Identifier
Created
Classification
Origin
03GUATEMALA1814
2003-07-15 22:11:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Guatemala
Cable title:  

CHOI SHIN/CIMATEXTILES LABOR AGREEMENT REACHED

Tags:  ELAB ETRD PGOV PHUM GT 
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UNCLAS SECTION 01 OF 02 GUATEMALA 001814 

SIPDIS

SENSITIVE

DEPT FOR WHA/PPC: CHARLOTTE ROE
USTR FOR VIONDETTE LOPEZ AND BUD CLATANOFF
USDOL FOR ILAB: ROBERT WHOLEY

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV PHUM GT
SUBJECT: CHOI SHIN/CIMATEXTILES LABOR AGREEMENT REACHED

REF: GUATEMALA 1313

UNCLAS SECTION 01 OF 02 GUATEMALA 001814

SIPDIS

SENSITIVE

DEPT FOR WHA/PPC: CHARLOTTE ROE
USTR FOR VIONDETTE LOPEZ AND BUD CLATANOFF
USDOL FOR ILAB: ROBERT WHOLEY

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV PHUM GT
SUBJECT: CHOI SHIN/CIMATEXTILES LABOR AGREEMENT REACHED

REF: GUATEMALA 1313


1. (SBU) Summary: After being threatened with withdrawal of
tax exemption privileges by the Ministry of Economy,
management of the Choi Shin/Cimatextiles maquila plants met
GOG requirements by successfully concluding and signing on
July 9 a collective bargaining agreement with each plant
union and achieving two other agreements with the union on
other pending labor complaints. On July 10, the GOG
acknowledged these efforts and withdrew its threat to close
the plants for labor violations. The resolution of the Choi
Shin/Cimatextiles case sets an important precedent in
Guatemala: while other collective bargaining agreements have
been achieved in the sector, all resulted in the closure of
the plant and loss of unionized jobs. This agreement is the
first result of the GOG's new forceful application of a
mechanism to compel respect for labor rights in the maquila
sector. Thirty similar cases of factories with unresolved
labor complaints under GOG threat of closure remain. End
Summary.

Background


2. (U) The Choi Shin/Cimatextiles plants share Korean
ownership and are co-located in the same complex in the Villa
Nueva municipality adjacent to the capital. They employ a
total of 1300 workers. Liz Claiborne Inc. is one of the
major buyers of clothing made in these factories. Anti-union
violence, encouraged by management, broke out in July 2001
when some workers filed a petition with the Labor Ministry
announcing a unionization drive. After international
attention and GOG intervention, two plant unions (SITRACHOI
and SITRACIMA) were organized. Since then, union members
reported a climate of low-level anti-union harassment which
prevented the unions from achieving the 25% threshold of
worker support to compel collective bargaining negotiations.
Meanwhile workers filed complaints with the Ministry of Labor
regarding unjustified firings (approximately 40 cases since
July 2001) and other issues.

Minister's Role


3. (SBU) Minister of Labor Moreira told visiting USTR and
USDOL officials in May (RefTel) that President Portillo had
authorized the use of the Minister of Economy's power to

grant import and export tax privileges to compel resolution
of labor complaints pending against maquila employers. At a
bilateral labor working group on July 10 (SepTel),Minister
Moreira told the Ambassador that the Labor Ministry has sent
a list of 30 maquilas with outstanding labor violations to
the Minister of Economy. It chose Choi Shin/Cimatextiles as
the first case, not to threaten the existence of the only two
unions currently in existence in the maquila sector, he said,
but because it is the case that has generated the most
international attention. If the GOG's three conditions were
met by July 10 (two had already been met by an earlier
deadline of July 7),he said, the GOG's threat to withdraw
tax privileges would be rescinded. The outstanding
requirement was to present a signed collective bargaining
agreement.


4. (SBU) Liz Claiborne's local representative and an agent
of the Fair Labor Association kept the Embassy informed of
the status of negotiations between Choi Shin/Cimatextiles'
management and the unions throughout the negotiation and
played important roles encouraging an agreement. Agreement
was reached on the final issue of a monthly wage raise (of
$12.85) on July 9. The GOG acknowledged the agreement on
July 10.


5. (SBU) Privately and publicly, industry employer groups
have reacted strongly against the use of the threat of
closure by the GOG to compel collective bargaining. CACIF
Labor Commission chief Carlos Arias told LabAtt that
employers believe the GOG should close the plants for
violations rather than force them to negotiate a CBA "with a
gun to (management's) head." VESTEX maquila employer
association labor advisor Rolando Figueroa accused the GOG of
"acting under political pressure" from international
organizations which "don't understand the economic realities
in Guatemala." "(The GOG) should give appropriate attention
to labor violation complaints, but follow the course of the
law."

Comment:


6. (SBU) If implemented, the Choi Shin/Cimatextiles
collective bargaining agreement will be the first in the
Guatemalan maquila sector (previous agreements prompted
management to close their plants and reopen elsewhere to
break their unions). As such, it will set a precedent not
lost on other maquila labor violators. The GOG believes this
new coercive mechanism is legal and is an important new tool
to punish and prevent labor violations in plants which
benefit from export tax privileges. While the GOG's strategy
in this case was high-risk (it might have resulted in the
closure of the only two unionized maquila plants in Guatemala
and the loss of 1300 jobs),the GOG deserves credit for
achieving an outcome which may strengthen labor rights and
cause violators to change their behavior.

HAMILTON