The United States ramped up pressure on Guatemala to better protect workers' rights on Thursday by restarting a trade case that could lead to hefty fines for the Central American nation.
U.S. Trade Representative Michael Froman said the Obama administration would push ahead with legal action under a free trade agreement to make Guatemala meet international standards on labor rights and working conditions.
“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,” he said.
“We remain hopeful that Guatemala can achieve a resolution that results in concrete improvements for workers on the ground and sends a positive signal to the world that would help attract investment, expand economic activity, and promote inclusive growth.”
Guatemala, whose economy is around the size of that of the U.S. state of Alaska, could face fines of up to $15 million a year or the suspension of trade benefits if an arbitration panel finds it has violated labor provisions in the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).
According to the International Trade Union Confederation, at least 73 trade unionists have been killed since 2007 in Guatemala, which has one of the highest murder rates in the Americas. The ITUC said in June that the country was the most dangerous place in the world for the exercise of trade union activities.
U.S. officials requested an arbitration panel in 2011, the first such move under a U.S. free trade agreement, after U.S. and Guatemalan labor unions filed suit under CAFTA-DR. The unions alleged Guatemala's government failed to effectively combat child labor, guarantee the right to assemble, and ensure overtime pay.
But the process was suspended after Guatemala promised to improve its labor protections. The deadline already has been extended several times and congressional Democrats have urged USTR not to give the country any more time.
While acknowledging Guatemala had made important progress, USTR said the country so far had failed to pass laws to speed up sanctions for employers who breach labor laws and set up a way to ensure payments to workers when enterprises close.
The government also had to show reforms it had undertaken were being properly implemented and improving the situation for workers, USTR said.
Under CAFTA-DR rules, a three-member panel will be drawn from a roster of trade experts nominated by member countries for the arbitration case. An initial report should be handed down within four months, unless otherwise agreed.
Guatemala's exports to the United States last year were worth $4.2 billion, mostly clothing and agricultural products such as bananas and melons.