To define 'acceptable conditions of work,' the committee first examined the legislative history of the term, and then considered several alternative interpretations.
Legislative History
The Trade Act of 2002 does not define 'acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health,' and no regulations defining these terms have been promulgated. Because the 2002 law continues worker rights provisions that were originally approved by Congress in 1984, it is useful to look at the history of that law.
When Congress inserted the phrase 'internationally recognized worker rights' in the 1984 Trade Act, it did not draw from established international law. U.S. foreign relations law does refer to 'internationally recognized human rights' (emphasis added), and recognizes some worker rights (such as the prohibition of slavery) as human rights (Potter, 2003). However, U.S. foreign relations law recognizes only those labor rights that violate a human right common in all legal systems and does not refer to any internationally recognized worker rights.
The Senate Finance Committee Report on the Omnibus Trade Act of 1988 offers some insight on what Congress meant by 'internationally recognized worker rights:
The particular worker rights and standards specified by this provision. . . .are each covered by conventions of the International Labor Organization ratified by a large number of countries which in turn are bound to uphold and enforce its provisions. For example, with respect to the right to organize and bargain collectively, 113 countries have ratified International Labor Organization Convention Number 98.
Finally, the legislative history suggests that acceptable conditions of work might vary with a nation's level of development. The House Ways and Means Committee wrote, 'It is recognized that acceptable minimum standards may vary from country to country' (United States House of Representatives, Ways and Means Committee, 1983). The conference report states, 'It is the intention of the Conferees that this definition of internationally recognized worker rights [the list of rights included in the Trade and Tariff Act of 1984 and most recently in the Trade Act of 2002] be interpreted to be commensurate with the development level of the particular country' (U.S. House of Representatives, Ways and Means Committee, 1984).
Alternative Interpretations
One possible interpretation of the intentions of the U.S. Congress is that acceptable conditions of work are those provided by widely ratified ILO conventions, perhaps by at least 100 nations. Following this interpretation, those working conditions governed by ILO conventions ratified by at least 100 nations would be 'acceptable.' Based on this interpretation, U.S. government officials might consider a nation as providing workers with 'acceptable conditions of work, if there is a mechanism to set a minimum wage, as called for in ILO Convention No. 26, and industrial workers receive a weekly day of rest, as called for in Convention No. 14. These two conventions have been ratified by more than 100 nations.
A second interpretation of acceptable conditions of work would be based on the facts that, as discussed in previous chapters, a nation's decision to ratify an ILO convention does not necessarily mean that that nation's workers enjoy the rights embodied in that convention and that a nonratifying country may enforce domestic laws that ensure workers enjoy those rights. If so, one could interpret acceptable conditions of work as those conditions that a large number of countries have affirmed either by ratifying a relevant ILO convention or by enforcing equivalent provisions in domestic law. Under this interpretation, the U.S. government would not only look at the status of ratification of ILO conventions, but also examine national laws to see whether they contain similar provisions governing wages, hours, and occupational safety and health. Common international norms in ratifications or laws would become the standard for assessing acceptable conditions of work. For example, although only 52 nations have ratified ILO Convention No. 1, providing for a 48-hour workweek, a much larger group of 138 nations has legislated regular working hours of 48 hours or less, and 96 nations have daily overtime limits. Following this interpretation, the U.S. government might find it acceptable if a nation meets this international norm by legislating and enforcing a regular workweek of 48 hours.
In the committee's view, long workweeks do not necessarily indicate that working conditions are not acceptable in the ordinary usage of the term. As the committee was preparing this report, the South Korean government briefly proposed that the standard workweek be reduced from 5_ to 5 days. At first, organized labor strongly supported this change. However, once unions learned that the law would have reduced weekly pay proportionately, they quickly withdrew their support. In this case, and in others, workers may prefer longer workweeks.
A final interpretation of acceptable conditions of work is that a condition is judged to be acceptable or not with reference to some external standard. For example, the United States has official poverty lines for families of different sizes. By this external standard, a wage level that does not provide a worker and his or her family with wages above the poverty line might be deemed unacceptable. Because this issue is so important, both with regard to ILO conventions and with regard to the U.S. State Department's reports, the next section of the report deals specifically with it.
Challenges in Defining an Acceptable Minimum Wage
Defining an acceptable minimum wage level, or a 'living wage' in various countries is particularly difficult because of the challenge of finding a common basis across countries and over time. For example, in India, an official committee concluded in 1954 that a living wage,
'should enable the male earner to provide for himself and his family not merely the bare essentials of food, clothing and shelter, but a measure of frugal comfort including education for the children, protection against ill health, requirements of essential social needs and a measure of insurance against the more important misfortunes including old age.'(Government of India, Ministry of Labour, 1954, p.7).
To carry out these recommendations, the Indian Labour conference assumed that a family included the wage earner and 3 dependents, with corresponding specific food, clothing, housing, and fuel requirements.
However, even ignoring the gender bias in the assumption that only the male earns wages, other assumptions may not accurately reflect reality. In India, the majority (52%) of those who worked in 1999-2000 were self-employed as workers (often unpaid) in family farms, informal enterprises, or as artisans and traders. Because they do not earn wages, a living wage does not apply. Another third of India's work force in 1999-2000 were casual workers, often employed by the day. Enforcing a living wage for these workers would be impossible as a practical matter. Finally, available data from household surveys indicate that the assumptions made in 1957 about number of dependents, food, clothing, and other needs are no longer correct.
A U.S. Department of Labor study of wages and workers' needs in the apparel and footwear industries in 35 developing countries, found (U.S. Department of Labor, 2000):
For the countries considered, there appears to be little conclusive evidence on the extent to which wages and non-wage benefits in the footwear and apparel industries meet workers' basic needs.
The Department of Labor noted, 'opinions vary widely' on such question as whether a single wage earner should be expected to support the entire family, how many dependents would be supported, and whether income from other sources should be considered. In addition, non-wage benefits account for a substantial portion of average compensation costs in some developing nations. Finally, even if it had been possible to account for all of these factors to establish a correct 'living wage,' a lack of high quality, comparable data on minimum wages and on prevailing or average wages in the footwear and apparel industries hampered the analysis. The authors concluded:
For several countries where data are available, the minimum wage (and in a few more countries, the prevailing wage in the footwear or apparel industries) may yield an income above the national poverty threshold for an individual (and perhaps one dependent, but not for a family of 4 or 5 with one wage-earner). However, whether this wage is a 'living wage' is likely to lie in the eye of the beholder.
Department of State Definitions
The Trade Act of 2002, in reauthorizing the Generalized System of Preferences (GSP) Program, requires that the President shall submit an annual report to the Congress on the status of internationally recognized worker rights within each beneficiary developing country (19 U.S. Code, Sec. 2464). Before its amendment in 2002, the law was more specific, requiring the Secretary of State to submit to Congress:
a full and complete report regarding the status of internationally recognized human rights -- in countries that receive assistance -- and in all other foreign countries which are members of the United Nations and which are not otherwise the subject of a human rights report under this Act (The Trade Assistance Act of 1974, as amended).
As required by these laws, the Secretary of State has submitted annual reports on countries' human rights and worker rights practices since 1977. The first reports covered only the 82 countries that received U.S. aid at that time, but by 2001 reports were prepared on 195 countries (see U.S. Department of State, 2002).
For the purpose of preparing these reports, the State Department Bureau of Democracy, Human Rights, and Labor has defined acceptable conditions of work (U.S. Department of State, 2002: Appendix B):
'Acceptable conditions of work' refers to the establishment and maintenance of mechanisms, adapted to national conditions, that provide for minimum working standards, that is: wages that provide a decent living for workers and their families; working hours that do not exceed 48 hours per week, with a full 24-hour rest day; a specified number of annual paid leave days; and minimum conditions for the protection of the safety and health of workers. Differences in the levels of economic development are taken into account in the formulation of internationally recognized labor standards. For example, many ILO standards concerning working conditions permit flexibility in their scope and coverage. They also may permit governments a wide choice in their implementation, including progressive implementation, by enabling them to accept a standard in part or subject to specified exceptions. Governments are expected to take steps over time to achieve the higher levels specified in such standards. However, this flexibility applies only to internationally recognized standards concerning working conditions. The ILO permits no flexibility in the acceptance of the basic human rights standards, that is, freedom of association, the right to organize and bargain collectively, the prohibition of forced labor, and the absence of discrimination.
The bureau has expanded on this definition in a memo to U.S. embassies providing guidance for the preparation of the annual country reports. The guidance memo for preparation of the 2001 reports asked posts to address the following questions on acceptable conditions of work (United States Department of State, Bureau of Democracy, Labor and Human Rights, 2002):
Minimum Wage:Is there a legislated or administrative minimum wage rate (set nationally, or by province or industry) and, if so, are there significant parts of the work force outside of its coverage? What is the (hourly or daily) rate in U.S. dollars?
Is it effectively enforced?
By which agency?
Given the level of economic development in the country, does it provide a decent standard of living for a worker and his/her family?
If there is no national minimum wage, posts should indicate whether the average wage provides a decent living for a worker and family.
Standard Language: Posts must use or adapt the following language: 'The national minimum wage (average daily wage) provides (does not provide) a decent standard of living for a worker and family.
Note: In addition to stating the minimum wage in U.S. dollars, give the local currency equivalent in parentheses. For example: 'The daily national minimum wage is $5.55 (24 francs).' (If national standards are set in accordance with hourly or weekly, rather than daily minimum wage rates, adapt this language accordingly).
Hours of Work: Is there a standard legal workweek of 48 hours or less?
Is there at least one 24-hour rest period provided per week?
How effectively are such laws/regulations enforced?
Are there legal limits on hours per week?
Does the law require overtime payment for hours in excess of the standard?
Are there prohibitions on compulsory overtime?
Health and Safety: Does the government set occupational health and safety standards?
Are they effectively enforced?
By what agency?
Do any workers suffer physical or sexual abuse?
Right to Remove: Do workers have the right to remove themselves from work situations that endanger health or safety without jeopardy to their continued employment?
Do laws protect workers who file complaints about such conditions?
What preventive measures, if any, has the government taken when industrial accident rates are unusually high or where well-known occupational health problems exist?
Foreign Workers: Does the law protect (legal) foreign workers? Are illegal foreign workers protected from exploitation by the law?
Do they receive equal treatment in terms of wages and working conditions?
Are they concentrated in certain geographical areas or industries?
Does the situation of domestic and/or foreign workers (especially those without documentation) in effect amount to coerced or bonded labor? If so, why and to what extent?
Are a significant percentage of the foreign workers children or trafficking victims? (If so, briefly indicate the extent of the problem)
Working Definitions
To carry out workers' rights provisions in trade laws and trade agreements, the U.S. government reviews worker rights in other countries. Any interested person may file a petition with the U.S. Trade Representative (USTR) requesting action to remove GSP trade benefits because of alleged violations of internationally recognized worker rights (U.S. Code, Title 19, Chapter 12, Section 2412). When it receives such a petition, the USTR conducts an initial review. Ifit believes the allegations have merit, USTR convenes the Trade Policy Staff Committee (TPSC), made up of representatives from the Departments of State, Labor, and other interested agencies, to conduct a formal review. The USTR also convenes the TPSC to conduct formal labor rights reviews when the United States enters into negotiations about a free trade agreement with another country. At other times, such as when a country receives designation as a GSP beneficiary, USTR gathers information and reviews the country's labor rights informally.
Interviews with current and former TPSC participants indicate that the group often relies on the definition of acceptable conditions of work developed by the U.S. State Department for use in preparing the Country Reports on Human Rights Practices. They do so both directly and indirectly. Directly, the definition helps to assess whether or not working conditions are acceptable. For example, if the country's laws allowed working hours to exceed 48 hours per week, it is possible that the TPSC would find this unacceptable (although this is unlikely, as the TPSC recognizes that labor standards may vary with a country's level of economic development). Indirectly, the TPSC relies on the Department of State's Country Reports as a prime source of information, and these country reports are based on the even more detailed guidance questions listed above. At other times, the TPSC and other branches of the government interpret acceptable conditions of work to mean that a nation enforces its own labor laws (this is the second alternative interpretation noted above).
The U.S. Trade Representative currently uses this approach in carrying out the labor provisions of the U.S.-Cambodia Bilateral Textile Agreement, signed in 1998 as part of a larger bilateral trade agreement. The textile agreement calls for the government of Cambodia to improve working conditions in the textile and apparel sector 'including internationally recognized core labor standards, through the application of Cambodian labor law' (Trade Compliance Center, 1999). During the 1998 trade talks, U.S. negotiators knew that Cambodia's labor laws had undergone a comprehensive 3-year revision with ILO assistance and provided the internationally recognized worker rights included in U.S. trade law. Thus, the textile agreement calls for the application of Cambodian labor law as the way to achieve acceptable conditions of work and core labor standards.
Under the textile agreement (which was later extended through 2004), the United States reviews labor conditions in the textile and apparel sectors annually and may increase U.S. imports by as much as 14 percent if the review is positive. Following its initial review of labor conditions in December 1999, the U.S. government allowed imports to increase 5 percent, in recognition that Cambodian factories had made progress towards compliance. The United States offered additional quota increases if Cambodia would allow the ILO to monitor its textile and apparel plants, and Cambodia agreed after the U.S. provided technical assistance funding to Cambodia's labor ministry, as well as most of the cost of establishing an ILO monitoring project. Since 2000, ILO staff and local inspectors have monitored conditions at 195 Cambodian textile and apparel factories. These inspectors measure compliance with Cambodianlabor laws. In this case, then, acceptable conditions of work are assumed to be those conditions that are guaranteed by Cambodia's own labor laws. Those conditions are quite similar to those required by the U.S. State Department's definition of acceptable conditions of work.
Although Cambodian laws, if adequately enforced, appear capable of providing most of the requirements of the State Department definition of 'acceptable conditions of work,' there is one important difference. In enforcing the trade agreement, USTR follows the ILO review, and this review focuses on enforcement of Cambodia's wage and overtime laws, without considering whether such laws provide a 'decent wage.' Following its stricter interpretation, the U.S. State Department's review of wages in 2001 found, 'prevailing wages in the garment sector . . . were insufficient to provide a worker and family with a decent standard of living' (U.S. Department of State, Bureau of Democracy, Labor and Human Rights, 2002).
In the three reports on Cambodian textile and apparel workers completed to date, monitors have found only a few violations of core labor standards prohibiting child labor and forced labor. However, each report has found problems of incorrect payment of wages and extensive, involuntary overtime (Sibbel, 2002). Because Cambodia has made progress, but has not yet reached full compliance with 'acceptable conditions of work,' the U.S. Trade Representative allowed Cambodia's export quotas to increase 9 percent in 2000, 2001, and 2002, rather than the full 14 percent possible under the Cambodia Bilateral Textile Agreement (American Embassy Cambodia, 2002). In early 2002, the U.S. and Cambodia negotiated a 3-year extension of the trade agreement, including the export increase incentive for compliance with international labor standards.
Committee Interpretation of Acceptable Conditions of Work
The committee recognizes that the U.S. government does not use a single interpretation of acceptable conditions of work. Using alternative interpretations has the benefit of allowing the government to interpret the law flexibly, as called for by the legislative history. The State Department definitionincorporates many elements that are also found in ILO conventions and are often found in national laws and regulations. However, actually determining on a country-by-country basis whether or not they meet the standards of wages that provide a decent living for workers and their families is problematic. As indicated in the State Department's guidance memo to embassies, Foreign Service officers around the world are expected to make judgments about whether wages in their host nations provide a decent living. Over the past decade, the number of Foreign Service officers with specific training and responsibility to deal with labor issues has declined (Advisory Committee on Labor Diplomacy, 2001). Even those who have some training are unlikely to be able to accurately access data on average nationwide wage levels and determine whether those levels provide a 'decent living.'
The committee proposes the following minimum, tractable, easily identifiable, and comparable list of indicators of acceptable conditions of work:
a mechanism exists to establish minimum wages (based on ILO Convention No. 26);
the regular workweek is 48 hours or less (based on ILO Conventions No. 1, 30, 47 and on widespread national law);
the nation has and enforces a law providing for a specified number of paid holidays days each year for covered workers (based on ILO Conventions 52, 101, 132);
all workers in covered jobs receive a full day of rest every 7 days (this expands ILO Convention No. 14, which applies only to industrial workers); and
there is a mechanism for setting health and safety standards (ILO Convention No. 155).
The committee recognizes that, unless these provisions cover a large share of the labor force, compliance with them might not improve the welfare of all workers to a significant extent. The committee also recognizes that it would be possible to supplement this list with additional indicators.
1. The provisions of this act, which allows the United States to retaliate with higher tariffs against a nation that gains competitive advantage by systematically denying basic internationally recognized worker rights, have never been implemented.
2. There is an extensive academic debate about both the potential benefits of requiring employers to pay a 'decent wage' or 'living wage,' and the possibility that such a requirement might discriminate against certain groups of workers, regions, or countries (see, e.g., Moran, 2003; Srinivasan, 2001).
