Labor, Environment, and . . . Gender? What the USMCA Could Mean for the Inclusion of Gender in Future U.S. Trade Agreements
This commentary is the second of a four-part series that examines the intersection between trade and gender. Though the term “gender” can encompass a variety of identities, the series will limit its consideration of gender differences to differences between women and men, due to limited data availability and other practical considerations. This installment considers what we can learn from the labor and environment chapters in the United States-Mexico-Canada Agreement (USMCA) to design gender clauses for future agreements. Over the next several months, CSIS will consider three case studies to inform research on existing gendered trade barriers before producing gender-specific model language for policymakers’ use in future trade agreements.
As discussed in the first installment of this commentary series, gender-specific language in trade agreements is rare. Mentions of the unique trade challenges that women face globally—such as gender discrimination in import taxes and reduced access to trade finance—rarely appear. When agreements do include gender provisions, the language is often vague and unenforceable, and seldom requires action. Many countries continue to resist addressing gender in agreements despite findings from the UN Conference on Trade and Development (UNCTAD) that trade policy is not gender neutral. Indeed, data show that trade agreement provisions often have different impacts on women and men and can lead to higher barriers to trade for women.
Though gender provisions that do exist in trade agreements broadly affirm gender equality, advocate for equal pay, and address workplace discrimination against women, more detailed language and obligations can lead to more measurable impacts. These impacts would benefit everyone, not just women. For example, abolishing customs duties, increasing market access, encouraging investment, and supporting women in the workforce can lead to higher employment and GDP, a more highly skilled labor force, and more competitive economic opportunities.
CSIS is conducting research on how best to promote the inclusion of gender commitments in trade negotiations and agreements. In considering the implementation of gender-specific trade language, it is useful to reflect on the treatment of two particular trade topics: labor and environment. Both policy areas have merited their own chapters in trade agreements over the past few decades. In this commentary, we consider how the United States-Mexico-Canada Agreement (USMCA) can inform future agreements’ recognition and treatment of gender disparities. Some of the politics surrounding USMCA negotiations may also foreshadow the political challenges that proposed text on gender could face in the United States.
The first trade agreement to include labor provisions was the 1994 North American Agreement on Labor Cooperation (NAALC), which accompanied the 1992 North American Free Trade Agreement (NAFTA, the precursor to today’s USMCA). Since then, agreements have added stronger labor-specific provisions; referenced key International Labor Organization (ILO) conventions, such as the Declaration on Fundamental Principles and Rights at Work; and subjected labor chapters to dispute settlement.
Notably, the World Trade Organization (WTO) does not maintain its own labor standards. It instead leaves the treatment of labor to the ILO, which lacks robust enforcement mechanisms. As a result, a number of WTO member states have dragged their feet on including labor clauses in their trade agreements. For example, countries that seek to attract foreign investment might benefit from maintaining low labor standards and resist the inclusion of stringent standards in trade agreements. The United States, however, has taken a different approach; in contrast to its agreements’ historical disregard for gender, the country has proven itself a leader in promoting labor rights through free trade agreements (FTAs). All FTAs the United States has signed since 1994 have included labor provisions, a practice that was established through the May 10 Agreement requiring their inclusion and the 2015 Trade Promotion Authority (TPA) requiring their subjection to dispute settlement mechanisms (DSMs).
Despite U.S. leadership on labor rights issues, the inclusion of these provisions in trade agreements does not guarantee they sufficiently address all labor-related issues, especially those that primarily affect women. Most agreements with labor provisions address key worker rights, such as reasonable working hours, occupational safety and health, minimum wage, and the freedom of association and right to organize. However, few condemn forced labor, and even fewer acknowledge labor challenges that disproportionately affect women, who comprise 59 percent of the world’s employment in services. Such challenges are often implicit; for example, an agreement that does not mandate domestic legislation on parental leave or childcare may hinder women’s ability to start their own export businesses, gain employment to pay for trade finance workshops, or network with trade partners relative to men. Failure to address these issues may widen an existing leadership and pay gender gap, which has only worsened during the pandemic. Enforcement of labor obligations has historically been slow and insufficient. For example, the United States has brought only one labor rights case to an FTA’s DSM, in 2010. An arbitral panel was formed in 2012 and, in 2017, failed to recognize labor rights violations the United States alleged against Guatemala. (The panel left no opportunity for appeal.) Absent effective enforcement action, labor and gender obligations, no matter how robust, will have limited impact.
The Evolution of U.S. Labor Provisions in Trade Agreements
The USMCA, which replaced NAFTA and entered into force on July 1, 2020, has been widely praised for the strength of its labor chapter relative to those in previous agreements, in part due to its ban on imports produced by forced labor. (The ban follows from Congress’s 2015 removal of the “consumptive demand” clause in Section 307 of the Tariff Act of 1930, which permitted the importation of products made with forced labor if domestic demand proved it necessary.) Still, the chapter’s language on gender is weak. In Article 23.9, the United States, Mexico, and Canada “recognize the goal of eliminating discrimination in employment and occupation and support the goal of promoting equality of women in the workplace” (emphasis added); specific measures to act on that recognition and support are not described. In Article 23.12, the parties “recognize the importance of cooperation” in “addressing gender-related issues in the field of labor and employment” but do not commit to specific measures to further that goal. The result: though the USMCA’s labor chapter may represent increased commitment to labor rights overall, it does not actively seek to reduce gender disparities in trade in a specific or enforceable manner. Though some have hailed the USMCA as strong enough to serve as a template for future FTAs, its absence of actionable gender provisions is noteworthy.
Though the inclusion of environmental provisions in trade agreements may seem nascent relative to labor, environmental protections were introduced in the original General Agreement on Tariffs and Trade (GATT) in 1947—almost 50 years before NAFTA explicitly referenced labor. GATT allows for environmental exceptions to general provisions through Article XX(b) (“necessary for the protection of human, animal or plant life or health”) and Article XX(g) (“relating to the conservation of exhaustible natural resources”). It was updated in 1994 at the WTO’s inception but maintained these clauses. That same year, NAFTA became the first FTA to reference the environment, along with its complementary side letter on North American Agreement on Environmental Cooperation (NAAEC). As with labor provisions, environmental provisions have featured in all U.S. FTAs negotiated since.
The United States has included dedicated environment chapters in its FTAs because it benefits economically from similar environmental standards among its trade partners. Strong environmental regulations in trade agreements prevent a “race to the bottom,” which could further harm the environment and decrease the relative competitiveness of U.S. businesses. Thus, it is in the United States’ interest to ensure that FTA partners enforce their own environmental laws (to avoid weakening or ignoring protections that could unfairly encourage trade or investment) and promote sustainable development (to strengthen partner countries’ capacity to protect their environment). Environment chapters also may require members to implement and enforce multilateral environmental agreements to which signatories of the agreement are party in order to ensure compatibility of the signatories’ environment-related trade policies.
Despite these measures, the United States continues to perform poorly in environmental rankings. The July 2020 Environmental Performance Index (EPI, put out by Yale Center for Environmental Law & Policy) ranks it 24th out of 180 economies, while the December 2020 Climate Change Performance Index (CCPI, released by three German organizations) ranks the United States last out of 58 economies chosen for the index, which collectively contribute more than 90 percent of the world’s greenhouse gas emissions.
Our consideration of environmental trade clauses has less to do with how they reinforce existing systems that suppress women’s trade access and more to do with what their increased prevalence might say about the political feasibility of including gender-specific language in future agreements. Does broad acceptance of the need for environmental chapters bode well for gender chapter advocates?
The USMCA again provides an illustrative example here. Last year, 89 senators voted to ratify the agreement with its standalone environment chapter and the complementary Environmental Cooperation Agreement (ECA), reflecting the environment’s growing political importance. The inclusion of this chapter certainly represents a win for green advocates. Yet, the USMCA does not mention climate change, which is considered by many to be a pillar of the global environmental agenda (and the primary reason that 9 of 10 senators, including now-vice president Kamala Harris, voted against it). The USMCA environment chapter also does not commit its parties to reducing carbon emissions, nor does it reference relevant binding treaties such as the Paris Agreement or explicitly promote renewable energy. In other words, the existence of an environment chapter—or a labor or gender chapter—may not mean much if its substance does not explicitly address key issues.
In the same way that partisan rhetoric surrounded the development of the USMCA’s environment chapter—voiced mostly by Democrats concerned with its weaknesses—a “centrist” position on gender could draw opposition from both sides of the political aisle and threaten the chapter’s ultimate effectiveness. Progressive Democrats could dismiss a tepid chapter on gender issues as not going far enough, while Republicans might oppose what they might see as a social goal whose inclusion is unnecessary for an economic agreement. (In fact, 46 Republicans did just that when they protested a USMCA clause protecting workers from “employment discrimination on the basis of sex.” A footnote was then added to assert that the United States’ existing policies were sufficient to meet this condition.) Such a stalemate would be par for the course in the U.S. Congress, particularly with an evenly split Senate. As a result, it is reasonable to believe that members of both parties could agree only to generalized, value-driven commitments to promote gender equality and women’s economic empowerment in trade agreements. Still, it is important to push for more specific commitments.
Let us be clear: there remains hope for the inclusion of specific gender commitments in U.S. trade agreements. It took time for robust labor and environmental obligations to develop. Those protections evolved from ancillary accords to weak clauses within agreements to full chapters, some of which are enforceable. Gender obligations in trade agreements could benefit from those precedents set by labor and environment negotiations and follow a similar path. It may take time for such obligations to become effective, but the impact that accrues to women in trade—and all market participants—will be well worth the effort.
Considering the nuances of gender in trade agreements comes after the first hurdle: addressing gender at all.
For most economies, including the United States’, explicitly recognizing the unique difficulties faced by women in trade would be a major first step. Such acknowledgment could appear in an agreement’s preamble, which would not be subject to a DSM and therefore pose minimal political risk. For agreements that reference these challenges but do not have a standalone gender chapter, such as the African Continental Free Trade Area (AfCFTA) agreement that recently entered into force, introducing a gender chapter would reiterate the economy’s commitment to correcting gender imbalances in trade.
Two main approaches have been proposed to promote the inclusion of gender in FTAs. The first is gender mainstreaming, which incorporates gender-related provisions throughout trade deals. By “mainstreaming” gender, the approach allows trade partners to address related issues across all policy areas—even procurement or pharmaceuticals, for example—and to enforce appropriate gender-responsive policies. As described in our first commentary, mainstreaming gender helps prevent uninterested policymakers from relegating the topic to a brief, unenforceable clause or chapter.
The second approach employs standalone chapters dedicated to gender-specific trade issues, such as those in several FTAs written by Canada and Chile. The existing gender chapters in the Canada-Chile, Chile-Argentina, and Canada-Israel FTAs include general provisions on gender issues; commitments to international agreements on women’s rights; and identification of areas of bilateral cooperation, such as capacity building, skills enhancement of women at work and in business, and promoting financial training. To maximize their positive impact on women’s market access, trade agreements should feature both gender mainstreaming and standalone gender chapters.
The USMCA’s failure to describe or commit to addressing gender-specific issues renders its structure inappropriate as a template for future agreements. The politics behind its negotiation prevented parts of the agreement, such as the environment chapter, from fully addressing all relevant issues. Going forward, the Biden administration should prioritize the inclusion and enforcement of gender clauses and chapters in trade agreements. Through use of clear, enforceable, gender-specific language, U.S. trade agreements could credibly commit to improving women’s access to global trade.
In the next installment of this series, CSIS will consider the role that gender may or may not play in trade negotiations. Drawing on available data and primary research, we hope to broadly describe the extent to which the gender of trade negotiators—and of the decisionmakers who determine negotiators’ priorities—may impact the final language of trade agreements.
Ally Brodsky is a temporary research assistant with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jasmine Lim is a program coordinator and research assistant with the CSIS Scholl Chair. Jack Caporal is a fellow with the CSIS Scholl Chair. Will O’Neil is a research intern with the CSIS Scholl Chair.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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