U.S. Knocks Guatemala on Labor Rights

The United States filed a case against the Guatemalan government on July 30 under The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) over Guatemala’s alleged failure to enforce labor and union rights. Earlier this year, labor unions in both Guatemala and the United States compiled a list of violations of workers’ rights in the Central American country and submitted it to the office of the U.S. Trade Representative. The Obama administration’s decision to launch a formal case prompted an immediate response from the Guatemalan government, claiming that Guatemala had proposed a comprehensive assessment of CAFTA-DR several months ago but had not received a response from Washington.

The suit against Guatemala represents the first time Washington protests workers’ rights in a partner country under the auspices of a free trade agreement.  "We want to see the Government of Guatemala take specific and effective action—including, if appropriate, legislative reforms—to improve the systemic failures in enforcement of Guatemalan labor law,” stated U.S. Trade Representative Ron Kirk. The complaint comes a week after a Labor Department statement criticized Guatemalan labor practices and the lack of official investigation into the murder of union leaders. Since 2007, the Central American country has seen a steady increase in the murder of union activists. However, 2007 saw a 17 percent decrease in the overall murder rate over the previous year. Practices called into question in the complaint include firing workers for union activities, denying unions the opportunity to negotiate with employers and corporations, and allowing the confiscation of social security payments by employers. The case follows as pressure to take action builds from U.S. labor unions, including the American Federation of Labor and Congress of Industrial Organizations (A.F.L.-C.I.O.). AS/COA Senior Director of Policy Christopher Sabatini called the administration’s decision “an attempt to appease some elements of the A.F.L.-C.I.O. by demonstrating that the labor protections built into CAFTA-DR were not empty gestures.”

The Guatemalan government rejects the accusations, saying it will seek to resolve the issue within the framework of previously-requested CAFTA-DR talks. "There is protection for unions in the constitution and in the labor code," said Guatemala’s Deputy Labor Minister Mario Illescas. U.S. Trade Representative Ron Kirk stated that while his government understands Guatemalan law protects union and workers’ rights, objections lie with the Guatemalan government’s willingness and ability to enforce these laws. Over a decade after the end of Guatemala’s 36-year-long civil war, corruption, crime, and impunity are at levels that have led to the creation of a UN International Commission against Impunity in Guatemala.

In 2009, Guatemala accounted for 0.5 percent of U.S. imports, totaling $3.1 billion, down 9.4 percent from 2008 but up almost 150 percent since the end of the civil war. U.S. foreign direct investment in the country increased almost 50 percent in 2008 from the previous year. Concerns over the dispute’s impact on bilateral trade remain low. Carlos Arias, President of Guatemala’s textile and apparel manufacturing association, Vestex, said: “Even in the worst case that a dispute goes forward, the penalty that would be assessed against Guatemala is a monetary one. It will not affect trade.” Knit and woven apparel account for just on a third of all Guatemalan exports to the United States.

If Guatemala is found guilty of violating labor conditions under the CAFTA-DR, it could be hit with a $15 million-a-year penalty, the funds used to enforce its labor laws. “We are sending a strong message that the Obama Administration will vigorously enforce labor obligations under U.S. free trade agreements,” stated U.S. Secretary of Labor Hilda Solis.

Learn More:

• U.S. State Department backgrounder on Guatemala.
• Office to the U.S. Trade Representative announcement on the case against Guatemala.
• The United States Department of Agriculture’s Foreign Agricultural Service resource guide on the CAFTA-DR.
• Amnesty International report on justice and impunity in Guatemala.
• U.S. State Department Guatemala country report on human rights practices.
• Labor Notes report on the persecution of unions in Guatemala.