Under the conditional model, the right to enter a market freely is linked to an obligation: to respect workers’ rights. In order to do so, it is agreed that a penalization mechanism is more effective than a discussion mechanism based on information to the public and moral condemnation. The objective is to persuade countries to respect workers’ rights. Generally, monetary or economic sanctions are associated with dispute resolution mechanisms for this purpose.
- Economic sanctions. Some social clauses suggest the implementation of punitive trade measures for countries that do not comply with their labour rights commitments. For example, the Free Trade Agreement between the United States and Peru and all US agreements signed after 2008 include the possibility of suspending all benefits arising from the agreement in the event that a party contravenes provisions of the Labour Chapter. The Government of Canada is now seeking to include the labour chapter in the general dispute resolution mechanism associated with the trade agreement. As a result, failure to comply with the labour chapter may be punishable by trade sanctions.
- Monetary penalties. The most common “sanction” in the clauses is a type of monetary penalty. In a number of agreements, parties commit to deposit the sums raised in a fund designed to address the labour issues at hand and improve respect for workers’ rights in the offending country.