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Why are labour obligations included in Free Trade Agreements?


Trade agreements with labour provisions have increased significantly in
the last two decades. Currently, over 60 trade agreements include labour
provisions, up from 21 in 2005 and 4 in 1995.
Labour provisions are included in trade agreements based on the
following rationales:
safeguarding of social protection;
are tools against unfair competition (violations of labour
standards can distort competitiveness);
(iii) trade liberalization without the necessary safeguards may lead to
a race to the bottom as regards labour standards;
to increase general protection for workers globally; and
strengthen measures to protect workers in the domain of
international trade.


What is the objective of the Labour Chapter in TPP?


The Labour Chapter contains disciplines that are to be observed to
ensure that trade and investment activities between TPP Parties
countries are not carried out at the expense of workers’ rights.


What are the main obligations in Labour Chapter?


The Parties are required to:

adopt and maintain the 4 principles of the 1998 ILO Declaration
into their respective labour laws. Those principles are: freedom of
association and the effective recognition of the right to collective
bargaining, elimination of all forms of forced or compulsory
labour, effective abolition of child labour, and elimination of
discrimination in respect of employment and occupation;


govern acceptable conditions of work with respect to minimum
wages, hours of work, and occupational safety and health; and


effectively enforce labour laws.

Q7. It is up to an individual Party to decide and ratify any ILO Convention that they feel necessary. Q5. Does the Chapter require Parties to ratify ILO Conventions? A. the Labour Chapter will not set a standardize minimum wage rate across all TPP Parties. Will the Labour Chapter set a standardize minimum wage rate across all TPP Parties? A. Entry of foreign workers in each Party’s territory will be based on policies and legislations decided by that Party. No. 2 . the Labour Chapter does not require Parties to ratify any ILO Convention. It is a universal reference point for the adoption of labour rights and provides sufficient flexibilities in its commitment for all countries. Minimum wage rate in each Party’s territory will be decided through relevant mechanism and formulas decided by that Party and depending on the level of development and economic situation. Why were the principles of the 1998 ILO Declaration selected as obligation in the Chapter and not the ILO Core Conventions? A. The 1998 Declaration has become a reference point for labour provisions in international trade agreements. No. The 1998 Declaration allows for labour provisions to be realistically incorporated into international trade agreements. Q6. Each Party is only required to establish legislation (if none exist at this time) and govern the mechanism relating to minimum wages. whereby most existing labour provisions in Free Trade Agreements explicitly refer to the 1998 ILO Declaration. Will there be free movement of workers between the Parties? Will there be more foreign workers in Malaysia? A. entry of foreign workers into the country will be based on the needs and requirements of the industries and sectors and the Government will continue to give priority in employment opportunities to local workers. It appeals as a middleground to both the advocates and opponents of trade-labour linkages by establishing a commitment to uphold worker rights while respecting concerns regarding vulnerability to comparative advantages in lowerwage labour. The Labour Chapter does not contain any obligation to allow freer movement of workers between Parties. As for Malaysia.Q4.

the Chapter allows the Council to facilitate public participation (including of the stakeholders) relating to the implementation of the Chapter. If the Parties are able to resolve the dispute. failure to resolve the dispute through consultation mechanism under Labour Chapter will invoke the related dispute settlement provisions under Chapter 28: Dispute Settlement. Q11. What is the Labour Consistency Plan? A. How do Parties resolve disputes that arise from the implementation of the Chapter? A. The Council is also required to establish a mechanism to receive and consider views of interested persons (including of the stakeholders) on matters related to this Chapter. the outcome of the consultation must be documented. The Plan is not attached to the Labour Chapter but makes reference to the obligations of the Chapter. A violation or non-compliance occurs when: (i) the implementation of a Party’s labour laws are inconsistent with the obligations set in the Chapter.Q8. In what situation can a TPP Party be considered as violating the obligations in the Chapter? A. The Labour Chapter includes the mechanism to resolve disputes between Parties. stakeholders (trade unions and employer associations) cannot be members of the Labour Council. and (ii) the violation or non-compliance has affected trade and investment between two or more TPP Parties. However. 3 . Can stakeholders (trade unions and employer associations) be members of the Labour Council? A. as designated by each Party. The Labour Consistency Plan is a bilateral side letter between Malaysia and the United States. The disputing Parties are required to enter into consultation to resolve the dispute in-line with the timelines and procedures that are outlined. Q9. No. as the Council is only composed of senior governmental representatives at the ministerial or other level. Q10. However.

especially the trade unions. Private Employment Agencies Act 1981. The Ministry of Human Resources is conducting an exercise to holistically review all labour legislations. Among the measures required to ensure that Malaysia fulfils the obligations in the Chapter are: i) amending policies and legislations that are currently not incompliance to the 1998 ILO Declaration. When should the amendments to the necessary labour policies and legislations that are related to the Labour Chapter complete? A. All amendments to the labour policies and legislations that are related to the obligations in Labour Chapter should be complete before the EntryInto-Force of the TPP Agreement for Malaysia. Sabah Labour Ordinance (Chap. Those legislations includes the Employment Act 1955. are important to the Ministry. What is the purpose of the Labour Consistency Plan? A. This includes the required amendments to ensure compliance to the obligations in the Chapter.Q12. Sarawak Labour Ordinance (Chap. Is the Labour Consistency Plan legally binding? A. it is. 4 . What measures are required to ensure that Malaysia will be able to fulfil the obligations in the Chapter? A. Q14. various engagements and road shows involving the stakeholders are being carried out currently. Q13. Trade Union Act 1959. Therefore. Yes. Industrial Relations Act 1967. The views and opinions of stakeholders. What actions has the Ministry of Human Resources taken so far? A. employer associations and general public. and ii) ensuring effective enforcement of labour laws. 76). Q16. The Plan outlines the commitments Malaysia will undertake in order to fulfil the obligations that are outlined in the Labour Chapter. 67). Q15. Child and Young Persons (Employment) Act 1966 and Workers’ Minimum Standards of Housing and Amenities Act 1990.

the Ministry of Human Resources has engaged ISIS at various periods of the TPP negotiations to update them on the latest development in the Labour Chapter. Q18. In this regard. • investment benefits – attract FDI and opportunity for Malaysian investors going abroad. Ministry of Human Resources November 2015 5 . Among the benefits that will be gained by agreeing to the Labour Chapter are: (i) increase in the country’s labour standards in tandem with the high obligations that are set in the Chapter. The CBA will incorporate and highlight the impacts of the Labour Chapter to Malaysia. (iv) the benefits for employers are generally seen across different Chapters and includes: • opening of four new markets – US. (iii) allows trade unions more opportunities to self-regulate union activities. Has the Ministry of Human Resources conducted any Cost Benefit Analysis to determine the positive and negative impacts of the Labour Chapter to Malaysia? A. and • integrating SMEs into the global supply chain. The Government has appointed Institute of Strategic and International Studies (ISIS) Malaysia to conduct a Cost-Benefit Analysis (CBA) of the TPP Agreement. Canada. What benefits will be gained by Malaysia by agreeing to the Labour Chapter? A. (ii) better protections will be provided in legislations for workers. Mexico and Peru • market access benefits for goods and services – duty free market of 800 million people.Q17.