TPPA LABOUR CHAPTER FREQUENT ASK QUESTIONS (FAQ) Q1. Why are labour obligations included in Free Trade Agreements?

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1 TPPA LABOUR CHAPTER FREQUENT ASK QUESTIONS (FAQ) Q1. Why are labour obligations included in Free Trade Agreements? A. 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 Labour provisions are included in trade agreements based on the following rationales: (i) safeguarding of social protection; (ii) 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; (iv) to increase general protection for workers globally; and (v) strengthen measures to protect workers in the domain of international trade. Q2. What is the objective of the Labour Chapter in TPP? A. 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. Q3. What are the main obligations in Labour Chapter? A. The Parties are required to: (i) (ii) (iii) 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. 1

2 Q4. 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, whereby most existing labour provisions in Free Trade Agreements explicitly refer to the 1998 ILO Declaration. The 1998 Declaration allows for labour provisions to be realistically incorporated into international trade agreements. It is a universal reference point for the adoption of labour rights and provides sufficient flexibilities in its commitment for all countries. 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. Q5. Does the Chapter require Parties to ratify ILO Conventions? A. No, the Labour Chapter does not require Parties to ratify any ILO Convention. It is up to an individual Party to decide and ratify any ILO Convention that they feel necessary. Q6. Will the Labour Chapter set a standardize minimum wage rate across all TPP Parties? A. No, the Labour Chapter will not set a standardize minimum wage rate across all TPP Parties. Each Party is only required to establish legislation (if none exist at this time) and govern the mechanism relating to minimum wages. 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. Q7. Will there be free movement of workers between the Parties? Will there be more foreign workers in Malaysia? A. The Labour Chapter does not contain any obligation to allow freer movement of workers between Parties. Entry of foreign workers in each Party s territory will be based on policies and legislations decided by that Party. As for Malaysia, 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. 2

3 Q8. Can stakeholders (trade unions and employer associations) be members of the Labour Council? A. No, stakeholders (trade unions and employer associations) cannot be members of the Labour Council, as the Council is only composed of senior governmental representatives at the ministerial or other level, as designated by each Party. However, the Chapter allows the Council to facilitate public participation (including of the stakeholders) relating to the implementation of the Chapter. 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. Q9. In what situation can a TPP Party be considered as violating the obligations in the Chapter? A. 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; and (ii) the violation or non-compliance has affected trade and investment between two or more TPP Parties. Q10. How do Parties resolve disputes that arise from the implementation of the Chapter? A. The Labour Chapter includes the mechanism to resolve disputes between Parties. The disputing Parties are required to enter into consultation to resolve the dispute in-line with the timelines and procedures that are outlined. If the Parties are able to resolve the dispute, the outcome of the consultation must be documented. However, 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. The Labour Consistency Plan is a bilateral side letter between Malaysia and the United States. The Plan is not attached to the Labour Chapter but makes reference to the obligations of the Chapter. 3

4 Q12. What is the purpose of the Labour Consistency Plan? A. The Plan outlines the commitments Malaysia will undertake in order to fulfil the obligations that are outlined in the Labour Chapter. Q13. Is the Labour Consistency Plan legally binding? A. Yes, it is. Q14. What measures are required to ensure that Malaysia will be able to fulfil the obligations in the Chapter? A. 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. Those legislations includes the Employment Act 1955, Sabah Labour Ordinance (Chap. 67), Sarawak Labour Ordinance (Chap. 76), Trade Union Act 1959, Industrial Relations Act 1967, Private Employment Agencies Act 1981, Child and Young Persons (Employment) Act 1966 and Workers Minimum Standards of Housing and Amenities Act 1990; and ii) ensuring effective enforcement of labour laws. Q15. What actions has the Ministry of Human Resources taken so far? A. The Ministry of Human Resources is conducting an exercise to holistically review all labour legislations. This includes the required amendments to ensure compliance to the obligations in the Chapter. The views and opinions of stakeholders, especially the trade unions, employer associations and general public, are important to the Ministry. Therefore, various engagements and road shows involving the stakeholders are being carried out currently. Q16. 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 Entry- Into-Force of the TPP Agreement for Malaysia. 4

5 Q17. 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. The Government has appointed Institute of Strategic and International Studies (ISIS) Malaysia to conduct a Cost-Benefit Analysis (CBA) of the TPP Agreement. The CBA will incorporate and highlight the impacts of the Labour Chapter to Malaysia. In this regard, 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. What benefits will be gained by Malaysia by agreeing to the Labour Chapter? A. 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; (ii) better protections will be provided in legislations for workers; (iii) allows trade unions more opportunities to self-regulate union activities; (iv) the benefits for employers are generally seen across different Chapters and includes: opening of four new markets US, Canada, Mexico and Peru market access benefits for goods and services duty free market of 800 million people; investment benefits attract FDI and opportunity for Malaysian investors going abroad; and integrating SMEs into the global supply chain. Ministry of Human Resources November

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