One Maquila Improves Working Conditions in

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 001546

SIPDIS

INFO WHA CENTRAL AMERICAN COLLECTIVE
DEPT OF TREASURY WASHDC
DEPT OF LABOR WASHDC

STATE FOR WHA/CEN, WHA/ESPC, DRL/IL, AND EB/IFD/OMA
STATE PASS AID FOR LAC/CEN
STATE PASS USTR FOR WILLIAM CLATANOFF
TREASURY FOR DORA DOUGLAS
DOL FOR ILAB

E.O. 12958: N/A
TAGS: ELAB ETRD EINV EIND KTEX PGOV HO
SUBJECT: One Maquila Improves Working Conditions in
Anticipation of U.S. NGO Accusations



1. Summary: In a June 22 press conference, the U.S. NGO
National Labor Committee's (NLC's) Director Charles
Kernaghan alleged mistreatment of workers in a Honduran
maquila that supplies Reebok's NBA and NFL jerseys, a charge
that the GOH and Honduran businesses quickly denied,
pointing to union and wage agreements in place. The story
is somewhat more complex, however, as these agreements on
unionization and overtime compensation were apparently
reached only following intervention by Reebok's lawyers
after the NLC's plant visit, but before his press
conference. The Honduran government and Honduran
Manufacturer's Association (AHM) both attributed the NLC
attack on this company and others in the maquila sector to a
political interest in trying to thwart CAFTA approval in the
U.S. Congress. While each side seeks to maximize or
minimize the impact of these allegations, Post views the
incident instead as proof that CAFTA's labor provisions can
work: civil society pressure and domestic labor enforcement
in this instance identified and quickly remedied weak labor
protections. End Summary.


2. On Friday, June 22, Charles Kernaghan, Director of the
U.S. nongovernmental organization National Labor Committee
(NLC),held a press conference in New York City in front of
an NBA retail store in Manhattan, where he condemned what he
portrayed as sub-par working conditions in a Korean-owned
Honduran maquila that assembles NBA and NFL jerseys for
Reebok. Between May and July of 2005, The NLC interviewed
dozens employees at Han-Soll, a Korean-owned maquila
operating in the department of Santa Barbara, Honduras. The
company employs 1,620 workers at two Honduran plants, sewing
t-shirts, shorts, pants, dresses and skirts. NLC alleges
that Han-Soll locked workers in a factory compound,
underpaid workers, discriminated against pregnant workers,
and did not recognize rights to organize. The NLC in its
press conference also condemned paying workers 19 cents per
jersey (about 65 cents per hour) when that jersey is sold in
the U.S. for USD 75. (Note: Minimum wage in Honduras ranges
from USD 3.25 to USD 5.19 per day, depending on sector. End
note.)


3. Honduran Manufacturer's Association (AHM) Executive
Director Henry Fransen told EconOff that the allegations
against Han-Soll, and a similar NLC investigation of a
nearby American automotive parts company, Lear Automotive,
were merely part of NLC's (and, by extension, organized
labor's) effort against CAFTA. He said that all NLC's
allegation of illegal treatment of workers were false. The
AHM views Kernaghan's organization as an arm of U.S.
unionized labor, and feels that the organization is focusing
on Central America rather than China because it is
convenient to do so while CAFTA is under review in the U.S.
House of Representatives. In a press conference, AHM
President Jesus Canahuati stated that the organization had
been aware of the investigation conducted by NLC, and noted
approvingly that Reebok had subsequently sent lawyers down
to review the situation. He said that after this visit by
Reebok lawyers, Han-Soll management and workers reached an
agreement eliminating obligatory overtime and reached an
agreement recognizing their right to unionize. NLC notes
that in addition to this agreement, the company also
eliminated obligatory overtime.




4. The Ministers of Labor and Commerce told Post that,
contrary to Kernaghan's allegations, the workforce in the
plant is unionized, and receives overtime compensation for
any overtime worked. Minister of Commerce Irving Guerrero
denied to EconChief that Han-Soll had prevented
unionization, saying that it was his understanding the union
movement in the factory had not at first recruited enough
members to be recognized under the law. Once they had done
so, the union was recognized. Minster of Labor German
Leitzelar stressed that while overtime in the factories is
common, his ministry is vigilant in ensuring that workers
receive premium overtime compensation, as stipulated in the
Honduran labor code. Some businesses do have labor
problems, he said, but in this instance, the recent
agreement between Han-Soll and workers assures resolution of
any issues within the company. The Ministry of Labor also
informed LabAtt that officials from the Korean Ministry of
Labor had come to Honduras to visit the maquila and meet
with Honduran Ministry of Labor officials to discuss the
case, Honduran labor law, and the application of the law.an
and areHe stated that this is further evidence of ongoing
collaboration between NLC and Honduran labor leader Israel
Salinas, and that NLC is also investigating a nearby
American automotive parts company, Lear Automotive



5. Israel Salinas, Secretary General of the CUTH labor
federation, confirmed that the Han-Soll union belongs to his
confederation. Salinas said that while there were
definitely some problems, the CUTH considers the problems
resolved. Salinas noted that the CUTH has an ongoing
relationship with the NLC and supported their work in
Honduras.


6. Comment: It seems to Post a reasonable assumption that
the NLC's visit to Honduras prompted Reebok to force its
supplier to clean up its act. It therefore strikes us as
somewhat disingenuous for the AHM to claim that Kernaghan's
claims were entirely false and purely politically motivated.
It is equally disingenuous, however, for the NLC to
conveniently ignore that the labor violations they alleged,
to the extent they existed at the time of his visit, have
already been rectified. Perhaps the most ironic aspect of
the dueling press releases on this incident is the apparent
failure by both sides to recognize that in this case the
process seems to have worked. Civil society inspections of
labor conditions revealed areas for improvement and the firm
promptly moved to address them. This moral pressure exerted
through the markets, in conjunction with strengthened
enforcement and monitoring by Leitzelar's well-meaning but
still understaffed Ministry of Labor, is precisely what
gives CAFTA labor rules their teeth. Far from being an
example of why CAFTA cannot work, this episode serves as an
example of why CAFTA can.



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