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US plans trade complaint against Guatemala

New York Times | July 30, 2010

U.S. Plans Trade Complaint Against Guatemala


WASHINGTON — The Obama administration announced Friday that it would file a complaint against Guatemala claiming labor law violations under the Central America Free Trade Agreement, the first time Washington has pursued such a case against a free-trade partner.

Ron Kirk, U.S. trade representative, said Friday that America was prepared to enforce labor protections under trade treaties.

The move, a victory for labor unions, comes as the administration is cautiously trying to revive its trade agenda. The White House wants to double exports over five years and ratify a free-trade pact with South Korea that many unions oppose.

“With this case, we are sending a strong message that our trading partners must protect their own workers, that the Obama administration will not tolerate labor violations that place U.S. workers at a disadvantage, and that we are prepared to enforce the full spectrum of American trade rights from labor to the environment,” the United States trade representative, Ron Kirk, said in a speech in Washington, Pa., near Pittsburgh.

With little Democratic support, the Republican-controlled Congress narrowly ratified the Central America Free Trade Agreement in 2005 at the urging of President George W. Bush, whose administration had negotiated the accord with six other countries. Guatemala ratified it the following year.

In April 2008, the A.F.L.-C.I.O., which opposed Cafta, and six Guatemalan labor groups accused Guatemala of violating labor standards in the agreement, citing the killings of two union leaders, the firing of workers for union activity and a failure to enforce collective bargaining rights.

Four days before President Obama took office in January 2009, the Labor Department issued a report that substantiated many of the complaints. The report cited efforts by Guatemala’s president, Álvaro Colom, to address some of the problems, and made some recommendations. But negotiations since then have “yielded limited results,” Mr. Kirk’s office said.

In a statement on Friday, the Labor Department said it “has grave concerns about labor-related violence in Guatemala, a problem which is serious and apparently deteriorating.”

The first step to bringing a case under Cafta is a request for a formal consultation with the Guatemalan government. If the talks fail to yield a resolution within 90 days, the United States could take the dispute before an arbitration panel. If the case were decided in favor of the United States, and Guatemala did not comply, it could be subject to penalties of up to $15 million a year, with the money dedicated to improving enforcement of labor laws.

“We sincerely hope that these consultations will signal meaningful and lasting change for Guatemalan workers,” Richard L. Trumka, the president of the A.F.L.-C.I.O., said in a statement. “If consultations fail, however, we call upon our government to prosecute this case vigorously through the dispute settlement process.”

Officials at the Guatemalan Embassy in Washington did not respond to requests for comment.

In his speech to workers at Allegheny Technologies, a maker of specialty metals, Mr. Kirk cited the administration’s actions to impose tariffs on Chinese tires, to keep auto parts suppliers from moving jobs to China and to support Boeing in the World Trade Organization case that challenged European subsidies to a rival plane maker, Airbus.

“Dialogue is always our preferred course,” Mr. Kirk said. “But in many cases we have to be ready to litigate, because we will not negotiate indefinitely where the rights of U.S. workers and businesses are concerned.”

I. M. Destler, a trade expert who teaches public policy at the University of Maryland, College Park, said the enforcement seemed intentional.

“By emphasizing enforcement of existing agreements, they increase their credibility as a defender of U.S. trade and economic interests, and perhaps also strengthen their future political capacity to negotiate new agreements,” Mr. Destler said. “This gives the Obama administration a way to differentiate itself from the George W. Bush administration without being protectionist.”

A full democratic government was restored to Guatemala in 1996 after a peace accord that ended nearly 20 years of civil war, but the government has remained divided and weak.

Christopher Sabatini, a political scientist and the senior policy director at the Americas Society/Council of the Americas, which promotes cooperation in the Western Hemisphere, said that corruption in Guatemala had worsened appreciably in the last five years.

He said the decision to file the complaint was in part “an attempt to appease some elements of the A.F.L.-C.I.O. by demonstrating that the labor protections built into Cafta were not empty gestures.”

The announcement drew praise from Democrats, including Representative Sander M. Levin of Michigan, the chairman of the House Ways and Means Committee. Mr. Levin said in a statement that Cafta’s labor provisions did not incorporate the toughest standards sought by House Democrats in 2005. “But we welcome the Obama administration’s decision to address failures by Guatemala, or any other Cafta country, to meet the standards incorporated in the Cafta,” he said.

 source: NY Times