United States-Chile Free Trade Agreement Implementation Act

The labour and environmental provisions in trade agreements have evolved over time. NAFTA`s ancillary restrictions set a precedent for both labour and environmental regulations that do not relax the standards of all parties: 1) to attract investment or reduce export costs; 2) strive to improve standards over time, and 3) effectively enforce their laws and regulations. The bilateral free trade agreement between the United States and Jordan (the implementing laws were signed by President Bush on September 28, 2001 — P.L. 107-43) took a step forward in labour and environmental legislation. It contains the main features of NAFTA`s ancillary agreements, but has moved the provisions to the main part of the text and incorporated these provisions into the dispute settlement process of the entire agreement. It is significant that this includes the language that a concerned party can take “any appropriate and proportionate action,” including trade sanctions if the dispute is not resolved. (22) Others are concerned that the USTR has exceeded its bargaining power by incorporating immigration provisions into free trade agreements. Critics argue that the USTR`s assertion that the temporary entry of foreign economic and professional staff is not an immigration policy is dishonest. More generally, some point out that these provisions would limit current and future congresses if they consider revising the immigration law for corporate staff, contract investors, internal transfers and professionals, as the United States could violate the free trade agreement. In addition, in a case where the formal dispute resolution procedure can be used, it differs from commercial disputes. Ultimately, if a trade dispute is not resolved, the country faces the possibility of suspending “equivalent effect” benefits under the free trade agreement (Article 22.15, paragraph 2), resulting in an increase in tariffs or the payment of a monetary tax equal to 50% of what a dispute resolution body describes as “equivalent”. This section does not apply to disputable work services. The difference lies in the fact that the possibility of not resolving a labour dispute is a monetary valuation that would be limited to $15 million per year, using an equivalent dollar value of suspended benefits (higher rates) if the monetary valuation is not paid.

The monetary assessment would also be paid into a fund and would be spent on “appropriate work initiatives.” Labor advocates argue that limiting the valuation to $15 million and disserging the valuation to a late-lay-back country make the work rules ineffective. The USTR argues that, for a small country such as Chile, such a fine would be significant relative to the value of the dollar of the trade benefits it will receive. (31) Chile recognized the importance of the labour and environmental provisions when it entered into the 1996 free trade agreement with Canada, while generally retaining them in NAFTA-type ancillary agreements. The labour and environmental provisions differ from the Jordanian model in their place in an ancillary agreement and their dependence on less stringent dispute resolution options, with a focus on monetary assessments, not trade sanctions. (23) During the negotiations, it was not clear whether Chile-Canada, the United States and Jordan or a new or hybrid model of the U.S.-Chile free trade agreement would work.

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