DOL A/DUS MAGAN MEETS CA LABOR MINISTERS IN

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 000426

SIPDIS

SENSITIVE

STATE FOR DRL/IL, WHA/PPC, WHA/EPSC, WHA/CEN, AND EB
STATE PASS USTR
STATE PASS AID FOR LAC/CEN
DOL FOR ILAB - A/DUS MAGAN
DOL FOR BLS (SFLECK, PSB RM 2120)
GUATEMALA FOR AID, COMATT, AND AGATT

E.O. 12958: N/A
TAGS: ELAB PREL PHUM PGOV ETRD EFIN EAGR HO
SUBJECT: DOL A/DUS MAGAN MEETS CA LABOR MINISTERS IN
HONDURAS AND TALKS CAFTA; LABOR UNIONS OPPOSE CAFTA

REF: A. TEGUCIGALPA 10

B. TEGUCIGALPA 3040

C. TEGUCIGALPA 2972 (ALL NOTAL)


1. (SBU) Summary. Associate Deputy Under Secretary for
International Labor Affairs Mike Magan visited Honduras
January 23-25 to attend the Central American Labor Ministers
Meeting and held discussions with labor, management, and
government on the U.S.-Central American Free Trade Agreement
(CAFTA). All three Honduran labor confederations oppose
CAFTA, and complained that there had been a complete lack of
consultation by the GOH with labor unions on CAFTA. A/DUS
Magan urged the labor leaders to make their views known on
key issues related to CAFTA to the Ministry of Labor.
Central American Labor Ministers are seeking a larger role in
CAFTA, but it is not clear if that will happen. End Summary.


2. (U) Associate Deputy Under Secretary for International
Labor Affairs Mike Magan visited San Pedro Sula, Honduras to
attend the Central American Labor Ministers Meeting January
23-25. Deputy Under Secretary for International Labor
Affairs Thomas Moorhead had been invited, but was unable to
attend. LabAtt accompanied A/DUS Magan to all meetings and
the conference.


3. (U) Ministers of Labor from Honduras, Costa Rica, the
Dominican Republic, El Salvador, Honduras, and Nicaragua, as
well as the Vice Minister of Labor from Belize, and a MOL
official from Guatemala attended the meeting. Former
Panamanian Minister of Labor Joaquin Jose (JJ) Vallarino also
attended. President Ricardo Maduro opened the conference,
and emphasized the importance of a career civil service in
his remarks. During the day and half conference the
ministers heard presentations from various ILO technical
assistance projects on OSH, labor relations, and
modernization (but not child labor). The best presentation
was by the Spanish director of the Spanish-funded
Modernization of the Administration of Work (MATAC) regional
project, who emphasized the need for better coordination of
technical assistance projects by international donors, the
ILO, and Central American ministries of labor. He noted that
these projects could only succeed with the strong backing of
the ministers and a civil service in the ministries that did
not constantly turn over with political changes.


Labor Unions Oppose CAFTA; Appreciate USG Outreach to Labor
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4. (SBU) A/DUS Magan held a roundtable meeting January 23
with the CGT (General Workers' Central) - Daniel Duron,
SecGen, CGT is affiliated with World Confederation of Labour
(WCL); CTH (Confederation of Honduran Workers) - Dinora
Aceituno, SecGen, CTH is affiliated with the International
Confederation of Free Trade Unions (ICFTU); and CUTH (United
Confederation of Honduran Workers)- Israel Salinas, SecGen,
CUTH is applying for affiliation with the ICFTU. All three
labor confederations oppose CAFTA, and are not supportive of
free trade agreements in general. The unions noted, as they
have in the past, that several sectors of the Honduran
business community, most notably agriculture, are opposed to
or skeptical of CAFTA. The unions shared the concern of
Honduran agricultural producers, and feared that in general
Honduran products would not be able to compete with U.S.
products. In response to complaints about U.S. agricultural
subsidies LabAtt explained briefly the USG's proposal in the
WTO and A/DUS Magan noted that European Union subsidies were
higher than U.S. subsidies. During the meeting the labor
leaders discussed their concern that the GOH would be forced
to make concessions on public sector salaries to reach a deal
with the IMF (see ref A for more details on GOH-IMF
negotiations). They also criticized what they termed bad
experiences with privatization in Honduras. The unions
complained that there had been a complete lack of
consultation with labor unions on CAFTA. The unions'
concerns echoed comments from previous meetings that LabAtt
and Political Counselor had held in December and January with
the three confederations.


5. (SBU) A/DUS Magan noted that input from civil society,
including labor unions, is necessary for CAFTA. He urged the
labor leaders to make their views known on key issues related
to CAFTA to the Ministry of Labor. A/DUS Magan encouraged
the leaders to work with the AFL/CIO Solidarity Center
(regional office in San Jose),something that the CTH and
CUTH said they are doing. He emphasized that labor issues
are a key part of U.S. Trade Promotion Authority (TPA).
A/DUS Magan and the union leaders also discussed labor
aspects of GSP, the U.S.-Chile FTA, and NAFTA. He
highlighted DOL-funded technical assistance projects in
Honduras and the region, as well as the USAID-funded PROALCA
II. He also noted the use of trade adjustment assistance in
the U.S. for industries affected by free trade.


6. (U) Both the CGT and CTH told A/DUS Magan that the Embassy
played a helpful role on labor issues. They praised A/DUS
Magan for meeting with them and noted that it was rare for
the leaders of the three confederations to be in a room
together for a meeting like this.

Maquila Association - Strongest Supporter of CAFTA
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7. (SBU) A/DUS Magan had dinner January 23 with the Honduran
Apparel Manufacturers Association (AKA the maquila
association),including association president Jesus Canahuati
(younger brother of Honduran Ambassador to the U.S. Mario
Canahuati) and discussed CAFTA, the importance of respect for
core labor rights, and the 1995 MOU between USTR and the
Honduran Ministry of Labor. (A/DUS Magan also spoke briefly
January 24 with Honduran Council of Private Business (COHEP)
President Jacobo Regalado, who was unable to make the
dinner.) The maquila association is by far the strongest
private sector booster for CAFTA, a fact evidenced by
Canahuati's past flirtations with the GOH about possibly
leading the Honduran negotiating team, something that he
chose not to do (see ref B for more information on GOH trade
team). The maquila association warned that in the business
community the agricultural sector was the most skeptical
about CAFTA. The maquila association said they had a
positive relationship, in general, with the three labor
confederations and highlighted the importance of Salinas'
support in lobbying for passage of the Caribbean Basin Trade
Partnership Act (CBTPA),that benefits Honduran maquila
exports.

Central American Labor Ministers Seek Larger Role in CAFTA
-------------- --------------


8. (SBU) A/DUS Magan had a private meeting January 24 with
the ministers to discuss CAFTA and labor issues (see ref C
for more information on bilateral trade and non-trade issues
potentially affecting CAFTA). He gave them all a copy of the
USTR Trade Facts "Highlights of Trade Capacity Building
Initiatives In Support of the U.S.-CAFTA Negotiations" that
describes DOL-funded regional technical assistance projects
(CERSSO and the Freedom of Association, Collective Bargaining
and Industrial Relations in Central America Project
(RELACENTRO) that aims to promote industrial relations,
collective bargaining, and conflict resolution in Central
America). He stressed that MOL officials had a role in the
negotiations, as did labor unions and businesses. The
ministers noted that many unions opposed CAFTA. A/DUS Magan
suggested that governments reach out to unions, especially to
individual unions that supported free trade. He urged the
ministers to use an inter-agency process to build consensus
within the government on CAFTA issues.


9. (SBU) The ministers bemoaned their anemic budgets,
including a lack of travel funds for MOL officials to attend
CAFTA negotiating sessions. The ministers praised DOL-funded
technical assistance projects, as well as the Spanish-funded
MATAC. Honduran Minister of Labor German Leitzelar
emphasized that this technical assistance is even more
important with CAFTA.


10. (SBU) Note: Although he did not say it to A/DUS Magan,
MOL Leitzelar told Department of State FTAA Coordinator Dr.
Barbara Bowie-Whitman January 15 in an American Embassy
Television Network (AETN) interactive program on CAFTA that
with regard to labor issues in CAFTA, it would be
insufficient to just call for the improved enforcement of
existing labor laws and regulations. The agreement will need
to address core labor rights if it hopes to garner any union
support in Honduras. End Note.

Maquila Tours Show Benefit of DOL-funded OSH Project
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11. (U) Prior to the start of the meetings A/DUS Magan toured
January 23 the J.E. Morgan maquila (assembly manufacturing
for export),a U.S.-owned Sara Lee maquila, and Dragon Maya,
a Hong Kong/Honduran-owned maquila. J.E. Morgan has been an
active participant in the DOL-funded Regional Occupational
Safety and Health Project (CERSSO) that aims to reduce the
number of accidents and injuries in the workplace. The plant
manager proudly pointed out a sign on the wall that stated
that the factory had gone 2,678,028 hours without a work
accident. A/DUS Magan and LabAtt noted that plant conditions
were obviously superior at the U.S.-owned maquila.
Separately, a recent visit by officials from the Customs
Attache's office in Panama noted that the Honduran-owned
maquila they inspected had superior working conditions and
productivity to the Korean-owned maquila they inspected.

Visit A Success, But Influence of Unions/MOL Remains Weak
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12. (SBU) Comment. A/DUS Magan's visit was successful from
Post's perspective. The ministers appreciated hearing
insights on CAFTA and labor issues, and both the maquila
association and labor unions thanked A/DUS Magan for engaging
them in discussions. At least in Honduras, it remains to be
seen whether (a) the labor unions will work with the
ministries of labor to voice their views on CAFTA, and (b)
whether the Ministry of Labor will play a larger role in GOH
policy formulation on CAFTA issues. Post has a high opinion
of Minister Leitzelar, but the fact of the matter is that
Minister of Industry and Commerce is clearly in the driver's
seat on CAFTA, and labor issues do not appear to be high on
the GOH's CAFTA agenda. End Comment.


13. (U) A/DUS Magan did not clear this cable prior to his
departure.
Palmer