Comparative Guide Chile - U.S. FTA and DR - CAFTA - Chapter 18: Labor

A Comparative Guide to the Chile-United States Free Trade Agreement and the
Dominican Republic-Central America-United States Free Trade Agreement


Chapter Eighteen: Labor


Table of Contents

Labor issues are dealt with in Chapter 18 of the Chile-U.S. FTA and Chapter 16 of DR-CAFTA and are subject to dispute settlement mechanisms similar and equivalent to those established for the treatment of commercial issues.

However, for each Party the only obligation that can be subject to dispute settlement is the non-compliance with its own labor laws and only if the failure “to effectively enforce its labor laws… (is) in a manner affecting trade between the Parties…”. Each Party retains its sovereignty with respect to its national legislation and monitoring of its labor laws.

Statement of Shared Commitment: in both Agreements (Chile-U.S. FTA and DR-CAFTA) Parties commit to promote, to the maximum extent possible, the labor principles set out in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998) and to ensure that the domestic labor laws promote and protect those principles. (Chile-U.S. FTA Arts. 18.1.1 and 18.1.2 and DR-CAFTA Arts.16.1.1 and 16.1.2).

DR-CAFTA also affirms respect to each Party’s Constitution as part of this section (Art.16.1.2).

Enforcement of Labor Laws: the subsections of Article 18.2 in the Chile-U.S. FTA are the same as those in Article 16.2 in DR-CAFTA. In both Agreements the Parties are required to strictly comply with their own labor legislation, with respect to the labor rights defined in the text. These are:

(a) the right of association;
(b) the right to organize and bargain collectively;
(c) a prohibition on the use of any form of forced or compulsory labor;
(d) a minimum age for the employment of children and the prohibition and elimination of the worst forms of child labor; and
(e) acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

This is the only obligation subject to dispute settlement after the period of consultation with experts. In this section, Parties oblige each other to enforce their labor laws and recognize that it is inappropriate to promote trade and investment by weakening their labor laws. However, Parties retain the right to decide on the investigatory, prosecutorial, regulatory, and compliance matters and “to make decisions regarding the allocation of resources to enforcement with respect to other labor matters determined to have higher priorities”.

Procedural Guarantees and Public Awareness: (Chile-U.S. FTA Art.18.3 and DR-CAFTA Art.16.3)

Procedural guarantees: both Agreements recognize the right of every person with a legally recognized interest under the law to have “access to judicial tribunals of general, labor or other specific jurisdiction, quasi-judicial tribunals or administrative tribunals, as appropriate, for the enforcements of the Party’s labor laws”.

In this matter, DR-CAFTA is slightly more specific in terms of the proceedings including compliance with due process. While the Chile-U.S. FTA only states that the proceedings should be fair, equitable, and transparent. DR-CAFTA adds that “each Party shall ensure that:

(a) such proceedings comply with due process of law;
(b) any hearings in such proceedings are open to the public, except where the administration of justice otherwise requires;
(c) the Parties to such proceedings are entitled to support or defend their respective positions and to present information or evidence; and
(d) such proceedings do not entail unreasonable charges or time limits or unwarranted delays”.

It also includes the types of remedies that may be used (Art.16.3.6).

Public Awareness: both Agreements state that the Parties should promote public awareness. In addition, DR-CAFTA states how each Party will promote public awareness:

(a) ensuring the availability of public information related to its labor laws and enforcement and compliance procedures; and
(b) encouraging education of the public regarding its labor laws.

It also includes statements on impartiality of proceeding reviews and the right to review proceedings (Art 16.3.2).

DR-CAFTA also states that final decisions in the proceedings should be in writing and well based and made available without delay to the Parties to the proceedings (Art.16.3.3). It further provides for the right to review and, when appropriate, to correct the final decision.

Labor Affairs Council and Institutional Arrangements: both Agreements have a very simple institutional arrangement with Contact Points in the Ministry of Labor and the establishment of a Labor Affairs Council (Chile-U.S. FTA Art.18.4 and DR-CAFTA Art.16.4). Comprised of cabinet-level officials or their designees, the Labor Affairs Council will pursue the labor objectives of this Agreement, oversee the implementation of the Labor Chapter, review progress and supervise the activities of the Labor Cooperation Mechanism. In the case of the Chile-U.S. FTA, the Council will establish a work program and procedures.

Particulars on the duties of the contact point are omitted in the Chile-U.S. FTA. Only DR-CAFTA mentions the publication of reports written in matters related to Labor.

Labor Cooperation (Chile-U.S. FTA), Labor Cooperation and Capacity Building (DR-CAFTA): DR-CAFTA includes capacity building in this Article. This covers the strengthening of institutional capacity and the creation of a Capacity Building Mechanism, and the activities to be undertaken by the mechanism. (Chile-U.S. FTA Art.18.5 and DR-CAFTA Art.16.5).

Labor Consultations: both Agreements establish a consultation mechanism that seeks mutually satisfactory solutions of any difficulty that might arise among the Parties. The Chapter allows for the possibility to consult with experts or mediators. This mechanism is required to be used before any other dispute settlement mechanism.

There are very small differences regarding the time tables for these consultations. As stated in this section, the Council may also provide information to the Commission on consultations held on the matter.

Labor Roster: both Agreements instruct the establishment, within six months of the date of entry into force, of a labor roster comprised of experts in, among others, labor law, its enforcement and dispute resolution (Chile-U.S. FTA Art.18.7 and DR-CAFTA Art.16.7). The main difference between the Agreements is the number of individuals required in the roster and the number of members that can be nationals of the Parties. In the Chile-U.S. FTA out of the 12 roster members, there would be up to eight members who are non-Party nationals. In the case of DR-CAFTA out of the 28 roster members, there would be a minimum of seven who are non-Party nationals but there is no maximum. Also, DR-CAFTA explicitly allows for the appointment of “a replacement when a roster member is no longer available to serve”.

Definitions: both Agreements provide definitions for “labor laws” and for “statutes or regulations” (Chile-U.S. FTA Art.18.8 and DR-CAFTA Art.16.8).


Labor Cooperation (Chile-U.S. FTA Annex 18.5), Labor Cooperation and Capacity Building (DR-CAFTA Annex 16.5): only the Chile-U.S. FTA includes specifications for the establishment of a labor cooperation mechanism previously mentioned in Article 18.5 (Chile-U.S. FTA).

Organizational and Principal Functions: both the Chile-U.S. FTA and DR-CAFTA are fairly similar. Differences rely on the publication of data for comparison on labor standards, labor market indicators and enforcement activity, which is only mentioned in the Chile-U.S. FTA. DR-CAFTA includes a statement on the use of support from various international organizations as well as some differences in deadlines.

The Chile-U.S. FTA also envisions periodic labor cooperation review sessions at the request of a Party which is not included in DR-CAFTA.

Cooperative Activities–Cooperation and Capacity Building Priorities: the differences between the two Agreements in this section are based on the range of activities to be undertaken by the Labor Cooperation Mechanism.

Table 18.1 Cooperative Activities

Chile-U.S. FTA


(a) fundamental rights and their effective application
(b) labor relations
(c) working conditions
(d) issues related to small and medium enterprises
(e) social protections
(f) technical issues and information exchange
(g) implications of economic integration between the Parties for advancing each Party’s labor objectives
(a) fundamental rights and their effective application
(b) worst forms of child labor
(c) labor administration
(d) labor inspectorates and inspection systems
(e) alternative dispute resolution
(f) labor relations
(g) working conditions
(h) migrant workers
(i) social assistance programs
(j) labor statistics
(k) employment opportunities
(l) gender
(m) technical issues

Implementation of Cooperation Activities: DR-CAFTA incorporates the possibility of technical assistance programs.

Public Participation: only DR-CAFTA mentions Public Participation.