UGANDA: PROGRESS ON GSP/AGOA ISSUES

C O N F I D E N T I A L KAMPALA 001514

SIPDIS

SIPDIS

DEPARTMENT FOR AF, AF/E, DRL, INR; USTR FOR JACKSON;
NAIROBI FOR FLEITMAN

E.O. 12958: DECL: 08/09/2011
TAGS: ECON ENRG ETRD PGOV PHUM ELAB UG
SUBJECT: UGANDA: PROGRESS ON GSP/AGOA ISSUES

REF: A. STATE 118626


B. KAMPALA 0555

Classified By: Econ Off Nathan Carter for reasons 1.4 (b) and (d).


1. (C) Summary: The Government of Uganda, Textile Unions,
and Textile Manufacturers Association have made significant
progress toward resolving the outstanding issues in the
AFL-CIO GSP case. The Government,s passage of the new labor
laws in May has been followed up with the signing of the
implementing regulations on July 27, and a clarification of
the industrial court,s status, which paves the way for the
funding necessary to jump-start its operations. The Ministry
of Labor also is moving ahead with plans to provide labor
inspectors in every district. On August 4, the textile union
and the three main textile employers TriStar Apparel, Phenix
Logistic and Southern Range Nyanza signed the long-awaited
procedural agreement. TriStar the focus AFL-CIO case,
expressed a desire to move quickly in formulating a
collective bargaining agreement. Post believes GOU and
textile firms are meeting the requirements necessary to
review the case for eventual dismissal. End Summary.

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TEXTILE UNIONS
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2. (C) New leadership of the textile unions has helped
improve the relationship with the textile manufacturers,
according to Catherine Aneno, the newly elected President of
the Uganda Textile Union. During a meeting with poloffs on
July 27, she applauded the Government of Uganda,s passage of
the new labor laws and thanked the U.S. for keeping up
pressure on all parties to resolve the outstanding issues
pertaining to the TriStar case. She blamed the managers of
TriStar for slowing down the process of concluding the
procedural agreement and noted that another textile
manufacturer, Phenix was ready to finalize theirs. The
issues of contention were which positions would be covered by
the collective bargaining agreement (i.e. the scope of
coverage),the modalities of the check-off system for union
dues, and the grievance process. Aneno accused TriStar
management of using intimidation tactics, including massive
lay-offs, to intimidate workers. TriStar,s workforce is
down to 340 from a one time high of 2,400. TriStar workers
allege that machinery is being secreted out of the factory at
night, destined for southern Sudan. A claim denied by
TriStar management who attributes the story to Worker Member
of Parliament, Dr. Sam Lymonki, who also serves as
chairperson of the Confederation of Free Trade unions.
TriStar claims to have had conflicts with Lymonki in the past
and said it will request a public retraction his allegations.
The union, in conjunction with the Ministry of Gender,
Labor, and Social Development, has already begun sensitizing
employers and workers on the provisions of the new labor code.

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LABOR LAW IMPLEMENTATION
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3. (C) On July 28, poloffs met with Minister of Gender,
Labor, and Social Development Syda Bbumba to discuss the
status of the implementation of the new labor laws.
According to Bbumba, the passage of the new labor code within
four months time is an indication of the Government,s
commitment to improving conditions for Ugandan workers. She
expressed appreciation for the role the U.S. played in
getting the laws passed and was proud to announce that labor
unions now have representation in parliament. Bbumba said
the new labor laws give the Government a &stick8 to move
reluctant employers to respect workers rights. In addition,
the operational instruments for the new labor laws were
signed on July 27, the first step in implementation. Bbumba
also said that the Ministry, despite its resource deficits,
will have labor inspectors in each district who will be
responsible for sensitizing employers and workers and
enforcing the new code. She admitted that this task will not
be easy, but it is one of the Ministry,s top priorities.


4. (C) Bbumba was critical of the TriStar management and
blamed it for canceling several meetings to finalize the
procedural agreement between TriStar and its employees.
Nonetheless, she believed that an agreement would be reached.
On the industrial court, Bbumba said that the industrial
court has now been given high court status, which means it
can be funded from the consolidated fund, rather that require
a special allocation from the judiciary. Another sign of
Government support for organized labor is the recent
pronouncement that hotels which do not allow its workers the
right to collective bargaining will not be allowed to host
events and guests related to next year,s Commonwealth
Head,s of State Summit, a much anticipated source of revenue
for the tourism industry.

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INDUSTRIAL COURT STATUS CLARIFIED
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5. (C) Minister of Trade and Industry Janet Mukwaya told pol
and econoff on August 4 that the Government is implementing
the new labor laws on two levels. First, the clarification
of the industrial court,s status allows it to be financed
from the consolidated fund rather than the judiciary,s
meager budget. Structurally, the industrial court will be
considered a &specialized court8 similar to the commercial
court and be the equivalent of an appeals court, rather than
the high court. Mukwaya pointed out that the Government
encourages parties to settle disputes through arbitration
rather than resorting to the courts, but the industrial court
will be an available option. A second development is that
the Government and the trade unions have encouraged employers
to respect the new law on occupational hazards. She gave the
example of the Flower Industry benefiting from the new
standards, which will allow export into EU countries.
Mukwaya said that the Government also plans to allow public
servants to unionize, a major step forward, and that men are
beginning to take advantage of parental leave.

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THE VIEW FROM TRISTAR
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6. (C) TriStar blames Uganda,s current energy crisis which
has taken a toll on local industry and economic growth for
its staff layoffs. TriStar reported to EconOff back in March
(see Ref B) that it would have to scale back production
because of increased energy costs that add markedly to the
cost of production. Uganda is experiencing daily load
shedding with frequent and unpredictable variations. Most
large businesses have resorted to using their own diesel
powered generators to fulfill their energy needs. TriStar
management said unless it is able to secure some short term
orders its number of employees may decline further. TriStar
said it will bid on a new round of U.S. garment orders in
early September and anticipates returning to 60 percent
capacity of 1,200 workers. TriStar said it will bring back
the workers it has been forced to lay off during the energy
crisis. TriStar management told EconOff that it recognizes
the importance of moving forward on the collective bargaining
agreement and realizes that if Ugandan textile industry is
seen as not respecting workers rights it could cost future
contracts with U.S. buyers.


7. COMMENT: The GOU, Textile Manufactures, and the Textile
Unions are aggressively and adequately addressing the
concerns of the AFL-CIO GSP petition and it would be
appropriate to review the case and consider its dismissal.
All parties openly credit the U.S. for its role in
facilitating the progress being made in labor rights. The
concerns of TriStar regarding the energy crisis and the
negative impact it is having on its production capacity are
legitimate and have caused layoffs in other sectors.
BROWNING