USTR Seeks Comments on Labor Rights Consultations with Guatemala

(On July 30, 2010, the U.S. requested consultations with Guatemala to discuss Guatemala’s apparent failure to meet its obligation under Article 16.2.1(a) of the DR-CAFTA to effectively enforce its labor laws. This is the first labor case the U.S. has ever brought against a trade agreement partner.)

Although USTR will accept any comments received during the course of the consultations, comments should be submitted on or before September 22, 2010 to be assured of timely consideration by USTR.

U.S. Alleges Failure of Guatemala to Enforce its Labor Laws

In its request for consultations, the U.S. notes that the Government of Guatemala appears to be failing to meet its obligations under 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.

Based on an extensive examination of Guatemala’s labor laws, collection of factual evidence, and analysis of Guatemala’s obligations the DR-CAFTA, the U.S. identified a significant number of failures by Guatemala to enforce its labor laws, constituting a sustained or recurring course of action or inaction. Failures include:

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

(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.)

If Consultations Fail, U.S. May Request Free Trade Commission Meeting

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.

If Not Resolved at Commission, Parties Could Request a Dispute Panel

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.

Guatemala could face up to $15M in penalties. 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.

U.S. Wants Guatemala to Consider Legislative Reforms

USTR Kirk recently 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.

(See ITT’s Online Archives 08/02/10 news, 10080209, for BP summary announcing the labor rights enforcement case against Guatemala.

See ITT’s Online Archives or 08/11/10 news, 10081116, for BP summary of ILWU and Costa Rica groups filing a DR-CAFTA petition against Costa Rica for not enforcing its own labor laws.)

USTR contact- Carlos Quintana (202) 395-9439

Additional information on this case is available on USTR’s website.