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 1995.
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)

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;

(ii)

govern acceptable conditions of work with respect to minimum

wages, hours of work, and occupational safety and health; and

(iii)

effectively enforce labour laws.

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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 Partys 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
Partys 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.
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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 Partys 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.

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 EntryInto-Force of the TPP Agreement for Malaysia.
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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 countrys 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 2015