The Trans-Pacific Partnership (TPP) trade deal has promised to provide comprehensive standards for trade and investment across the Asia-Pacific region, including enhanced labor and other protections.
The TPP joins together 12 countries—including the U.S., Canada, Japan, Malaysia, Singapore and Vietnam —that collectively represent an estimated 40 percent of global gross domestic product and a third of global trade, in the largest regional trade accord in history. Cambodia of course is not currently among the parties to the TPP, each of which must still ratify the agreement before it becomes effective.
While it is premature to assess the full ramifications of the TPP for Cambodia, some apparent effects are already beginning to emerge, including reported movement of apparel manufacturing—a key pillar of Cambodia’s economy —toward Vietnam and other countries in anticipation of duty-free trading benefits among the member states.
Whether Cambodia seeks to join the TPP in the future will depend on a host of factors and require a careful analysis of obligations, benefits and drawbacks. Yet, a review of the labor provisions of the recently-released TPP text of- fers insights and lessons into the expectations and labor conditions of the landmark pact, and reveals that Cambodia is relatively competitive in terms of its own labor standards vis-a-vis the provisions under the pact.
Fundamental Labor Rights
The labor provisions of the TPP promote compliance with internationally recognized labor rights and the effective enforcement of labor laws. TPP parties agree to adopt and maintain in their laws and practices fundamental labor rights, namely freedom of association and the right to collective bargaining; elimination of forced labor; abolition of child labor and the prohibition of the worst forms of child labor; and elimination of discrimination in employment.
In addition to these fundamental labor rights, TPP parties agree to have laws governing acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health. The TPP does not stipulate what the exact level of protection for labor rights should be, but mandates that enforceable standards must exist for each country. These labor commitments also apply to special trade or customs areas such as export processing zones. And TPP parties agree to encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labor issues.
The TPP commits parties not to waive or derogate from laws implementing fundamental labor rights in order to encourage trade or investment, and not to fail to effectively enforce their labor laws in a sustained or recurring course of action that would affect trade or investment between the parties.
Consultations and Enforcement
Parties are to ensure there is appropriate access to impartial and independent tribunals for the enforcement of labor laws. The TPP provides for various consultative and coordination mechanisms to allow parties to share best practices, but also to raise concerns when improvement is needed. Countries failing to meet the labor standards in the deal are subject to the TPP’s formal dispute settlement mechanism. This can result in monetary fines or the suspension of trade benefits.
Unlike some of the current TPP parties, Cambodia has ratified all “core” conventions of the International Labor Organization related to the fundamental labor rights and incorporated such rights into its Labor Law. Cambodia also has extensive existing regulations on working conditions, including wages, working hours, and health and safety. And Cambodia’s Arbitration Council is considered a model tribunal for the resolution of labor disputes. By way of contrast, Vietnam—which is expected to reap significant economic benefits from the TPP—has not ratified the fundamental labor conventions on freedom of association and the right to organize and collective bargaining. Under the TPP, it will have to relinquish its long-practiced state monopoly over trade unions.
In practice, while there is still room for Cambodia to strengthen the upholding of labor rights and the development of labor relations, the country has made substantial progress in labor market governance. The draft law on trade unions currently under consideration and the forthcoming law on a labor court have raised contentious debates among unions, employers and others. But, so far, consultations have been held and concerns appear to have been taken into account in the drafting and review process.
Based on the analysis of the TPP labor provisions and Cambodia’s experience in labor market governance, the country would be well-positioned should it eventually seek to join the historic trade pact. Cambodia needs to continue to ensure, and to further strengthen, the making and the application of its laws, policies and processes pertaining to labor standards in order to attain outcomes that are efficient, fair and equitable.
Sok Lor is the managing director of the Sok Xing & Hwang law and policy firm and a former executive director of the Arbitration Council Foundation.