Central America Free Trade Agreement (CAFTA); Guatemala Complaint

The Central American Free Trade Agreement-Dominican Republic (CAFTA-DR) is a trade and investment agreement between the U.S., the Dominican Republic, and the Central American countries of Guatemala, Costa Rica, El Salvador, Nicaragua, and Honduras. Following a bitter fight, CAFTA was narrowly approved by the U.S. Congress in the summer of 2005.  A separate trade agreement with Panama was negotiated in 2006 and received Congressional approval on October 12, 2011.

CAFTA is effectively an extension and expansion of the North American Free Trade Agreement (NAFTA) implemented in 1994 that has been linked to substantial job loss in the U.S. and economic upheaval in Mexico, especially among peasant farmers.

The Bush Administration and Central American governments concluded negotiations on CAFTA in December 2003, but strong opposition during the 2004 elections forced the Administration to delay a vote until 2005.  After all of the participating countries approved of CAFTA, implementation was delayed beyond the scheduled January 1, 2006 start date because the U.S. government required some Central American governments to pass separate and controversial "implementing" legislation, mandated by last-minute changes after the formal negotiations were concluded.

CAFTA Deficient on Worker Rights 

The agreement falls far short of the minimum threshold on worker rights protections advocated by USLEAP and most trade unions in the region as well as in the U.S. Passage of CAFTA largely replaces current U.S. trade programs with Central America (such as GSP, CBTPA, and CBI) that have much stronger worker rights protections. The approval of CAFTA sharply reduces the leverage of worker rights advocates like USLEAP to pressure Central American governments to improve and enforce labor laws protecting the basic rights of workers.

Human Rights Watch has an excellent critique of the worker rights provisions of the agreement.

First CAFTA Labor Complaint Filed, on Guatemala

In April 2008, the AFL-CIO and six Guatemalan trade unions filed the first worker rights complaint under CAFTA. The complaint uses several case studies to document illegal firings, failure to bargain in good faith, health and safety violations, and violence against trade unionists in Guatemala.

The Bush Administration reviewed the complaint, investigated its allegations, and found merit sufficient to sustain the complaint process, which was effectively kicked over to the then incoming Obama Administration. The Obama Administration requested more documentation of worker rights violations and then began a process of “pre-consultations” in an effort to seek redress (there is no provision in the CAFTA complaint process for “pre-consultations, but as the first labor complaint filed under CAFTA, a number of precedents are being set). After securing little progress, in the summer of 2010, USTR and DOL released a July 30, 2010 letter asking for formal consultations with the Guatemalan government. After another year without progress, the Obama Administration said in August 2011 that it would take Guatemala to arbitration, the stage that can lead to sanctions, e.g. a fine against the Guatemalan government.

First, however, the Administration confidentially proposed a “labor action plan” to the Guatemalan government as an alternative to going to arbitration. The labor action plan contained some significant measures but when it was leaked and shared with the Guatemalan business sector, the business sector (CACIF) pushed back.  The Guatemalan government then publicly rejected the proposed plan as a U.S. imposition. The U.S. government resumed the formal process calling for arbitration. The Guatemalan government has objected to moving towards arbitration, claiming that the U.S. government has failed to follow CAFTA procedures correctly.  As of the end of 2011, the governments had resumed confidential negotiations and not gone to arbitration.

The Guatemala labor complaint is a very important test of the effectiveness of CAFTA’s labor protections. The very limited actions taken by the Guatemalan government over a period of nearly four years indicates that CAFTA’s penalties for failing to address labor rights violations, including murder, are not feared, especially by employers.

A second CAFTA worker rights complaint was filed in July 2010 by the International Longshore and Warehouse Union and Costa Rican unions but subsequently withdrawn after a constitutional court reinstated the union leadership who had been dismissed by the government.  A labor complaint was filed against Honduras in March 2012.

Other CAFTA Deficiencies

CAFTA is also deficient in other areas, including environmental protections and safeguards for small farmers. A comprehensive critique of CAFTA is available from the Alliance for Responsible Trade. The Washington Office on Latin America also produced a detailed critique of CAFTA prior to the congressional vote. In May 2009, WOLA also issued a detailed critique of CAFTA's impact on worker rights.

Check out our fact sheet on Labor Protections and CAFTA! (updated Nov 2010)

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