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Latest News - September 2014

September 25, 2014
US Moves Forward with Labour Case under Guatemala Trade Deal
Source: International Centre for Trade and Substantial Development

The US will proceed with its labour enforcement action against Guatemala under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), officials confirmed last week. The labour case, originally launched four years ago, is the first of its kind brought under a free trade deal.

Speaking in Washington to an assembly that included domestic labour leaders, politicians, and the Deputy Secretary of Labor, US Trade Representative (USTR) Michael Froman said that the US would continue to “advance both our interests and our values” through “strong, enforceable labor standards.”

The original case was filed in July 2010, but has advanced slowly since. (See Bridges Weekly, 4 August 2010) In re-starting the case, the USTR said that Washington will “not hesitate to take action” to improve international labour standards and protect American workers against what the US sees as unfair competition.

Ensuring compliance, Froman added, would “level the playing field for American workers and help ensure that global competition is driven by entrepreneurship and innovation, not by exploitation or injustice.”

Enforcement plan

Following three years of stop-and-start arbitration, the US suspended litigation in April 2013 after agreeing to an 18-point Enforcement Plan. Under the plan, the Guatemalan government promised to significantly improve compliance with CAFTA-DR labour standards through dedication of additional enforcement resources and the passage of supporting legislation.

During the litigation freeze, Guatemala has taken several notable steps. On Thursday, the US trade chief pointed towards the creation of a compliance unit and the hiring of 100 new labour inspectors as signs of “important progress.”

Still, the impacts of government action have been minimally felt by Guatemalan workers and unionists.  Despite “close collaboration,” with the Ministry of Labor, Froman suggested that the Guatemalan record on labour is “insufficient to demonstrate that the changes made have had the desired impact on the ground.”

Pointing towards a failure to implement “key commitments” – such as passing legislation granting Guatemala’s Ministry of Labor the authority to impose sanctions on labour rights violators – Froman added that “the ladder we built together remains Guatemala’s to climb.”

Situation on the ground

According to a 2013 report by the International Trade Union Confederation (ITUC), Guatemala is the most dangerous country in the world for labour activists. Since CAFTA-DR entered into force in March 2007, over 70 Guatemalan unionists have been murdered and many more have been attacked, kidnapped, or fired in retaliation for attempting to organise workers.

During an August 2014 meeting in Guatemala City, local trade unionists told the USTR that “the government of Guatemala has no political will to solve the existing labour problems,” and that workers’ rights have actually deteriorated since Guatemalan unions first filed a CAFTA-DR complaint in 2008 with the support of the American AFL-CIO.

The AFL-CIO, known otherwise as the American Federation of Labor and Congress of Industrial Organizations, is the largest federation of labour unions in the US.

Immigration issues

Speaking after Froman, AFL-CIO president Richard Trumka suggested that labour issues and the related cycle of violence in Guatemala have contributed to a recent influx of unaccompanied minors crossing into the US. To address this issue, Trumka said, “we can and must do better for workers, so that they can prosper from trade and not be forced to send their children far from home.” 

The flow of unaccompanied child immigrants into the United States is an issue that has caused growing alarm in recent months, particularly due to humanitarian concerns. On Tuesday, the governments of Guatemala, Honduras, and El Salvador presented their own plan to stem the flow of immigrants by boosting economic growth in the region.

Next steps

Despite the decision to move forward with arbitration, Froman suggested that there may still be room for the two sides to find a mutually acceptable solution, in which case litigation could be suspended or abandoned.

On the other hand, if no agreement is reached, the case would go before an arbitration panel. Should Guatemala be found to be in violation of the labour provisions of CAFTA-DR, it could be subject to fines of up to US$15 million per year, or the suspension of trade benefits. 

The US is Guatemala’s largest trading partner, with the Central American country receiving US$5.5 billion worth of American goods exports in 2013.

Imports from Guatemala amounted to US$4.2 billion in that same year. Guatemala, for its part, is the US’ 49th largest trading partner in goods.

ICTSD reporting; “US: Presses Guatemala again on labour law reforms,” JUST-STYLE, 22 September 2014; “Central American countries offer plan to curb migration to U.S.,” REUTERS, 23 September 2014; “United States steps up pressure on Guatemala over labor rights,” REUTERS, 19 September 2014.





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