Summary
Since 2001, Congress has approved free trade agreements (FTA) with 14 countries. Most were negotiated under Trade Promotion Authority (TPA), which aims to lower trade barriers while strengthening the capacity of trading partners to promote respect for workers' rights and to protect the environment. The Office of the United States Trade Representative (USTR) is responsible for overseeing implementation of the FTAs, and the Departments of Labor (Labor) and State (State) have responsibilities for implementing and managing FTA cooperation projects. GAO was asked to assess progress through FTAs in (1) advancing U.S. economic and commercial interests, (2) strengthening labor laws and enforcement in partner nations, and (3) strengthening partners' capacity to improve and enforce their environmental laws. GAO focused on Jordan, Chile, Singapore, and Morocco, chosen because of their economic, social, and geographic diversity and relatively older FTAs. GAO analyzed relevant trade laws and trends, met with U.S. agencies and foreign government officials, conducted fieldwork in the four countries, and solicited input from the private sector.
The four selected FTAs have largely accomplished the U.S. objectives of achieving better access to markets and strengthening trade rules, and have resulted in increased trade, as summarized in the table. While varying in details, the FTAs have all eliminated import taxes, lowered obstacles to U.S. services such as banking, increased protection of U.S. intellectual property rights abroad, and strengthened rules to ensure government fairness and transparency. Overall merchandise trade between the United States and partner countries has substantially grown, with increases ranging from 42 percent to 259 percent. Services trade, foreign direct investment, and U.S. affiliate sales in the largest partners also rose. FTA negotiations spurred some labor reforms in each of the selected partners, according to U.S. and partner officials, but progress has been uneven and U.S. engagement minimal. An example cited was Morocco's enactment of a long-stalled overhaul of its labor code. However, partners reported that enforcement of labor laws continues to be a challenge, and some significant labor abuses have emerged. In the FTAs we examined, Labor provided minimal oversight and did not use information it had on partner weaknesses to establish remedial plans or work with partners on improvement. The selected partners have improved their environmental laws and made other progress, such as establishment of an environmental ministry and a 400-strong environmental law enforcement force in Jordan, according to U.S. and foreign officials. However, partner officials report that enforcement remains a challenge, and U.S. assistance has been limited. Elements needed for assuring partner progress remain absent. Notably, USTR's lack of compliance plans and sporadic monitoring, State's lax management of environmental projects, and U.S. agencies' inaction to translate environmental commitments into reliable funding all limited efforts to promote progress.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
Loren Yager
Government Accountability Office: International Affairs and Trade
(202) 512-4347
Recommendations for Executive Action
Recommendation: To reflect the evolving U.S. experience with FTAs and better ensure progress in achieving stated U.S. objectives related to labor and the environment, USTR, should, in cooperation with other agencies, as appropriate, prepare updated plans to implement, enforce, monitor, and report on compliance with and progress under the FTAs' labor and environmental provisions. To facilitate oversight and input, these plans should reflect ongoing trade developments, be provided to Congress, and summarized in USTR's annual trade agreements report.
Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Secretary of Labor should direct the Bureau of International Labor Affairs (ILAB), in consultation with other agencies as appropriate, to reinvigorate its implementation and cooperation responsibilities under the FTAs by initiating regular contact with all FTA partners' ministries of labor to review implementation of FTA labor provisions and to develop ongoing priorities and plans for technical cooperation on labor matters, as guided by the labor cooperation annexes and the partners' common interests and needs. The Department of Labor should consider, identify, and if necessary request appropriate resources such as new funding to undertake such contact and cooperation, including by coordinating with other agencies that can facilitate or assist these efforts.
Agency Affected: Department of Labor
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Secretary of State should direct the Oceans and International Environmental and Scientific Affairs Bureau (OES) to work with other agencies to develop a more structured approach to manage and monitor the implementation of environmental cooperation mechanisms and projects. This should enable State to more readily track progress and include information such as number and nature of activities, source and amount of funding, and, to the extent practical, performance indicators and benchmarks to measure appropriately the progress made in accomplishing or otherwise furthering the goals and objectives of such programs, projects, and activities and public reporting of that progress.
Agency Affected: Department of State
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Secretary of State should direct OES to use this information to publicly report to Congress on cooperative activities and projects with FTA partners and their outcomes, as well as their role in furthering U.S. trade policy goals and FTA and FTA-related cooperation objectives.
Agency Affected: Department of State
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
