US trade officials give Guatemala more time to install labor overhaul

U.S. trade officials on Monday said they would give Guatemala more time to implement a labor rights enforcement plan.

U.S. Trade Representative (USTR) Michael Froman said that the dispute settlement process will remain suspended for another four weeks while the United States reviews information provided by Guatemala about whether labor law reforms are leading to improvements.

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In April, Froman announced a four-month continued suspension as Guatemala continued to make major changes to its labor laws designed to better protect workers.

“The additional steps Guatemala needs to take are important not just in terms of implementation of the Enforcement Plan they agreed to in 2013, but also because they’ll send a signal to investors that Guatemala respects its agreements and the rule of law," said USTR spokesman Matt McAlvanah.  

"This is critical to create the kind of climate in which businesses and workers can flourish and will assist in addressing the deep-seated economic issues that the country is facing," he said. 

The case was first brought in 2011 under the under the Central American Free Trade Agreement (CAFTA) over Guatemala’s inability to effectively enforce its labor laws.

Froman traveled to Guatemala on in late July to press for effective implementation of the enforcement plan agreed to by Guatemala and the United States in April 2013.

The U.S. retains the right to reactivate the arbitration panel at any point during the next month.

“Our aim, all along, has been to support changes on the ground, not to punish Guatemala," McAlvanah said.  "The dispute settlement option from the outset has always been a means to that end, and we continue to regard it that way.”

A senior Democrat expressed concern about Guatemala’s ability to install the labor plan.

“I remain deeply concerned about Guatemala’s failure to take the necessary steps to fulfill even the limited commitments it agreed to under CAFTA and the Enforcement Plan,” said House Ways and Means Committee ranking member Sandy Levin (D-Mich.).

“This failure to effectively provide its citizens with basic worker rights weakens its economy and the chance for a decent livelihood for large numbers of its citizens, during a period when large numbers of unaccompanied minors and others are fleeing to escape poverty and violence in their home countries," he said.

"If Guatemala continues to shirk the long overdue implementation of its commitments, I look forward to working with the administration to pursue arbitration in this case.”

Under the labor plan, Guatemala has agreed to strengthen labor inspections, increase labor law compliance by exporting companies, improve the monitoring and enforcement of labor court orders and establish mechanisms to ensure that workers are paid what they are owed when factories close, according to the USTR.