U.S. Proceeds with Labor Enforcement Case Against Guatemala

By Roy Maurer Sep 25, 2014

The United States is pressuring Guatemala to improve its labor law enforcement and restarting legal action under a free trade agreement that could lead to significant fines for the Central American nation.

U.S. Trade Representative Michael Froman said the Obama administration will proceed with a labor enforcement case against Guatemala under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).

“Our goal in taking action today remains the same as it has always been: to ensure that Guatemala implements the labor protections to which its workers are entitled. Litigation is a means toward that goal, not an end in itself,” said Froman. He added, “We remain hopeful that Guatemala can succeed in producing concrete improvements for workers on the ground … We remain committed to helping Guatemala achieve these outcomes and earn the benefits that come with enforcing laws to uphold internationally recognized labor rights.”

A First in International Labor Enforcement

The case is the first the U.S. has ever brought under a trade agreement. The AFL-CIO and six Guatemalan labor unions initially brought the case against the Guatemalan government, charging it with failing to effectively enforce its laws on the following:

  • Rights to associate, organize and bargain collectively.
  • Nonpayment of severance and social security benefits.
  • Prohibiting acts of violence against trade unionists, including murder.

According to the International Trade Union Confederation, at least 73 union workers have been killed since 2007 in Guatemala, which has one of the highest murder rates in the Americas. The group said that the country was the most dangerous place in the world for the exercise of union activities.

Guatemala could face fines of up to $15 million a year or the suspension of trade benefits if an arbitration panel finds it has violated labor provisions contained in the trade agreement.

One Promise Too Many

U.S. officials requested an arbitration panel in 2011 after U.S. and Guatemalan labor unions filed suit under the trade pact. The countries agreed to suspend the settlement process after Guatemala promised to improve its labor protections.

This led to the signing of an enforcement plan between the United States and Guatemala in April 2013. Under the plan, Guatemala committed to strengthen its labor inspections; expedite and streamline the process of sanctioning employers and ordering remediation of labor violations; increase labor law compliance by companies engaged in exporting; improve the monitoring and enforcement of labor court orders; publish labor law enforcement information; and establish mechanisms to ensure that workers are properly compensated upon closure of a company.

On three separate occasions, the parties agreed to continue the suspension of arbitration to provide Guatemala more time to implement the plan: once at the six-month mark, a second time at the one-year mark, and a third time at the sixteen-month mark. “However, Guatemala has still not met the terms of the enforcement plan and concerns over the enforcement of Guatemala’s labor laws have not been resolved; therefore the United States is proceeding with the dispute settlement process,” Froman said.

“It is high time that Guatemala be held to the labor obligations to which it committed a decade ago,” said Rep. Sandy Levin, D-Mich. “Guatemala’s failure to enforce its labor laws weakens its economy and damages the opportunity for its citizens to earn a decent livelihood at a time when large numbers of unaccompanied minors and others are fleeing to escape violence and poverty in their home countries.”

Roy Maurer is an online editor/manager for SHRM.

Follow him at @SHRMRoy

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