funding.

Arguments in favour

  • A permanent Secretariat would make the social clause more effective by devoting human resources to support its implementation on an ongoing basis.
  • Since trade agreements have a permanent Secretariat to monitor trade objectives, creating a permanent institution for social objectives would correct the institutional imbalance.
  • Institutions would receive the financial resources needed to ensure the effective implementation of the social clause.

Arguments against

  • Regardless of institutional arrangements, the social clause objectives will always be overshadowed by commercial objectives.
  • Interdepartmental consultative bodies are in a conflict of interest: they are responsible for both assessing the complaints filed and promoting cooperation between parties.
  • There is no need to create a permanent Secretariat due to its lack of power to investigate alleged violations or to impose sanctions (the NAALC model).

What they said:

«By allowing the NAALC Secretariat to atrophy and to cease carrying out its reporting functions, parties and stakeholders in the three countries have missed the opportunity to obtain valuable experience of systematic and transparent review of labour standards that would have informed the public and debated how to achieve international standards.» (free translation)

Kevin Banks, Law Professor at Queen’s University. Ontario, 2010


«Following the adoption of the NAALC, emphasis was placed on compliance with the obligations and on the effective implementation of the agreement, to the detriment of its positive cooperation activities. Therefore, the debate has taken a direction and a tone that does not correspond with the cooperation objectives of the agreement.»

U.S. Council for International Business, 1999


«NAFTA’s parallel agreements on labour and environment have never been designed to alter the substance of the treaty. They will not be able to do it either because they are weak and ineffective.» (free translation)

Robert G. Finbow. «The Limits of Regionalism: NAFTA’s Labour Accord», International political economy of new regionalisms series, 2006


«[…] the member states, and not any permanent independent body, are in control of the dispute settlement process.»

Francesco Duina, Professor at the University of British Columbia. Vancouver, 2015


«Most, if not all observers agreed that the cooperative aspects of the NAALC are important and provide hope for addressing common labor law enforcement concerns in the three countries. While there were differences among observers regarding the relative emphasis that should be placed on cooperative programs versus oversight and dispute settlement, almost all observers agreed that there was a need to keep the cooperative aspect alive and well.»

Eric Griego. Secretariat of the Commission for Labor Cooperation, 1998


«The parties should create an independent oversight agency responsible for reviewing allegations of non-compliance and engaging the governments to take remedial action.»

Human Rights Watch. «Trading Away Rights, The Unfulfilled Promise of NAFTA’s Labor Side Agreement», 2001


«NAALC institutions should receive adequate funding. For the moment, the three countries have contributed equally to the slender budget of NAALC institutions […]. The large difference in size between the economies of the three North American countries would justify scaling the contributions according to the size of trade flows in each country.»

Gary Clyde Hufbauer et Jeffrey J. Schott. «NAFTA Revisited, Achievments and Challenges», Institute for International Economics, Washington D.C., 2005


«the NAFTA Labor Secretariat’s periodic reports on comparative labor markets and North American labor law provide valuable information for researchers, policy makers, and practitioners in the three countries.»

The Industrial Relations Research Association-NAFTA Committee. «Making Free Trade more Fair:Developments in Protecting Labor Rights», 1997