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United States Continues to Press Guatemala on Enforcement of Worker Rights

USTR Froman says CAFTA partner has taken steps under enforcement settlement; implementation is now critical

Washington, D.C. – United States Trade Representative Michael Froman today expressed serious concerns about the enforcement of Guatemala’s laws protecting worker rights, saying that significant work remains to ensure that an Enforcement Plan signed by the Guatemalan government earlier this year is effectively implemented.  Ambassador Froman recognized important steps taken by Guatemala under the plan, but communicated to Guatemalan officials today that the United States expects solid progress in fully implementing the commitments over the next six months.  If Guatemala fails to comply with the provisions of the Enforcement  Plan, the U.S. Government retains the right to reactivate an arbitration panel established in the 2011 labor enforcement case brought under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).  

On April 26, 2013, the United States and Guatemala signed the 18-point Enforcement Plan outlining concrete actions to strengthen labor law enforcement in Guatemala, which Guatemala committed to implement within six months.  Guatemala has adopted a number of reforms, consistent with applicable deadlines, but implementation of those reforms is key to improving worker rights in Guatemala.  While the arbitration panel will not be reconvened at this time, Ambassador Froman stressed that much work remains to be done to ensure effective implementation.   

“Guatemala has taken steps to improve enforcement of worker rights, but there is substantially more progress to be made,” said Ambassador Froman.  “We will continue to work with the Guatemalan Government and with our partners in the labor movement to ensure the implementation of Guatemala’s commitments to strengthen labor law compliance.” 

The following are among the actions Guatemala has taken to date pursuant to the Enforcement Plan:  

  • To enhance its ability to enforce labor laws, the Government of Guatemala:  
    • Issued a Ministerial Accord,  concluded an interagency agreement between the Ministry of Labor and the Ministry of Interior and issued a directive to the national police to ensure police assistance to facilitate labor inspector access to worksites;
    • Hired 100 new inspectors;
    • Submitted draft legislation to Congress for Ministry of Labor authority to issue fine recommendations and establish an expedited process for judiciary to adopt Ministry of Labor fine recommendations.
  • To strengthen export companies’ compliance with labor laws, the Government of Guatemala:
    • Published a Ministerial Accord requiring the Ministry of Labor to conduct annual inspections of all enterprises receiving tax benefits under special provisions of Guatemalan law;
    • Published a Ministerial Accord to establish a public comment process as part of its application review and to reject new applications for benefits received from companies that are found to have violated labor laws;
    • Published a Ministerial Accord to provide for a streamlined process to revoke tax benefits for existing beneficiaries that violate labor laws, which requires publication of the enterprises whose benefits are withdrawn.
  • To strengthen the enforcement of court orders:
    • Guatemala’s newly created Verification Unit within the Judiciary established standardized procedures and criteria for verifying employer compliance with labor court orders and is verifying such compliance;
    • The Judiciary has initiated a systematic review of all labor courts to hold accountable  judges who fail to take measures required by law to enforce court orders. 
  • To address payments to workers when enterprises suddenly close, the Government of Guatemala:
    • Issued a Ministerial Accord requiring the Labor Ministry to intervene upon receiving information  of a potential enterprise closure and to take the necessary steps to obtain payment to workers if the enterprise closes, including by petitioning relevant labor courts to embargo or seize assets;
    • Issued a Ministerial Accord to establish an Inter-Institutional Rapid Response Team to attempt to prevent closures of export enterprises receiving tax benefits and to ensure payments owed to workers if the closure cannot be prevented.
  • To increase stakeholder input, the Government of Guatemala:
    • Implemented a tripartite sub-committee with both worker and employer representatives to provide input on instruments and procedures issued under the Enforcement Plan.

In announcing that the United States will support continued suspension of the arbitration panel at this time, Ambassador Froman noted particular areas that require additional and prompt action from the Guatemalan Government.   These areas include making every effort possible to swiftly pass legislation providing for an expedited process to sanction employers that violate labor laws and to implement a contingency mechanism to address payment to workers in cases where export enterprises have closed.  Serious efforts are also needed to ensure that the instruments and procedures issued under the Plan are effectively implemented and enforced.  If at any time, during the next six months, the U.S. government determines that Guatemala is not effectively implementing the Enforcement Plan, it can request that the panel resume its work.