GUATEMALA GSP PETITIONS

UNCLAS SECTION 01 OF 04 GUATEMALA 000056

SIPDIS

SENSITIVE

DEPT FOR DRL/IL, WHA/EPSC, WHA/PPC, AND WHA/CEN

E.O. 12958: N/A
TAGS: ETRD ELAB EAID PGOV PREL PHUM GT
SUBJECT: GUATEMALA GSP PETITIONS



1. (U) Summary and introduction: In this cable, post
provides its comments on the petition submitted December 13,
2004, to USTR by the Washington Office on Latin America
(WOLA) and the U.S./Labor Education in the Americas project
(US/LEAP) to remove Guatemala from the list of GSP and CBI
beneficiaries. The paragraphs below are keyed to the points
in the WOLA/USLEAP petition, some of which were reiterated in
a subsequent petition filed by the International Labor Rights
Fund. While the Constitutional Court's decision against
administrative fines by the Labor Inspectorate was
unfortunate, the Government of Guatemala (GOG) is acting
decisively to remedy the situation. That the GOG needs to
address discrepancies in the labor code is clear; that they
are doing so is equally clear. To punish a nation because its
executive obeyed a high court's decision and then followed an
established legislative procedure to remedy a situation is
not the signal we wish to send. Therefore, we strongly
support Guatemala's continued inclusion in the list of GSP
beneficiary countries. End Summary.

The GSP Petition Point by Point
--------------


2. (U) The petition suggests that, "As firmly established by
the International Labor Organization, Guatemalan labor law
simply fails to meet international labor standards." In
point of fact, the ILO conducted a study in 2003 that
concluded that Guatemala has a framework of labor laws that
give effect to the core labor principles embodied in the 1998
ILO Declaration on Fundamental Principles and Rights at Work
and its Follow-up. The petition cites Observations and
Direct Requests by the ILO's Committee of Experts on the
Application of Conventions and Recommendations (CEACR) but
fails to recognize that the ILO itself credited Guatemala for
its Labor Code reform that "took account of the observations
made over a number of years by the (CEACR)." Guatemala
continues to engage actively with the ILO and its CEACR to
address all pending Observations and Direct Requests.

2A. (U) The petition makes five points regarding the failings
of Guatemala's labor law. The Berger Government, not yet one
year old, has been developing a labor reform package to
improve the labor code on these and other points. The
package was pending before the Tri-partite Commission,
however, when the Constitutional Court issued a decision that
nullified many provisions of the 2001 reform (discussed below
in point 2B). The GOG continues to work to address the
pending points from the 2003 ILO study as well as to address
the reestablishment of the gains achieved in the 2001 reform
and lost in the Constitutional Court decision.

2A1. (U) The ILO noted that the wording of Guatemala's law
could affect the right of public sector workers to strike.
ILO conventions agree on the prohibition of strikes in
essential services related to life, health, and safety of
persons. Guatemala's law reform, however, did not expressly
repeal the existing prohibition on strikes in the public
transport and energy sectors. In reply to the CEACR's
Observation (significantly an Observation, rather than a
Direct Request),the GOG noted that they had implicitly
repealed the prohibition by order while drafting a new reform
package to formally resolve this interpretation of
Guatemala's labor code. We note that, since this observation
was made, the GOG has never declared a strike illegal in
those sectors.

2A2. (U) The CEACR noted that in a strike vote, only cast
votes should be counted in determining a majority. The GOG
recognized the validity of this point and included it in the
draft reform package mentioned in paragraph 2A.

2A3. (U) The petition says that Guatemala has a de facto ban
on industrial unions, which allows employers, such as those
in the apparel sector, to easily close their operations and
move production to a non-unionized factory. In fact,
Guatemalan law says only that a sector-wide union must have a
membership of one-half plus one of the workers in an
industry. Not one unionized factory in the textile and
apparel sector has closed operations, either to move
production to a non-unionized facility or for any other
reason.

2A4. (U) Guatemalan labor law does indeed require that trade
union executive committee members be of Guatemalan origin and
employed by the enterprise in question, points questioned by
the ILO. Ministry of Labor contacts told us that at the ILO
meetings in Geneva in 2004, it was agreed by all parties that
the issue be referred to the Tri-partite Commission, where it
remains pending.

2A5. (U) The petition notes that agricultural workers have
not been able to exercise the right to strike during the
harvest. In point of fact, the Labor Code -- as the petition
recognizes -- allows for agricultural workers to strike
during harvest, but the major union representing commercial
agricultural workers has not called for such a strike.

2B. (SBU) The petition correctly notes the effective measures
included in the 2001 reform package, that the ILO also
praised. The August 2004 Constitutional Court ruling did
overturn key articles of the package, which was later
interpreted to leave the Ministry of Labor with a temporary
vacuum of authority to assess fines on employers found not to
be in compliance with Guatemalan labor law. Following the
court's decision, the Ministry continued to assess fines on
non-compliant businesses. Appellate court decisions,
however, began to overturn the fines based on the larger
Constitutional Court ruling. For this reason, inspectors now
take their findings to labor courts for court-ordered
sanctions; a process that Ministry of Labor officials agree
is cumbersome and inefficient, but only temporary.

Faced with these Appellate Court interpretations, the
Ministry of Labor was forced to accept the temporary block to
its powers in late November 2004. In January 2005, the
Inter-Institutional Commission on Labor Rights, which
includes the Ministries of Labor, Foreign Relations, and
Economy, and other government agencies such as the Bank of
Guatemala, began to address the issue in order to find a
solution. Currently, the discussions are based on a
long-term approach including a new legal initiative and a
short-term approach in which the executive re-empowers the
Ministry of Labor by decree. We have encouraged those
involved to do both: empower the Ministry immediately by
decree and then address the broader legal issues through
consultation and legislation. Representatives of the textile
and apparel employers' organization, VESTEX, told us that
they favor an immediate executive order to re-empower the
Ministry of Labor, followed by new legislation through the
standard process.

The umbrella business confederation CACIF, which brought the
challenge to the Constitutional Court, has repeatedly argued
that it supports the concept of administrative sanctions so
that businesses can move on without expensive litigation when
they have clearly infringed the law. The 2001 legislation,
however, employs formulae for calculating fines based on the
size of a company that CACIF representatives say can lead to
excessive fines for minor infractions. They claim they are
willing to negotiate a new legislative initiative.

2C. (SBU) The petition correctly notes that Guatemala had
prepared an extensive further reform of the labor code, to
address outstanding issues in regard to child labor, sexual
harassment, domestic labor, and reinstatement; a point for
which the GOG should be commended rather than rebuked. The
reform package was submitted to the Tripartite Commission for
review, in accord with an ILO direct request. The new
reforms were still under review when the Constitutional Court
issued its decision to overturn key articles of the 2001
reform. As the petition itself notes, since reforms nullify
pre-existing statutes, there is no automatic return to the
status quo. For that reason, the new reforms cannot move
forward until the situation with the 2001 reforms is
resolved. We also would like to add that there is a
difference of opinion in the legal community here whether the
reform nullified pre-existing statutes. Chamber of Commerce
representatives believe that the Constitutional Court's
decision did, in fact, return Guatemala to status quo ante
and that the Ministry of Labor can use those statutes as a
basis for their activities.


3. (SBU) The Ministry of Labor is currently involved in a
review of its practices and procedures. In doing so, the
Ministry of Labor replaced more than thirty percent of its
labor inspectors. The review of existing staff and
procedures, the retirement or firing for cause of many of its
inspectors, and the hiring and training of new inspectors has
strained the capabilities of the Ministry. Furthermore, as
noted above, the Constitutional Court decision of August 2004
put many of the Ministry's activities in question. For these
reasons, the Ministry of Labor has had difficulty reaching
its ambitious objectives. The activities, however, have been
beneficial to the Ministry as an institution, and the
continued constructive engagement with labor rights
activities, such as the U.S. Department of Labor-funded
Cumple y Gana program, the Commission for Verification of
Corporate Codes of Conduct (COVERCO),the tri-partite
Alternative Resolution of Labor Disputes' Commission (RAC),
and others have improved the morale and efficiency of the
Ministry.


4. (SBU) The petition cites a 2002 U.N. report that covers
the years prior to 2002 as evidence that trade unionists
continue to be the target of violence, including murder.
While this was true when written, there were no murder cases
related to trade union activity in 2003 or 2004. The
petition states that the murder of Julio Rolando Raquec is
evidence that the "brutal legacy of violence against trade
unionists continues to this day." While Raquec was the head
of an organization under the larger umbrella of the General
Center of Guatemalan Workers (CGTG),his murder was judged to
be a clear case of common crime by the police, prosecutors,
his own family, the head of the CGTG, and indeed, by Raquec
himself, who was able to make a report to officials before he
died of his injuries. He was shot four times by unknown men
who robbed him. Raquec's wife stated that she believed the
aggressors were gang members who operated in the area.

While we regret Raquec's death and do not dismiss the legacy
of violence against trade unionists, the fact is that
violence against trade unionists -- for their union
activities -- has diminished in recent years. Police are
much more active in both protection from and investigation of
threats. Additionally, the Attorney General's office has a
Special Prosecutor for Crimes against Trade Unionists and
Journalists.

Regarding the case of Imelda Lopez de Sandoval, the Special
Prosecutor does not have any information to link the events
described in the petition to her union activities. Also, the
Special Prosecutor has no authority to investigate the
Nobland (NB) case cited in the petition as the conflict is
between rival groups of employees.


5. (SBU) As noted in the petition, the GOG's enforcement of
labor laws remains weak. This does not take into account,
however, efforts to improve the professionalism of the
Ministry of Labor staff. The Constitutional Court decision
greatly restricted the efficacy of the Ministry's activities,
but those activities continue. The petition cites no
evidence of government wrongdoing.

The Ministry of Labor has an inspector dedicated to each of
the cases cited in this section of the petition. Virtually
all of these situations are cases still pending before
various courts. In none of the cases have the employees
called for a strike.


6. (SBU) International textile quotas on China and India
expired December 31, 2004. For this reason, the entire
textile and apparel industries in Guatemala and other
countries have been experiencing difficulties. We have met
with GOG officials, industry representatives, and staff of
the Korean Embassy (Note: many of Guatemala's textile
factories are Korean-owned. End note.) to raise concern
about the responsibilities of factory owners who may choose
to leave Guatemala. The GOG is continuing to engage factory
owners and investors regarding their legal responsibilities.

The petition correctly notes that, in the case of NB, the
legal system did, in fact, protect the establishment of the
union and achieve the reinstatement of fired workers. The
owner of the factory hired an independent consultant to
review labor practices and when that consultant reported
non-compliance, the company immediately began negotiations of
a collective-bargaining pact. We add that, although the pact
has not yet been concluded, the parties have agreed to almost
200 articles. Only 12 articles remain outstanding. The
petition notes that all pending articles are in regard to pay
and other forms of remuneration. We note that one of the
articles has to do with a salary increase, but that many of
the others are demands for such items as school supplies for
employees' children, paid holidays for Father's Day and the
anniversary of the founding of the union, and a party paid
for by the company to celebrate the founding of the union.
In short, several of the pending concerns have little to do
with the employees' labor rights. The petition notes that
management called off negotiations, but we would add that the
union did not request a meeting during the last three months
of 2004. NB management and the union have scheduled
negotiation sessions in January 2005.


7. (SBU) We agree that child labor in Guatemala persists and
warrants international attention and support, which Guatemala
has received from the U.S. Department of Labor, USAID, and
ILO/IPEC, amongst others. The extent of the informal economy
in Guatemala, as in all developing countries, inhibits the
collection of reliable data as the petition demonstrates by
citing two sources regarding the number of child domestic
laborers. One source determined that there are 17,350
children in that status and the other source claimed 92,800.
While we agree that even one child laborer is too many, the
GOG and the donor community are engaged in many activities in
the health, education, and social welfare sectors to minimize
this unfortunate practice. Enforcing labor laws in the
informal sector is an immensely difficult proposition in any
country, and the Guatemalan Ministry of Labor, as the
petition agrees, has developed a reform package to the Labor
Code to address these issues. The Tri-Partite Commission is
currently reviewing the reform proposal; again, as the ILO
requested the GOG to do.

Final Comments
--------------


8. (U) The petition does not indicate GOG wrongdoing in any
of the cases cited in Sections 5 or 6 -- stories of factories
shutting down, owners exhausting the legal appeals available
to them, or "management engaged in anti-union activities
including repeated threats to close the factory, blaming the
union for lost business, sending workers to mandatory
anti-union meetings, and trying to pit the workers against
the union." Post notes that in none of these cases did the
aggrieved workers go on strike to protest.


9. (U) The Constitutional Court's decision was unfortunate,
untimely, and, in our opinion, on rather dubious legal
justification. Nonetheless, we do not believe that we should
punish Guatemala because its executive paid attention to the
legal decision of its independent judiciary. The GOG is
working to resolve the legal problems through a process that
the ILO requested it follow. The petition usefully raises
attention to this matter, and we will continue to engage the
GOG to resolve this and other matters. Most of the points
cited in the petition, and in particular those of child
labor, are reflections of Guatemala's dire poverty. We
believe that the most effective way to address this
underlying cause is to encourage continued economic growth.
GSP benefits are the primary tool currently available to
allow this to happen. Thus, we strongly support Guatemala's
continued inclusion in the list of GSP beneficiary countries.
HAMILTON