MEXICO CITY – Guatemala claims to have won a bitter, nine-year labor rights suit brought by the U.S. Trade Representative’s office and the AFL-CIO.
“We won the case,” said Guatemala trade lobby Vestex’s general manager Alejandro Ceballos. “It was a hard test but it shows there is rule of law in Guatemala.”
AFL-CIO filed the case in 2008, alleging the country was failing to enforce CAFTA-DR laws enabling textile and apparel workers to unionize. The union also claimed that, when demanding these rights, many workers were intimated and some even murdered.
But a three-member arbitration panel ruled that wasn’t the case, Ceballo said, adding that Vestex obtained the report’s findings earlier this week. He could not, however, immediately share the report.
The USTR did not return messages seeking comment while the arbitration panel could not be reached.
AFL-CIO’s trade policy specialist Celeste Drake called the decision “shocking.”
“This a serious problem and shows the weakness of the labor enforcement system in our trade agreement,” she said. She added the group won’t be appealing the decision, however, as there is no formal mechanism to do so.
“Guatemala has a systemic rule of law problem, not just in labor but across the board,” Drake added.
The USTR is expected to release the arbiters’ report soon, she noted, adding that it will make further comments at that time.
The panel’s decision could provide guidance for negotiating future labor chapters, particularly for the North American Free Trade Agreement, which is being overhauled as part of President Trump’s anti-Mexico agenda.
Ceballos said the decision will help Guatemala obtain new sourcing orders at a time when it is facing cut-throat competition from Asia and regional producers such as Honduras. The country recently lured $1.5 billion from several U.S., European and Asian investors to build a synthetics manufacturing hub by 2020.
“Guatemalan unions and the Obama administration gave this case too much importance,” Ceballos said. “At the end, they saw that the law is being met.”
If the panel had ruled in the U.S.’ favor, the country would have had to pay a $15 million fine to correct labor violations. “It’s important not to be guilty,” Ceballos concluded.