USTR Announces Labor Rights Enforcement Case Against Guatemala

This is the first labor case the U.S. has ever brought against a trade agreement partner.

AFL-CIO and Six Guatemalan Unions Had Filed a Case under DR-CAFTA

In April 2008 the AFL-CIO and six Guatemalan unions filed a public submission under the DR-CAFTA alleging that the Guatemalan government is failing to effectively enforce its labor law. Since then the U.S. has conducted an extensive examination of Guatemala’s compliance with its obligations under the labor chapter of the DR-CAFTA.

USTR Agrees that Guatemala Appears to not be Meeting its DR-CAFTA Obligations

Based on this examination, it appears that Guatemala is failing to meet its obligations under Article 16.2.1(a) of the DR-CAFTA, with respect to effective enforcement of Guatemalan labor laws related to the right of association, the right to organize and bargain collectively, and acceptable conditions of work. For example, the U.S. has identified a significant number of failures to enforce Guatemalan labor law, constituting a sustained or recurring course of action or inaction, including:

• Ministry of Labor failures to investigate alleged labor law violations;
• Ministry of Labor failures to take enforcement action once the Ministry has identified a labor law violation; and
• Court failures to enforce Labor Court orders in cases involving labor law violations.

U.S. Also Concerned about Labor-Related Violence in Guatemala

The U.S. also has grave concerns about the problem of labor-related violence in Guatemala, which is serious and apparently deteriorating. The U.S. is concerned about the Government of Guatemala’s response to the use and threats of violence that appear to be related to the exercise or attempted exercise of labor rights in Guatemala, including the right of association and the right to organize and bargain collectively.

The concerns of the U.S. include apparent failures by the Government of Guatemala to adequately protect those threatened with violence and apparent failures to adequately investigate and prosecute such crimes.

U.S. Has Engaged in Informal Discussions, but No Corrective Action Taken

The U.S. has been engaged in informal government-to-government discussions with the Government of Guatemala since the U.S. Department of Labor issued a report in January 2009, where it found systemic weaknesses in the Government of Guatemala’s enforcement of its labor laws and raised concerns about labor-related violence. To date, the Government of Guatemala has not undertaken effective steps to correct systemic failures in the enforcement of its labor laws.

U.S. and Guatemala to Engage in Formal DR-CAFTA Consultations

The U.S. and Guatemala will engage in formal consultations. The DR-CAFTA provides that if the matter involves the effective enforcement of domestic labor law and the consulting Parties have failed to resolve the matter within 60 days after the delivery of the consultation request, the complaining Party may request a meeting of the agreement’s Free Trade Commission.

The U.S. will assess what it learns in consultations, whether the problem is being effectively resolved, and will determine whether it will seek to resolve outstanding issues through a Chapter 20 dispute settlement process.

U.S. Wants Guatemala to Consider Legislative Reforms

USTR Kirk stated that the U.S. wants 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.

(Under the DR-CAFTA, a Party may request consultations with another Party regarding any matter arising under the labor chapter. If the matter involves the effective enforcement of domestic labor law and the consultations do not resolve the matter within 60 days, the complaining Party may then request a meeting of the agreement’s Free Trade Commission, the ministerial level body that supervises the implementation of the agreement.

If the Parties do not resolve the matter through ministerial consultations within 30 days, the complaining Party may request the establishment of a dispute settlement panel to consider the matter. If the panel finds that the Party complained against has failed to effectively enforce its labor law, the panel may, at the request of the complaining Party, impose an annual monetary assessment of up to $15 million (adjusted for inflation), if the disputing Parties are unable to reach agreement on a resolution of the matter or, after reaching agreement, the complaining Party considers that the responding Party has failed to observe the terms of the agreement. Any such assessments are to be paid into a fund established by the trade ministers of the disputing Parties and expended at their direction on appropriate labor initiatives, including efforts to improve or enhance labor law enforcement in the territory of the responding Party.)

(See ITT’s Online Archives or 06/25/08 news, 08062505, for BP summary announcing that the Labor Department accepted the AFL-CIO and six Guatemalan unions’ petition alleging Guatemala violated DR-CAFTA labor rules.)

Labor Department press release on the consultation request is available here.