U.S. Proceeds with Labor Dispute Settlement Process Against Guatemala under CAFTA-DR

Portrait of Michael FromanWashington, DC – United States Trade Representative Michael Froman announced on Sep 18 that the United States is proceeding 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 Ambassador Froman in his remarks. He added, “We remain hopeful that Guatemala can succeed in producing concrete improvements for workers on the ground, which would send a positive signal to the world that would help attract investment, expand economic activity, and promote inclusive growth. This is also critical to demonstrating to the Guatemalan people that there are opportunities for their children in staying and working at home rather than embarking on a dangerous journey of migration.  We remain committed to helping Guatemala achieve these outcomes and earn the benefits that come with enforcing laws to uphold internationally recognized labor rights.”

BACKGROUND

On August 9, 2011, the United States requested the establishment of an arbitral panel under the CAFTA-DR dispute settlement chapter to address Guatemala’s apparent failure to effectively enforce its labor laws.  The United States and Guatemala agreed to suspend the arbitral panel pending the negotiation and implementation of the Enforcement Plan.  United States and Guatemala signed the Enforcement Plan in April 2013.  Over the last 17 months, both countries have been in close contact as Guatemala has taken several steps to implement the measures outlined in the Enforcement Plan.

Under the Enforcement 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.

Over the course of the Enforcement Plan, on three separate occasions, the parties agreed to continue the suspension of the panel 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.

TPP and TTIP: In these trade agreements, the United States is negotiating the strongest labor protections in history.  The U.S. approach not only incorporates commitments to adopt and maintain fundamental labor rights, as recognized by the ILO, and to effectively enforce labor laws, it includes first-ever commitments on forced labor and acceptable conditions of work.  The United States is insisting that these provisions be fully enforceable, including that trading partners be held accountable for failure to meet the labor obligations through the same dispute settlement mechanism and trade sanctions as the rest of the agreement.
USTR Fact Sheet: Standing Up for Workers: Insuring that the Benefits of Free Trade Agreements are Broadly Shared

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Remarks by Ambassador Froman on Labor Dispute Settlement Procedure against Guatemala

“Today, I’m joined by President Trumka of the AFL-CIO, Ranking Member Levin, Representatives Becerra and Price, and Deputy Secretary of Labor Chris Lu to announce that this Administration is once again taking action on behalf of workers, both here and around the world, by proceeding with our labor enforcement case against Guatemala under the Central America Free Trade Agreement.

Comments: What they are saying

Sen. Ron Wyden (D-OR), Chairman, Senate Finance Committee: “This moment is long in coming. Guatemala has failed to enforce its labor laws again and again, and its workers continue to suffer as a result. Our trading partners cannot turn a blind eye to their trade obligations, including those that are in place to protect workers…Labor rights are a pillar of our nation’s trade policy, which makes today’s action so important. Both USTR and the Department of Labor have put hundreds of hours into developing the facts of this case, and on top of that, put hundreds more into trying to resolve this matter with Guatemala. One thing is clear: to have a strong enforcement record, you cannot enforce some of the rules some of the time. All of the rules must be enforced all of the time. That includes labor and environmental commitments.”

Posted: Sep 19, 2014; Updated: Oct 5, 2014