Policy Innovations Digital Magazine (2006-2016): Briefings: The Race to the Middle

Labor unions often seek to delay free trade agreements until labor standards equalize between trading partners. Otherwise, they argue, a "race to the bottom" will ensue as global labor markets become deregulated and workers become more vulnerable to exploitation.

Of course, examining labor standards can be a tricky business; which is why the race to the bottom remains such a prominent point of debate when new trade agreements are under discussion. But recent developments in the case law of Mexico and the United States suggest that labor standards between these trading partners may actually be converging.

The Supreme Court of Justice in Mexico has recently shown itself willing to expand labor protections. In addition to dominating the retail business in Mexico, Wal-Mart de Mexico (Walmex) is one of Mexico's largest employers. Just this month, the Court held that Walmex could not pay employees with vouchers redeemable only at its stores. The ruling was not a radical assertion of labor rights—it only applied to the individual worker who filed the case—nor will it have much of an impact on Wal-Mart's bottom line. Nevertheless, it was a ruling for improving labor standards and against one the largest and most powerful corporate entities in Mexico.

Beyond the recent Walmex decision, the Supreme Court of Justice in Mexico has also agreed to hear a case that will decide whether private voting should be mandatory when workers are deciding whether or not to form a union. If the Court rules in favor of privacy in voting, it could lead to a drastic increase in the number of unions in Mexico. While not yet decided, this case, especially when coupled with the Walmex case, indicates that the Mexican courts are not racing to the bottom in the face of free trade with the United States and increased competition from China.

Meanwhile, the Supreme Court of the United States is undertaking an unprecedented review of labor and employment law cases. Several decisions highlight the movement of the Court in recent years. A 2006 case shows that, with few exceptions, the right and practical ability of employees to bring discrimination claims has markedly decreased. In Ledbetter v. Goodyear, the Court decided that employment discrimination claims can only be brought within the 180 day statute of limitations of the alleged discriminatory action. This decision was broadly criticized by many who saw this as practically eliminating the ability to bring a discrimination claim. By the time the employee is aware of discrimination, which possibly took place in small increments over many years, as was the case with Ledbetter, the 180 days will have passed. While there have been some decisions over the last few years maintaining an employee's right to a discrimination claim, those decisions do little or nothing to expand that right.

In a 2002 case, Hoffman Plastic Compounds, Inc. v. National Labor Relations Board, the Supreme Court restricted workers' ability to organize by confirming that undocumented workers fired solely for joining a union have no right to have their jobs restored. But the Court went even further than in previous decisions. Not only could the workers be fired merely for joining a union, they would have no right to any back pay for the time they were out of work.

This was a big blow to American unions which have recently begun to embrace the estimated 12 million undocumented workers in the United States. In many ways the Supreme Court ruled on the importance of labor protection laws in relation to immigration laws. In this case, the labor laws lost out to immigration laws, national security, and a host of other concerns.

It is possible that courts in the United States and Mexico may reflect trade's real effect on labor standards. American courts have allowed labor standards in the United States to slowly erode or, at best, remain stagnant since the North American Free Trade Agreement (NAFTA) was signed. At the same time, Mexican courts may be slowly working to improve labor standards.

Judiciaries in both countries are moving cautiously, but their patterns may be the greatest indicators of the effects of free trade. In the end, we may see no race to the bottom, only a slow migration to the middle.

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