The dispute resolution process
Since the North American Agreement on Labour Cooperation (NAALC) signed in 1994, the United States and Canada have established a dispute resolution process linked to labour obligations in their trade agreements. If a member of the public considers that the partner country of a trade agreement that incorporates a social clause fails to meet its commitments in terms of labour standards, he may submit a communication to his ministry of labour with the aim of initiating a process to resolve the dispute in question. This process is established in five successive stages: from public communications to the possibility of sanctions.
According to the Canadian approach, a penalty mechanism is more effective than a mechanism focusing exclusively on public information and moral condemnation.
The objective is to put pressure on countries to respect workers’ rights. A monetary compensation is the most common «sanction» mentioned in social clauses, Canada is committed to deposit the sums of money generated by sanctions into a fund created to improve workers’ rights in the concerned country.
At the same time, Canada’s current position is that the labour chapter should also be subject to the dispute settlement mechanism applicable in the trade agreement (including the possibility of trade sanctions).
This system has been often criticized for its inefficiency, since no action has been implemented for the imposition of remedies.
How to improve the dispute resolution process
Provide trainings to civil society organizations interested in submitting communications.
Provide financial resources to fund independent expertise assisting organizations in filing communications.
Strengthen States capacity to bring a case to arbitration.
Create a government independent institution destined to receive and review complaints, instead of the ministry of labour.
Adopt a compliance agreement defining the problems, determining the results and providing for penalties. If the targeted State does not attain the expected results, then it can proceed to the panel of experts stage.
Impose trade sanctions. If the non-compliance with the commitments is recurrent, the commercial benefits arising from the agreement should be suspended in part (eg. a specific industry sector) or in total depending on the degree of harm suffered, as provided for in several agreements signed by Canada since 1994.