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Labor in the U.S.-Panama Trade Promotion Agreement: Protecting And Enhancing Labor Rights

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Hard Hat and GlovesThe Agreement sets high standards for protecting workers’ rights. The Agreement includes obligations for Panama to protect fundamental labor rights as well as to effectively enforce existing labor laws, which will enable American workers and businesses to compete on a level playing field. The Agreement contains groundbreaking labor protections that were first outlined on May 10, 2007, in a bipartisan, Congressional-Executive agreement to incorporate high labor standards into America’s trade agreements.


The Agreement includes a commitment to all of the elements agreed to in the May 10, 2007 bipartisan Congressional-Executive agreement:

• Commitment by the United States and Panama to adopt and maintain in domestic law the five fundamental labor rights as stated in the 1998 International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work. These include:

 Freedom of association – the right to form and join a union;

 The right to collective bargaining;

 Elimination of all forms of compulsory or forced labor;

 Effective abolition of child labor and a prohibition on the worst forms of child labor; and

 Elimination of employment and occupation discrimination based on gender, race, or other factors.

• Commitment not to waive or otherwise fail to apply labor laws in a manner affecting trade and investment.

• Commitment to effectively enforce fundamental labor rights, as well as wage and hour and occupational safety and health laws.

• Commitment to establish procedures that allow members of the public to raise concerns about labor violations directly with either of the two governments, which must be reviewed and considered.

• Commitment to guarantee workers and employers access to tribunals where rights can be enforced and to ensure that proceedings before those tribunals are fair, equitable, and transparent.

• Commitment to improve labor standards and to cooperate on a wide range of labor issues, including labor relations, labor inspection, employment opportunities and working conditions.

• Commitment to the same level of dispute settlement accountability for meeting labor obligations as for meeting commercial obligations. Available remedies for violations of labor commitments will include trade sanctions and fines.


Panama has undertaken a series of major legislative and administrative actions since 2009 to further strengthen its labor laws and labor enforcement. Panama has reformed labor laws to protect the right to strike, eliminate restrictions on collective bargaining, and protect the rights of temporary workers. Panama has taken administrative actions to address concerns in the areas of subcontracting, temporary workers, employer interference with unions, bargaining with non-union workers, strikes in essential services, and labor rights in the maritime sector.

Executive Decrees and Ministerial Resolutions

• Panama implemented Executive Decrees to improve inspections and labor law enforcement concerning:

- Subcontracting: Panama clarified the criteria for legitimate subcontracting and ensured that labor inspections take place so that contracting arrangements do not undermine worker rights.

- Temporary Work Contracts: Panama established an enforcement plan to protect the rights of temporary workers.

- Employer Interference in Unions: Panama established a plan to increase monitoring and enforcement of labor laws that protect against employer interference with union rights.

- Direct Negotiations: Panama clarified that an employer may not enter into collective negotiations with non-unionized workers when a union exists and that a pre-existing agreement with non-unionized workers cannot be used to refuse to negotiate with unionized workers.

- Sector Specific Labor Rights: Panama clarified strike restrictions for workers involved in the cargo transportation sector.

• Panama’s Ministry of Labor issued a Ministerial Resolution to address concerns in the Maritime Sector by clarifying and reaffirming the application of the Labor Code for maritime workers, including provisions on union organizing, collective bargaining, and strikes. The resolution also increases inspections and labor law enforcement activities in the maritime sector.

Legislative Reforms

• More recently, Panama reformed its labor laws concerning:

- Export Processing Zones: Panama protected the right to strike, eliminated restrictions on collective bargaining, and eliminated exemption that allowed companies to use temporary workers for three years.

- Barú Special Economic Zone: Panama eliminated restrictions on collective bargaining for companies less than six years old, and eliminated an exemption that allowed companies to use temporary workers for three years.

- Companies Less than Two-Years Old: Panama eliminated restrictions on collective bargaining.