Monday, June 5, 2017

Canada - Canadian Labor Department Issues its First Report on Petition Filed Under the Canada-Colombia Agreement on Labour Cooperation

By Tequila J. Brooks

On January 27, 2017, Canada’s labor ministry Employment and Social Development Canada (ESDC) released its first report on a petition filed under the Canada-Colombia Agreement on Labour Cooperation (CCALC). The CCALC is the labor side accord to the Canada-Colombia Free Trade Agreement (CCOFTA) which was signed in November 2008 and went into effect on August 15, 2011. The underlying petition was filed by the Canadian Labour Congress (CLC) and five Colombian trade unions in May 2016. The Canadian National Administrative Office (NAO – the department within ESDC empowered to respond to petitions under labor side accords to Canada’s free trade agreements) accepted the petition for review on July 15, 2016. The petition was based on the same labor issues and events occurring in the petroleum and sugar producing and processing industries as those in a petition filed and accepted by the U.S. Department of Labor under the U.S.-Colombia Trade Promotion Agreement (TPA) in July 2016. USDOL issued its report on January 11, 2017. Based on their assessment of the allegations and evidence in the petitions, the labor departments of Canada and the U.S. both recommended ministerial consultations with the Government of Colombia to address serious shortcomings in its compliance with labor provisions of its free trade agreements (FTAs) with Canada and the U.S.

The main issues addressed by the Canadian NAO in its report were (1) the misuse of subcontracting arrangements by employers in the petroleum and sugar producing industries in Colombia to avoid compliance with labor laws; (2) shortcomings in administrative and legal processes for workplace inspections resulting in the failure to levy and collect fines and remedy labor law violations in a timely manner; and (3) ongoing failure by the Government of Colombia to protect trade unionists from violence and threats of violence.

Under Articles 1 and 3 of the CCALC, the Governments of Colombia and Canada committed to ensure protection of internationally recognized labor principles and rights including freedom of association and the right to collective bargaining. Based on its review of evidence and interviews with government officials, trade unions and employer representatives in Colombia, the Canadian NAO found that a number of subcontracting arrangements utilized by employers created situations where it was difficult for workers to effectively and freely exercise their rights to freedom of association and collective bargaining. As part of the process of improving labor standards to accede to FTAs with the U.S. and Canada, Colombia made it unlawful for employers to utilize “Associated Work Cooperatives” to subcontract out permanent core functions in order to avoid labor law compliance.

Lack of clarity in the law led to the utilization of subcontracting in different legal forms – Simplified Stock Companies (Sociedad por Acciones Simplificada or SAS) or “union contracts” (agreements whereby a union provides employees to employers and operates as a subcontracting entity – not to be confused with independently negotiated collective bargaining agreements) – with the same effect as work cooperatives. Acknowledging that subcontracting can be a legitimate business mechanism, the Canadian NAO observed a significant amount of interference by de facto employers in the management of subcontractors – an indication that labor intermediaries were being used to avoid compliance with labor law obligations. The Canadian NAO found that misuse of subcontracting by de facto employers chilled workers’ exercise of freedom of association due to the fear of non-renewal of short-term contracts and blacklisting as well as legal obstacles to recognition of representative trade unions by the primary employer.

Article 3 of the CCALC requires Canada and Colombia to effectively enforce labor laws through labor inspections and other mechanisms and to ensure that labor law violations are appropriately sanctioned in a timely manner. In its discussion of the adequacy of the operation of Colombia’s labor inspectorate, the Canadian NAO observed that labor inspectors are hired on a provisional basis subject to budgetary constraints. While noting that there have been improvements in the functioning of Colombia’s labor inspectorate in recent years, the Canadian NAO found that the labor inspectorate’s administrative processes are still burdensome and not completely effective – and that sufficient funding and resources are required to ensure that inspectors are adequately trained and experienced. Even in cases where inspectors find labor law violations and levy fines against employers, bureaucratic delays occur due to of lack of coordination between Colombia’s labor inspectorate and the government agency empowered to collect fines (Central de Inversiones S.A. or CISA). As a result, fines and remediation may not occur in an efficient and timely manner and thus do not have a sufficient deterrent effect.

The Canadian NAO observed that a climate of violence and anti-union culture have posed significant challenges to the advancement of trade unionism in Colombia. Between 1986 and 2014, more than 3,000 trade unionists were murdered, 230 disappeared and thousands of others suffered threats, kidnapping and other types of violence. Despite recent legislative and executive progress in recent years, there were 18 labor-related homicides in Colombia in 2015. Noting that the strengthening of Colombia’s National Protection Unit (NPU) in recent years is essential to tackling impunity and violence against trade unionists, the Canadian NAO observed that the progress achieved will be compromised if the Government of Colombia does not allocate sufficient resources to support the NPU’s work to protect trade unionists. Similarly, the Canadian NAO observed that the Office of the Attorney General of Colombia is critical to prosecuting perpetrators of violence and murder against trade unionists – but “note[d] with concern that no case of trial and subsequent conviction under Article 200 of the Criminal Code has been reported by the Colombian Government.” Other shortcomings highlighted by the Canadian NAO of Colombia’s procedures and lack of results in protection of trade unionists from violence and threats include: failure to respond to calls for investigation of excessive force by police authorities against trade unionists; the closing of files without criminal prosecution; and the number of files stuck at the pre-investigative phase. The Canadian NAO pointed specifically to the mandatory conciliation phase of the process for investigating and prosecuting violence against trade unionists as being a sticking point in the timeliness and efficiency of the process.

The Canadian NAO’s report contains a number of substantive, administrative and policy recommendations to the Government of Colombia to address shortcomings in its protection of the fundamental rights to freedom of association and collective bargaining. On the issue of the use of labor intermediaries to avoid compliance with labor laws, the Canadian NAO recommended the elimination of union contracts and collective pacts as well as the elimination of the misuse of short-term contracts. It also recommended the implementation of measures to reduce widespread and systemic misuse of subcontracting. The Canadian NAO noted that 2016 regulations issued by the Government of Colombia seem to make it lawful to use certain forms of subcontracting to avoid labor law compliance and that this may be in violation of the CCALC’s non-derogation provision.

On the issue of strengthening the enforcement of labor laws through the labor inspectorate, the Canadian NAO recommended a number of reforms, including: ensuring reinstatement or severance as remedies for labor law violations; streamlining administrative processes; improving coordination between government agencies to enhance collection of fines for labor law violations; and providing labor inspectors with adequate training and resources to perform preventive and proactive labor inspections.

Finally, the Canadian NAO recommended that the Government of Colombia strengthen its efforts to fight impunity and violence and bring perpetrators to justice by: evaluating the effectiveness of the mandatory conciliation phase; reviewing and acting on pending criminal investigations to ensure that justice is administered before legal time limits expire; providing the NPU with sufficient resources to effect its mandate; critically examining the actions of police authorities in cases where excess violence is alleged in actions involving trade unions; and effectively prosecuting acts of violence against trade unionists.

On April 27, 2017, the Minister of Labor of Colombia Clara López Obregón, and the Minister of Labor and Workforce Development of Canada Patty Hajdu agreed to negotiate a Work Plan to implement the Canadian NAO’s recommendations. On May 23, 2017, Minister Hajdu released a public statement indicating that she and López Obregón’s successor, Minister Griselda Janeth Restrepo, will continue ministerial consultations to develop a multi-year work plan to address issues raised by Colombian and Canadian trade unions under the CCALC. Under Article 12 of the CCALC, the Government of Colombia had 60 days to respond to Canada’s request in writing for ministerial consultations to address the issues raised in the Canadian NAO’s report. The parties are required to make every effort to reach a mutually satisfactory agreement on resolving the issues raised in the petition. Unlike similar provisions in NAFTA’s labor side agreement (North American Agreement on Labor Cooperation – NAALC), Article 12(5) requires that ministerial consultations shall conclude no later than 180 days after they are initiated.

If the Governments of Canada and Colombia are unable to reach agreement on resolution of the issues raised in the Canadian NAO’s report through ministerial consultations, the Government of Canada may call for the establishment of a Review Panel under Articles 13 and 14 of the CCALC. The matters in the report must be trade-related for the Review Panel to be established. The Review Panel would consist of three recognized experts in labor law matters and issue an independent report according to rules set forth in the CCALC. The states parties, members of the public and the petitioners are able to provide information to the Review Panel. If in its final report the Review Panel finds that Colombia is not in compliance with the CCALC, under Article 20 the Review Panel may levy monetary assessments against the Government of Colombia.

The existence of two simultaneous reviews of the same labor issues in Colombia by Canadian and U.S. labor authorities provides a unique opportunity for comparison of the U.S. and Canadian models for incorporating and implementing labor provisions in FTAs. This has not happened since the 2003 Puebla Garment Workers case was filed simultaneously with the Canadian and U.S. NAOs under the NAALC. While the procedures under the CCALC and Chapter 17 of the U.S.-Colombia Trade Promotion Agreement (TPA) are fairly similar at the beginning stages (acceptance and review of the petition, issuance of report, request for ministerial consultations), the rules diverge after the ministerial consultations phase. If ministerial consultations between the U.S. and Colombia fail to result in a satisfactory outcome, under Article 17.7.6 of the U.S.-Colombia TPA, the U.S. may call for formal dispute resolution under Chapter 21 of the agreement, leading to a potential request for the establishment of an Article 21.6 trade arbitration panel.