Trade law policing on the factory floor: next generation agreements and their corporate accountability tools
Kathleen Claussen Professor of Law, Georgetown Law, USA

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Trade policymakers’ increased attention to sustainability has prompted the development of trade tools focused on corporate accountability within international trade agreements. As evidenced by the creation and use of the United States–Mexico–Canada Agreement’s Rapid Response Labor Mechanism, this institutional shift has potent implications for labour rights and environmental protections. This article, which transcribes a lecture delivered at the Lauterpacht Centre in October 2023, scrutinises the turn toward supply-chain policing within international trade law and its institutional, legal, sociological, rhetorical and disciplinary effects.

Abstract

Trade policymakers’ increased attention to sustainability has prompted the development of trade tools focused on corporate accountability within international trade agreements. As evidenced by the creation and use of the United States–Mexico–Canada Agreement’s Rapid Response Labor Mechanism, this institutional shift has potent implications for labour rights and environmental protections. This article, which transcribes a lecture delivered at the Lauterpacht Centre in October 2023, scrutinises the turn toward supply-chain policing within international trade law and its institutional, legal, sociological, rhetorical and disciplinary effects.

1 INTRODUCTION

There is an important shift under way in international trade law and in the development of new trade tools, especially in trade agreements. For more than 30 years, the idea within international economic law, particularly within international trade law, has been to increase the number of issues that we put under the ‘trade umbrella’.1 Policymakers have brought more under the trade umbrella because trade law has had an enforcement capacity, unlike certain other areas of international law. More recently, however, the focus has shifted from policing other States and their regulatory and legislative authorities, holding States accountable when they reach the rules of the road, to today, policing private actors.2 Previously, the place of non-State actors, like firms, civil society and workers’ groups, was principally to provide input to shape the rules of the road and to shape the use of enforcement mechanisms between States; those inputs have not changed.3 In fact, they are arguably more inclusive than they have ever been. But what has changed is the targets. And, in trade law, this shift is significant.

Our trade law system is premised on shared rules among States in which States promised to reduce barriers to trade. They promised to use collective action and settle disputes between one another through international arbitration. That is what we teach in trade law. That is typically what we talk about when we talk about agreements. There is a normative valence to this understanding of trade law. Trade law is about trade liberalisation. The premise of our multilateral system is that we reduce barriers to trade on States.

That system has faced increasing pressure however. Pressure that has led policymakers to reconsider trade’s values and how those values affect trade institutions. Among economies like the United States (US) and the European Union values are changing, particularly in the areas of sustainability and security. Today, trade law increasingly focuses on sustainability values and security values in ways that it has not in the past.4 I will focus just on sustainability in this article, but we could equally talk about security. There is a lot in their intersection: the intersection between sustainability initiatives and imperatives and those of security. But, for present purposes, sustainability is my focus.

International trade agreements have traditionally been considered unlikely vehicles for promoting global sustainability given those agreements’ primary liberalisation purpose: to reduce barriers to trade and barriers to economic exchange more broadly between States. Under the traditional view, trade agreements tend, or ought, to limit States’ abilities to adopt domestic regulation that would interfere with that primary purpose, even when that regulation might enhance or promote sustainability objectives.5 But, as values have changed, some governments are now using trade instruments to achieve sustainability goals, including those that may not be achievable at home.

There has been considerable divergence among various stakeholders about how best to integrate sustainability values into these tools.6 ‘How’ to do this is the thread running through the conversation today where the debate is strongest. It is relatively easy to support sustainability as an important principle in our international initiatives, but how that happens is a matter of debate. We want to help workers. We want to help save the wildlife. We want to protect our forests. ‘How’ we do so is the question. How do we do so consistent with existing rules? Or do we need to reimagine those?

Increasingly, there have been two answers to this question: two schools of thought. First are those who see the path to sustainable and inclusive trade through trade agreements that liberalise trade and promote exports.7 Proponents of that view see these integrations as part of the liberalisation story. A second view is held by those who see the path to sustainability goals through restyled agreements: agreements that do not necessarily offer liberalisation or promote exports, but rather privilege domestic regulation or that have embedded in them tools to discipline private actors.

The difficulty with the first view, that of seeing the path to sustainability through traditional liberalisation initiatives, is that the position relies heavily on exceptions to the liberalisation paradigm; exceptions that are built into our trade law. The difficulty with the second position, that of privileging domestic tools or of disciplining private actors, is that it sits uncomfortably with what we understand to be the consensus on trade law principles. Some feel the second pathway is inconsistent with trade law’s fundamental core. Despite this limitation, this emphasis on private actors is dominating the conversation because of its innovativeness. It is pushing the boundaries of what many trade law experts have thought trade tools could do.

Put simply, as sustainability and security pressures have called into question some of trade law’s fundamental priors, States are shifting their attention, first, from rules to tools, and second, from reciprocal State arrangements to direct action, but not toward one another. That is so 2016. They are shifting attention to direct action toward private actors, toward corporate accountability. Several factors intrinsic and extrinsic to trade policy have precipitated this. Because of the limitations on negotiations, because of limitations on dispute settlement to achieve these politically important goals (again, sustainability and security, politically important goals), States relying on other States just does not cut it to get that job done. It is not that the State-to-State practice is lost, but rather this is a moving train with more destinations with supplementary forms of action on the rise.

I like to think about an analogy to the evolution of electrical cables. In trade law, we have been working with a two-prong system for some time (State-to-State efforts). That was the original system: think about it like a two-prong electrical cable. You can still use a two-prong electrical cable in most countries, but many have moved to a three-prong system. The third prong serves a grounding element. So, while we maintain our two-prong trade tools, it is the three-prong tools that are newest and may be strongest. A three-prong cable is going to help you achieve your goals without getting so easily burned. The purpose of my intervention is to highlight these newest instruments: this three-prong approach to trade in cross-border commercial regulation. The third prong today is the direct applicability and emphasis on businesses all under the guise and through the lens of sustainability and security.

Let me charge ahead with some examples. Most of what I am going to point to today is from the experience of the US, but this trend is not unique to the US. I can equally point to examples in the European Union and beyond where trade policymakers are thinking about and potentially implementing some of these tools.

2 A SAMPLE TOOL: CORPORATE ACCOUNTABILITY FOR LABOUR RIGHTS VIOLATIONS

The most straightforward example of this shift toward corporate accountability among trade law tools is the US–Mexico–Canada Agreement (USMCA) and something called the Rapid Response Labor Mechanism (RRM). The RRM is a new tool that the US is very excited about. It is the first of its kind because it allows one government of the three to take action against a particular worksite on the territory of another government on the basis of a belief that the workers at that facility are not able to exercise their workers’ rights in the area of the right to collective bargaining and the right to unionisation.8 As soon as the first government decides that there has been a denial of rights in that particular worksite, it can then delay the customs processing of the shipment of goods from that worksite into its territory until it decides that this labour issue has been resolved.9

Let us make it a little bit more concrete with a hypothetical. Imagine a fictional worksite called Cambridge Car Parts in Mexico producing high quality automotive car parts. It comes to light that the workers at Cambridge Car Parts have not been able to unionise due to some exploitation either by a powerful group of workers or by the management. The workers at this facility have been prevented from unionising, contrary to Mexico’s labour law, and word about this problem at Cambridge Car Parts comes to the attention of the US government. The US Department of Labor and US Trade Representative (USTR) learn about this and examine the situation on the basis of a complaint that has been filed with them.

If this issue came to light before the existence of the USMCA, and if it was a big enough problem, perhaps the US government would bring it to the attention of the Mexican authorities and encourage action. If there were a pattern, and if the US thought the Mexican government was failing to effectively enforce its labour laws, the US could potentially seek to activate the dispute settlement mechanism under the predecessor agreement to the USMCA. That would be a State-to-State legal enforcement proceeding in which the actions of the Mexican government would be evaluated by an arbitral panel.10

Now, however, with the USMCA RRM, the US government can take action directly against Cambridge Car Parts in Mexico on the basis of the information that the US government has received. It is a diagonal exercise: a compliance structure that allows the government to take action diagonally against a company rather than a horizontal State-to-State action or a vertical enforcement move within its own territory. Under the RRM, the US government takes action directly against the company on the basis of this concern. It is not that the inter-State element has gone away. Yes, the US and Mexico still work together, but the penalty is enforced by one State directly against the company. Further, the mechanism is immediate: rapid, as the name suggests. As soon as this denial of rights has been identified, the US can delay processing of shipments of goods from that worksite and ultimately subject them to higher tariffs or even exclude them from entering the US entirely. The purpose here is to say: ‘Hey, Cambridge Car Parts, you better get your act together and be sure that this labour issue gets resolved. Otherwise, your car parts can’t come into the US or they will be subject to a very high tariff’.

In the principal treaty text, the tool is reciprocal.11 The Mexican government could do the same with a US company. But a footnote in the agreement limits the application substantively to the way Mexico could apply the tool to US companies.12 So the tool’s reciprocity is significantly circumscribed. Still, it is fair to say that never before have we seen something like this in a trade agreement where governments give themselves the ability to police companies on one another’s territory on the basis of labour rights violations.

This new tool has been hailed by progressives throughout North America as a major step forward in protecting workers. They call it a major step forward in advancing social policy agenda. One lingering question remains whether this is replicable in other places. We have seen something like the RRM already in the Indo-Pacific Economic Framework (IPEF) agreements. The US has insisted upon a variation of the RRM in its IPEF supply-chain agreement, and it is insisting upon something like the RRM in other agreements as well.13

Let us move beyond my hypothetical of Cambridge Car Parts to what has actually happened. There have been 16 RRM situations so far since the entry into force of this tool. All of them are actions by the US government against facilities based in Mexico. The latest one was announced at the worksite of a subsidiary of the US company, Caterpillar.14 Most RRM situations are commenced with the filing of a petition by a member of civil society. Anyone may file a petition indicating a problem at a worksite in Mexico. The US government will review that petition and either accept or reject it on the basis of an investigation that US officials carry out. There is also a hotline where an individual or group can call or email the US government and to inform US authorities of a denial of rights, rather than complete a full written petition. Hundreds of tips have come in through the hotline that the government has also used to identify further situations. The US government also maintains a group of labour attachés in Mexico that go to the worksites whenever possible to do an investigation at the Mexican facility.15 The idea that the US government could appear at a worksite in Mexico without notice is already a powerful tool.

Most RRM situations have taken approximately 90 days from start to finish, although it is difficult to measure what the ‘start’ is and what the ‘finish’ is.16 This count assumes that the ‘start’ is the date that the US suspends liquidation on those goods at the border, and the ‘finish’ is the moment where the US declares success: it typically issues a press release noting that the issue has been resolved. Among the companies that have been implicated are about a half dozen American companies, about a half dozen European companies, some Japanese companies, more recently a Chinese company and some Mexican companies as well, all of them with facilities based in Mexico.

Where Mexico and the US disagree about a denial of rights, the governments can convene a panel to evaluate the situation and make an expert judgment as to the presence of any denial.17 Recently, the governments convened the first such panel and, at the time of writing, the panel is reviewing the governments’ positions.18 The details of the panel’s work are interesting from an international dispute settlement perspective. In May 2023, US labour groups and a Mexican union filed a petition with the US alleging a denial of workers’ rights at a mine.19 Following a request from the US that Mexico review the situation, Mexico reported that it had determined that no denial of rights existed at the mine. According to Mexico, the situation was not covered by the USMCA because (1) the alleged denial of rights occurred prior to the entry into force of the USMCA and did not implicate legislation that complies with Annex 23-A of the USMCA, and (2) the San Martín mine is not a ‘Covered Facility’ within the meaning of Article 31-A.15 of the USMCA.20

The US then sought the constitution of a panel. As required by the USMCA, the Mexican Section of the Secretariat selected the panel members by lot.21 The panel was constituted on 30 August 2023. The USMCA requires that a panel within five business days of its constitution

confirm that the petition:

  1. (a)identifies a Covered Facility;
  2. (b)identifies the respondent Party’s laws relevant to the alleged Denial of Rights; and
  3. (c)states the basis for the complainant Party’s good faith belief that there is a Denial of Rights.22

The panel, faced with very short submissions from both sides, and this very short deadline, adopted a ‘prima facie’-styled decision in which it ‘confirmed’ the petition.23 ‘Confirmation’ is an unusual concept in this space, styled somewhat as a jurisdictional stage of the proceedings, but again with very little to work with, something the panel acknowledged.

During the autumn, both Mexico and the US filed written submissions with the panel. Most importantly, the panel indicated that it will hold an in-person ‘verification hearing in Mexico City’.24 The panel stated that it will allocate two days for oral arguments and the hearing will be open to the public.

This first panel is facing challenging legal questions about its work.25 For example, what rules apply to the RRM proceedings? The panel so far has adopted the Chapter 31 (State-to-State Dispute Settlement) Rules of Procedure, at least in part. Those include some provisions specific to the RRM, but most of the rules are designed for traditional State-to-State disputes. Applying some of those ideas to the RRM proceedings is imperfect, and we have already seen the panel depart as necessary. How do workers groups (or others) participate, if at all? Interestingly, the panel has invited non-governmental entities that are directly involved in the dispute to submit briefs.26 What does ‘verification’ mean? Does it mean panels will go to facilities? Under what authority and with what protection? The US government decided the San Martín mine was in too dangerous a location for it to allow its staff to visit. It appears the panel has dispensed with the possibility that it could get there at least in this instance, although Mexico has asked the panel for clarification. In a communication on 18 September 2023, Mexico asked the panel to indicate whether it will visit the mine, and also whether it will engage in some form of discovery.27

3 TOOLS ALONG OTHER SUSTAINABILITY DIMENSIONS

Another innovative and recent model tool of this sort, and one on which the RRM was partly based, is found in the US–Peru free trade agreement. That agreement has a unique annex in its environment chapter on forest sector governance, which includes requirements for Peru to conduct audits of particular timber producers and orders and upon request from the US.28 The US can ask Peru to perform verification of shipments of wood products from Peru to the US again to control against illegal timber production and to avoid devastation of forests, beyond Peruvian law. The US may take direct action against a shipment if it finds that the verification was not done to its satisfaction. So, once again, the idea is the US takes action against particular shipments coming in from Peru where the US is not satisfied that Peru has verified compliance by that timber producer. There is an illustrative list in the agreement as to further action the US could take against a shipment or an enterprise.29 For example, it could deny entry to products from a particular enterprise. This forestry annex remains the first of its kind.

The RRM and the forestry annex are different from other sorts of sustainability measures such as certification schemes. We hear a lot about certification practices in other parts of the world as cross-border regulatory mechanisms. Sometimes those certifications are carried out by governments, but more often certification may be coordinated with non-government actors.30 In the tools I have highlighted here, the government acts against the company, not relying on third-party certification, but based on the government’s own analysis.

Other examples of the same type arise in fisheries management and in forced labour. Those measures are typically statutory, rather than part of trade agreements, but increasingly forced labour provisions are part of trade agreements.31 The idea is the same whether in statute or agreements: the US government is taking action directly against companies abroad where it finds violations of sustainability principles.

Moreover, although the examples that I have highlighted are those advanced by the US, the phenomenon is not unique to the US. Certainly, in the United Kingdom and in the European Union, discussions about similar tools are ongoing. The result is that companies need to know their supply chain all the way down and then some. They need to know what is happening within their facilities abroad.

To be sure, it is not that trade policymakers have not experimented with new mechanisms in the past. What is different here and now is the direct applicability for businesses. Outside of trade, regulating companies across borders is not new; in fact, in international financial regulation, that approach is the norm. But it has not been the case in trade. In the past, in trade, the States have been negotiating market access for broad categories of goods and services. Now, however, governments are effectively negotiating company-by-company market access and worksite-by-worksite enforcement.32 Perhaps the regulation of the cross-border movement of goods is approaching the same sort of approach as was developed for regulating the cross-border movement of capital.

Given this reconfiguration of the interaction between States and firms in our trade regime, this project then seeks to ask: what does this mean for international trade law and for its durability? What are the effects as an intellectual matter for using these cross-border tools? When it comes to corporate accountability, we are especially finding ourselves confronting the logics of other areas, such as the logic of human rights for example with the logic of trade and trade’s values.

Let me try to explain this in a somewhat more theoretical way, having made the case in descriptive terms. I see two flips here. One I call institutional, and another is cartographic. This institutional flip is an inside/outside move: one in which the relationship between the State and the company is sort of turned inside out. We used to think about the States as the main actors in the story: they were the centre of the story. And other actors were on the periphery. Now those lines have blurred. The companies have moved toward the centre with an emphasis akin to what we put on other States.

The cartographic shift has to do with borders. Typically, States regulate companies within their borders, and they rely on other States to do the same. That is a transnational two-step: States agree at the international level and then enforce and implement domestically. But the transnational two-step on which our trade system relies is eliminated through these tools. Nationality matters less. Location matters less. The border is erased, even if it is the location at which goods are stopped as a result of this regulatory enforcement.

Taken together, these moves are reflected in three groups of changes: changes to the form of trade law, changes to the fora of trade law and changes to the forces of trade law. The form is no longer State action, but rather State to company. The forum has changed from the World Trade Organization to many deals and to domestic agencies. And the forces have changed, moving from suspension of concessions against other governments to direct payments or sanctions on individual companies. These changes to the forms, the fora and the forces are part of trade law’s corporate accountability turn.

4 EVALUATING OUR TRADE AND CORPORATE ACCOUNTABILITY TOOLS

Is the corporate accountability paradigm better than the old approach to trade law? Is this a good system? These questions are challenging to answer where our starting assumptions may differ. Policymakers and academics are diverging in their views of what trade law is for. If we do not agree on the goals, it is difficult to evaluate fairly. But let us take a moment to consider the following critiques.

One critique of the corporate accountability trade tools is that these tools are only plausible for powerful governments: they are effectively unilateral tools, and some would say neocolonial tools.33 Another way of thinking about that critique, though, is to think about the complementarity functions of these tools. Consider the RRM. To do their work under the terms of the RRM, the US government staff must educate themselves on the details of Mexican labour law. They must do so because they are now charged with enforcing Mexican labour law. Some observers find that troubling because that means, ultimately, that the US government is not only assessing worksite compliance, but it is effectively creating Mexican labour law in its enforcement decisions. And it is doing so alongside Mexican institutions. Sometimes, they reach different results. That is, Mexican institutions (which, by the way, were just reformed as part of the negotiation of the USMCA) are in some instances being supplanted or replaced by the work of the US authorities. You have parallel proceedings between the RRM and the Mexican courts. From this perspective, the US government’s work under the RRM has created an external precedent and that has led to conflicts with Mexico’s federal law. At the very least, these conflicts or the appearances of potential conflict are creating doubt for companies operating in Mexico, and even for labour rights proponents there. This criticism raises the question: what sort of complementarity should there be, if any, in the deployment of these sorts of tools?

A second critique about these tools is their lack of transparency and the absence of due process protections.34 There is very little public information about how these foreign commercial bureaucracies are reaching their decisions. Companies have also expressed concern about their inability to provide evidence in their own defence. There is also no opportunity for review that a company could initiate. The lack of public-facing information and of the opportunity to be heard has led companies to, in essence, say: ‘We are with you; we think sustainability is important and we want to protect workers’ rights, but we do not quite know how you are going about this. We do not know how we can help. We do not really have a sense of the process that is available to us. If we feel that you have done this in a way that is contrary to our interests, we have no recourse. And that is not right’.

A third criticism raised by observers is that this work as ‘trade police’ takes away from the other duties of our trade bureaucrats.35 That critique implicates two questions: first, do we consider this sort of regulatory monitoring to be appropriately situated among our trade tools? And, second, is this the best use of trade officials’ limited resources? Policymakers have yet to engage in a robust dialogue about these questions.

Fourth and finally, many outside the US raise concerns about the extraterritorial nature of these tools.36 The reach of these instruments has created a degree of alarm. The fact that a government is making a determination about the domestic law consistency of behaviour by private actors in another place, and then imposing penalties, is at the very least unusual.

There has also been considerable praise for these instruments and for what they have achieved, even in a short time. For one, some civil society groups and the US government have argued that the RRM is making a meaningful and positive difference in the lives of workers. In the RRM situation involving General Motors, officials pointed to a more than 8 per cent increase in workers’ wages following the successful conclusion of the RRM review process.37

Others have praised officials for their use of the tool to resolve seemingly intractable situations where the Mexican government was unable to secure compliance. In some respects, one could view the RRM as usefully filling gaps: allowing the US to effect change where Mexico was unable to do so. From this perspective, the two governments could be seen as partners to enforce the law against companies jointly, and this approach is more appropriate and more effective than the US accusing Mexico of failing to effectively enforce its labour laws.

Finally, there have been some unexpected results from the use of these tools. One is that there have been reports of violence in local communities where these sorts of tools have disrupted the power balance among groups controlling the social fabric, for example.38 Another unexpected outcome has been the challenges in implementation. Forced labour is a good example. Both the private sector and the governments have realised that policing forced labour is far more resource-intensive than was anticipated.39 It requires sophisticated technology to be able to figure out where an individual thread came from in a shirt or blanket, or to determine what is happening inside a specific facility. Businesses have sought guidance on how they can be sure that their supply chain all the way down is free of forced labour. Some companies have said that they are committed to helping workers, but maybe the corporate accountability tools are so severe that they have made the import of goods unworkable.40 If the tools result in companies leaving areas where workers need the work, what next in improving those workers’ lives?

Reviewing these positive and negative comments about these tools brings us back to question the goals. What could or should the goals of these tools be? How do they compare to alternative means of achieving these outcomes? How do they compare to the due diligence initiatives we see in a variety of other jurisdictions? What does success look like? Is it the same sort of success that we seek to achieve through the due diligence tools, for example? What are the law-generating aspects of these tools? One major remaining challenge is how to reconcile the competing priorities that arise where sustainability imperatives themselves clash, or where they clash with other policy priorities. These clashes are apparent when considering policies and measures surrounding the development of solar technology for example. Solar is a good example because it highlights the tensions that have arisen among trade tools, including with security policy.

To the extent more tools like these are going forward, we need to think about these competing initiatives. We also need to think about the extended impact of each particular one. With respect to the RRM, for instance, it is important to recognise that we cannot merely consider how many situations are brought. If the intent is to have a deterrent effect, then this mechanism may work best if it is never used.

5 EFFECTS OF THE PARADIGM SHIFT

Finally, it is worth reviewing some of the effects of these instruments to the extent we can identify them at this early stage. First, it is clear that these instruments have the effect of changing the role of our foreign commerce bureaucrats. These civil servants serve more as police than as diplomats. The addition of corporate accountability tools to trade agreements has changed the role of the trade official from negotiating agreements and enforcing those agreements against other States to acting as regulatory monitors, transnational regulatory monitors, coming up with bespoke solutions for individual facilities or for individual shipments for individual products.41 A second institutional effect has to do with international organisations. The more these tools become the priority place for cross-border regulatory cooperation and enforcement, the more the role of other organisations related to trade may be called into question. Likewise, what place is there for the International Labour Organization in these labour-oriented tools? The governments are addressing these matters on a case-by-case basis. A third institutional effect has to do with courts. Companies are seeking recourse where they can when they are affected by these tools and that place is often in domestic courts. A major case is now under way in the US Court of International Trade concerning forced labour enforcement.42 There are surely other companies considering where they may also seek relief.

We might also consider legal effects. The emphasis on tools like these over rules has led some commentators to focus on the experimental effect of these enforcement measures. There is much more to be explored with respect to compliance proceedings in the absence of written guidelines and the tailored nature of the solutions that these governments have devised: solutions that are difficult to be generalised. Further, it is clear that one of the legal effects we should be talking about is the potential change in the rights and responsibilities of corporations under international law arising from this conversation. And, finally, the implementation of these particular tools has implications for domestic law as well.

When it comes to sociological effects or even rhetorical effects, it is important to consider whether we see these tools as enforcement measures, or whether we see them as compliance instruments and what we mean by those labels. Reconciling the different views on that distinction is important not just as a policy matter, but also as a practical matter. It is not always clear who is at fault in these situations, so are we engaging in regulatory activity in a way that takes account of these complications? Do these create the most effective incentive structures? Query also whether coercing businesses, as these trade tools will do, is taking a page out of China’s playbook.43 These tools demand that companies protect environmental and labour rights with coercive consequences where they do not. Is the US government ceding ground to the approach used by China but for progressive causes? We could also consider effects on foreign relations with our trading partners. Is this sort of approach helping to de-escalate rising tensions among trading partners? Is this something we can all get behind and work on together?

Lastly, I turn to disciplinary effects. There is no question that this recent trend has reshaped or is reshaping the vision of the field from what we consider to be international trade law. Thinking about corporate accountability this way eliminates the traditional distinction between the inside and the outside or between the domestic and international. It collapses some of the guiding logics between international trade law and other ideas within international law. Here we have a mechanism that purports to be part human rights tool and part labour tool, but it appears in a trade tool. Its legal features draw from logics across many different areas of international law, complicating the story even further. These sorts of tools are trying to achieve through international trade law what ancillary fields could not achieve. In other areas, such as human rights, labour rights and even international criminal law, civil society actors and other movers have sought to impose greater responsibility on companies.44 Multiple movements are designed to check this work, like corporate social responsibility (CSR), business and human rights, corporate due diligence and more. With these new tools, the lines have begun to blur.

Over the last five years, an acceleration of attention on companies rather than countries in what we think of as conventional trade policy brings trade law closer to the territory long sought by CSR advocates in unexpected ways. It is not that the CSR movement penetrated the trade bar. Rather, the principles have coalesced somewhat inadvertently as certain State actors and progressive governments have sought avenues for making change in the compliance of their trading partners. As the notion of trade law has expanded and moved to embrace the idea of ‘trade values’, this attention to corporate authority has increased.

With that, I return to my opening premise: we have long thought about trade law as an institutional framework where State-to-State engagement was the centrepiece, along with liberalisation norms. Today, however, trade law is occupying a different space, a space more akin to what the CSR and business and human rights advocates have sought. Our trade law system is now also an institutional framework for State action against companies as a means of maintaining the norms advanced by these other agendas. Although many questions remain and this article has only skimmed the surface by laying many of them out, the change in tone and in practice is unmistakable. And it brings me back to my electrical analogy. Trade law may be moving from a two-prong system of State-to-State energy to a three-pronged world where companies are seen as the capital-dominant power-wielding entities. In the three-pronged world, governments are focusing on companies as the actors best situated and indispensable players in helping governments achieve social and environmental sustainability, as well as geoeconomic goals. There seems at least to be a spark there.

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    Dunoff Jeffrey L , '‘“Trade and”: Recent Developments in Trade Policy and Scholarship – And Their Surprising Political Implications’ ' (1997 ) 17 Northwestern Journal of International Law and Business : 759.

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    Monicken Hannah , '‘Tai: IPEF Dispute Settlement Part of Ongoing Revolution, Likely to Include Penalties’ ' (2022 ) 40 (23) Inside US Trade .

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    See generally

    Meyer Timothy , '‘Free Trade, Fair Trade, and Selective Enforcement’ ' (2018 ) 118 Columbia Law Review : 491.

    (collecting views); Richard H Steinberg, ‘The Rise and Decline of a Liberal International Order’ in David L Sloss (ed), Is the International Legal Order Unraveling? (OUP, Oxford 2022) 37.

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    Dunoff (n 1) 759–761.

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    See eg

    ‘Testimony of Ambassador Katherine Tai Before the Senate Finance Committee Hearing on the President’s 2022 Trade Policy Agenda’ (Office of the United States Trade Representative, 31 March 2022) (Tai’s Testimony) <https://ustr.gov/about-us/policy-offices/press-office/speeches-and-remarks/2022/march/testimony-ambassador-katherine-tai-senate-finance-committee-hearing-presidents-2022-trade-policy> accessed 24 February 2024: ‘[D]espite our enforcement efforts, many of our existing trade tools were crafted decades ago. In some cases, they do not adequately address the challenges posed by today’s economy. We are reviewing our existing trade tools and will work with Congress to develop new tools as needed’.

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    David A Lubin and Daniel C Esty, ‘The Sustainability Imperative’ (2010) 88(5) Harvard Business Review 42 <https://hbr.org/2010/05/the-sustainability-imperative> accessed 24 February 2024.

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    For a comparison between economic liberalisation and protectionism, see

    Henry M J Tonks, ‘Biden is Reviving a Lost Democratic Industrial Policy Playbook’ (The Washington Post, 7 Nov 2022) <www.washingtonpost.com/made-by-history/2022/11/07/biden-atari-democrats-japan-china/> accessed 24 February 2024

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    ; Aurelia Glass and Karla Walter, ‘How Biden’s American-Style Industrial Policy Will Create Quality Jobs’ (Center for American Progress, 27 October 2022) <www.americanprogress.org/article/how-bidens-american-style-industrial-policy-will-create-quality-jobs/> accessed 24 February 2024); Gary Clyde Hufbauer, Megan Hogan and Yilin Wang, ‘For Inflation Relief, the United States Should Look to Trade Liberalization’ (Peterson Institute for International Economics, March 2022) <www.piie.com/publications/policy-briefs/inflation-relief-united-states-should-look-trade-liberalization> accessed 24 February 2024.

  • 8

    Protocol Replacing the North American Free Trade Agreement with the Agreement Between Canada, the United States of America, and the United Mexican States (signed 30 November 2018, entered into force 1 July 2020) (USMCA) annex 31-A, ‘Facility-Specific Rapid Response Labor Mechanism’; Tai’s Testimony (n 5).

  • 9

    USMCA (n 8) annex 31-A: describing it as a tool between the US and Mexico.

  • 10

    Bureau of International Labor Affairs, ‘North American Agreement on Labor Cooperation: A Guide’ (US Department of Labor, October 2005) <www.dol.gov/agencies/ilab/trade/agreements/naalcgd> accessed 24 February 2024.

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  • 11

    USMCA (n 8) annex 31-A.

  • 12

    Ibid art 31-A.2 fn 2: carving out a narrow set of labour situations in the US that could be subject to review.

  • 13

    Monicken (n 2).

  • 14

    ‘United States Seeks Mexico’s Review of Alleged Denial of Workers’ Rights at Tecnología Modificada SA de CV Caterpillar Facility’ (Press Release, Office of the United States Trade Representative, 26 October 2023) <https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/october/united-states-seeks-mexicos-review-alleged-denial-workers-rights-tecnologia-modificada-sa-de-cv> accessed 24 February 2024.

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  • 15

    Kathleen Claussen and Chad P Bown, ‘The Rapid Response Labor Mechanism of the US–Mexico–Canada Agreement’ (PIIE Working Paper 23-9, 2023) 26 <www.piie.com/sites/default/files/2023-10/wp23-9.pdf> accessed 24 February 2024.

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  • 16

    ‘Fact Sheet: The USMCA Rapid Response Mechanism Delivers for Workers’ (Office of the United States Trade Representative, 9 February 2024) <https://ustr.gov/about-us/policy-offices/press-office/press-releases/2024/february/fact-sheet-usmca-rapid-response-mechanism-delivers-workers> accessed 24 February 2024

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    ; Justino De La Cruz, ‘Consequences of Non-Compliance with USMCA Labor Provisions: Potential Effects on Exporting Firms’ (Economics Working Paper 2022-05-B, 2022) 20 <www.usitc.gov/publications/332/working_papers/consequences_of_non-compliance_of_labor_provisions_5-24-2022.pdf> accessed 24 February 2024.

  • 17

    USMCA (n 8) art 31-A.1.

  • 18

    ‘United States Requests First Ever USMCA Rapid Response Labor Mechanism Panel at Grupo Mexico Mine’ (Press Release, Office of the United States Trade Representative, 22 August 2023) <https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/august/united-states-requests-first-ever-usmca-rapid-response-labor-mechanism-panel-grupo-mexico-mine> accessed 24 February 2024.

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  • 19

    Ibid.

  • 20

    Letter from the Mexican Ministry of Economy to the Rapid Response Labour Panel in the Case of the San Martín Mine (1 September 2023).

  • 21

    USMCA (n 8) art 31.9.

  • 22

    Ibid art 31-A.6.

  • 23

    Rapid Response Labour Panel in the Case of the San Martín Mine (Panel Confirmation of Petition) MEX-USA-2023-31A-01 (7 September 2023).

  • 24

    Rapid Response Labour Panel in the Case of the San Martín Mine (Communication from the Panel) MEX-USA-2023-31A-01 (14 September 2023).

  • 25

    For a previous commentary of this case, see also

    Kathleen Claussen, ‘First Rapid Response Labor Panel Begins Work Under USMCA’ (International Economic Law and Policy Blog, 2 October 2023) <https://ielp.worldtradelaw.net/2023/10/first-rapid-response-labor-panel-begins-work-under-usmca.html> accessed 24 February 2024.

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  • 26

    Ibid.

  • 27

    Rapid Response Panel in the Case of the San Martín Mine (Panel’s Communication) MEX-USA-2023-31A-01 (18 September 2023).

  • 28

    United States–Peru Trade Promotion Agreement (signed 12 April 2006, entered into force 1 February 2009) annex 18.3.4; United States–Peru Trade Promotion Agreement Implementation Act Pub L No 110-138, § 502(a)(2), 121 Stat 1455, 1489 (2007).

  • 29

    United States–Peru Trade Promotion Agreement (n 28) annex 18.3.4, art 13(a).

  • 30

    See eg

    ‘Could the Palm Oil Arrangement Between Indonesia and Switzerland Offer Lessons for EU and Indonesia Free Trade Agreement Negotiations?’ (Fern, 8 April 2021) <www.fern.org/publications-insight/could-the-palm-oil-arrangement-between-indonesia-and-switzerland-offer-lessons-for-eu-and-indonesia-free-trade-agreement-negotiations-2323> accessed 24 February 2024.

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  • 31

    USMCA (n 8) art 23.6.

  • 32

    See eg

    Commission, ‘Proposal for a Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence and Amending Directive (EU) 2019/1937’ COM (2022) 71 final, annex: requiring additional reporting by companies in their supply-chain management.

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  • 33

    See eg

    Achiume E Tendayi & Carbado Devon W , '‘Critical Race Theory Meets Third World Approaches to International Law’ ' (2021 ) 67 UCLA Law Review : 1462, 1474.

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    : ‘Neocolonial assertions of the international legal system implicate development doctrines, international economic law, international humanitarian law, and domestic legal regimes’. See also Chantal Thomas, ‘Race as a Technology of Global Economic Governance’ (2021) 67 UCLA Law Review 1860, 1878: ‘[T]his ideology reproduced and echoed earlier narratives of the civilization standard’.

  • 34

    Richard Vanderford, ‘US Forced Labor Crackdown is Tough, But Opaque’ (Wall Street Journal, 16 February 2023) <www.wsj.com/articles/u-s-forced-labor-crackdown-is-tough-but-opaque-a463d6e7> accessed 24 February 2024

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    : ‘[T]he campaign is an opaque one, with little detailed data on which companies or sectors are being targeted … the effort so far remains relatively mysterious to observers both in academia and industry’.

  • 35

    But see eg

    Peyser James A , '‘Executive Organization and International Trade’ ' (1984 ) 2 International Tax and Business Lawyer : 138, 139.

  • 36

    Neuman Gerald L , '‘Extraterritoriality and the Interest of the United States in Regulating its Own’ ' (2014 ) 99 Cornell Law Review : 1441, 1448 -1456.

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    : reviewing a few of the many legal dimensions of the federal government’s regulation of harmful conduct of its own officials and its own nationals outside the borders of the US.

  • 37

    Andrea Navarro, ‘GM Hikes Mexico Plant Wages by 8.5% in Landmark Deal with Union’ (Bloomberg, 12 May 2022) <www.bloomberg.com/news/articles/2022-05-12/gm-hikes-mexico-plant-wages-by-8-5-in-landmark-deal-with-union> accessed 24 February 2024.

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  • 38

    Claussen Kathleen & Bown Chad P , '‘Corporate Accountability by Treaty: The New North American Rapid Response Labor Mechanism’ ' (2023 ) 118 American Journal of International Law : 98, 111.

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  • 39

    See eg comments from participants in the Trade and Labor Working Group (unattributed) (15 November 2021).

  • 40

    See eg

    John Foote, ‘Good News! The Lawyers are Coming: Reflections on the 2024 Cornell ILR School Global Labor Institute Conference’ (Forced Labor & Trade, 9 February 2024) <https://forcedlabortrade.substack.com/p/good-news-the-lawyers-are-coming> accessed 24 February 2024.

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  • 41

    See generally

    van Loo Rory , '‘Regulatory Monitors: Policing Firms in the Compliance Era’ ' (2019 ) 119 Columbia Law Review : 369.

    : describing how the administrative State includes significant monitoring.

  • 42

    Ninestar Corporation v United States of America 666 F Supp 3d 1351 (Ct Intl Trade 2023).

  • 43

    See generally

    Chander Anupam & Sun Haochen , '‘Sovereignty 2.0’ ' (2022 ) 55 Vanderbilt Journal of Transnational Law : 283.

    : referring to a tech cold war and pointing to China’s coercive action against US companies and foreign executives in retaliation for US actions.

  • 44

    See eg

    ‘Congressman Panetta Releases Statement on the Deployment of USMCA Enforcement Measure’ (Press Release, US Representative Jimmy Panetta, 12 May 2021) <https://panetta.house.gov/media/press-releases/congressman-panetta-releases-statement-deployment-usmca-enforcement-measure> accessed 24 February 2024 (celebrating the use of the RRM)

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    ; ‘Wyden Statement on USTR’s Action to Block Illegal Timber Imports from Peru’ (US Senate Committee on Finance, 26 July 2019) <www.finance.senate.gov/ranking-members-news/wyden-statement-on-ustrs-action-to-block-illegal-timber-imports-from-peru> accessed 24 February 2024 (praising the USTR’s use of the tool).

Contributor Notes

Many thanks to the Lauterpacht Centre for International Law (LCIL) and the Cambridge International Law Journal (CILJ) for the generous invitation to present these remarks at the joint LCIL–CILJ Annual Lecture. This text is a lightly edited transcript of those remarks, delivered on 27 October 2023, with thanks to Noreen Tareque and Neha Vasagiri for their assistance. The lecture was based on prior and forthcoming work, particularly Kathleen Claussen, ‘Trade Policing’ (2024) 65 Harvard International Law Journal 25.