US embassy cable - 03TEGUCIGALPA2384

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 002384 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/CEN, DRL/IL, EB/TPP, AND H 
STATE PASS USTR FOR AUSTR VARGO 
STATE PASS AID FOR LAC/CEN 
DOL FOR ILAB 
PANAMA FOR CUSTOMS 
 
E.O. 12958: N/A 
TAGS: ELAB, ETRD, EAID, PREL, OREP, HO 
SUBJECT:  CODEL MEMBERS MEET WITH HONDURAS' THREE LABOR UNION 
CONFEDERATIONS AND GOH OFFICIALS TO TALK CAFTA 
 
REF: (A) Tegucigalpa 2283 
 
     (B) Tegucigalpa 1487 
     (C) Tegucigalpa 426 
 
1. (SBU) Summary.  CODEL Kolbe visited San Pedro Sula, 
Honduras September 27 as part of a Central American trip. 
After touring the Elcatex maquila owned by the Canahuati 
family and meeting with leaders of the Honduran Maquila 
Association, members of the delegation met at the maquila 
with leaders of the three labor confederations of Honduras: 
CGT, CTH, and CUTH.  The meeting was a productive discussion 
of challenges for the exercise/protection of core labor 
rights and CAFTA.  Chairman Kolbe also met with key GOH 
officials to discuss the Central American Free Trade 
Agreement (CAFTA) and the Millennium Challenge Account.  GOH 
officials noted that in addition to textiles benefits, CAFTA 
needed to provide additional market access for Honduran 
agricultural products, while providing protection and time 
for adjustment for vulnerable small producers.  End Summary. 
 
2. (U) CODEL Kolbe, led by Representative Jim Kolbe (R-AZ), 
Chairman of the Appropriations' Subcommittee on Foreign 
Operations, Export Financing and Related Programs, visited 
San Pedro Sula, Honduras September 27.  The delegation also 
included Representatives Earl Blumenauer (D-OR), Pete Stark 
(D-CA), Mike Thompson (D-CA), and Candice Miller (R-MI).  As 
part of their schedule, the Representatives discussed CAFTA 
with members of the maquila association, labor leaders, and 
GOH officials, and attended a reception in their honor hosted 
by the maquila association.  Other parts of the CODEL's visit 
to Honduras included site visits to a non-traditional 
agriculture farm and a HIV/AIDS project. 
 
Maquila Association Highlights CAFTA Textile Benefits 
--------------------------------------------- -------- 
 
3. (SBU) At the Elcatex maquila, Jesus Canahuati, President 
of the Honduran Maquila Association and Vice President of the 
umbrella private sector organization COHEP, gave a 
presentation to the CODEL on textiles and apparel discussions 
in the CAFTA negotiation.  (Note: Jesus Canahuati's father, 
Juan Canahuati, is the owner of the maquila and owner of the 
first free zone in Honduras, and his brother Mario Canahuati 
is currently the Honduran Ambassador to the United States. 
End note.)  The presentation focused on the size and growth 
of the Honduran maquila industry, the impact of CBI and CBTPA 
upon the industry's development, and the importance of CAFTA 
for the industry's future.  Canahuati emphasized the impact 
that the removal of quotas in 2005 will have on the Central 
American textile and apparel industry, stressing the need for 
a good CAFTA agreement to allow the region to compete with 
China and other Asian countries. 
 
4. (SBU) Canahuati also highlighted the interconnection 
between the Honduran and U.S. economies, pointing out that 56 
percent of Honduran imports are from the U.S.  Unlike the 
situation in Asia, growth in the Honduran maquila sector (and 
the Honduran economy as a whole) leads to continued jobs in 
the U.S. textile sector as well as other export-oriented 
sectors of the U.S. economy.  After the presentation, the 
CODEL had the chance to tour the non-unionized maquila, which 
includes spinning, dyeing, printing and cutting operations. 
All of the thread, and much of the equipment, used in the 
factory was made in the U.S. 
 
CODEL Talks CAFTA and Core Labor Rights With Unions 
--------------------------------------------- ------ 
 
5. (U) Representatives Blumenauer, Miller, Stark, and 
Thompson met with the three Honduran labor confederations: 
General Workers' Central (CGT) - CGT Secretary General Daniel 
Duron, CGT Regional Coordinator in the North Zone of Honduras 
Julio Figueroa, and CGT National Executive Committee member 
Enrique Castillo; Confederation of Honduran Workers (CTH) - 
Labor Federation of the National Workers of Honduras 
(FESITRANH) Labor Advisors David Cisneros and Armando 
Galdamez, (CTH SecGen Dinora Aceituno was unable to attend 
the meeting); and United Confederation of Honduran Workers 
(CUTH) - CUTH Secretary General Israel Salinas, CUTH 
Secretary for the Popular Sector Baudilio Andara, and CUTH 
 
SIPDIS 
Secretary for Conflicts and Oversight Armando Alvarenga. 
 
SIPDIS 
Mrs. Deborah Stark, Mrs. Janet Thompson, several 
congressional staffers on the delegation, EconOff, and AidOff 
sat in on the meeting, and LabAtt led the meeting and 
translated.  Representative Kolbe was meeting with maquila 
representatives and did not attend the meeting with the labor 
leaders. 
6. (SBU) The meeting with labor leaders focused on CAFTA and 
labor rights.  Labor leaders first expressed their views on 
the labor situation in Honduras, focusing on poor economic 
growth, ongoing GOH negotiations with the IMF that was 
leading the GOH to propose reforming the civil service pay 
and benefits for teachers and doctors, and their concerns 
about CAFTA and labor rights.  The representatives then took 
turns asking questions about specific complaints labor 
leaders had about (a) the exercise/protection of core labor 
rights, and (b) CAFTA and labor rights. 
 
7. (SBU) CGT SecGen Daniel Duron thanked the U.S. Congress 
for including the protection of labor and environmental 
rights as part of Trade Promotion Authority (TPA).  However, 
Duron expressed skepticism that CAFTA provisions would force 
stricter enforcement of labor laws in Honduras.  CUTH SecGen 
Israel Salinas stated his opposition to CAFTA, but at the 
maquila association reception that evening he took a softer 
line.  All three union confederations said they worried about 
Honduras not being able to compete with the U.S. in CAFTA, 
especially with respect to agriculture. 
 
8. (SBU) Congressmen Blumenauer, Stark, and Thompson 
emphasized the importance of the protection of core labor 
rights and encouraged union leaders to share with them 
specific complaints.  Union leaders said the anti-union 
sentiment in the business community combined with inadequate 
enforcement of labor laws made it a difficult environment for 
labor unions.  Labor leaders also said that Ministry of Labor 
bureaucratic procedures and a weak budget for inspections 
made a difficult situation worse for organizing new unions. 
Note:  According to the Ministry of Labor, union 
representation has declined from approximately 15 percent to 
approximately eight percent of the economically active 
population.  End Note. 
 
Kolbe Discusses CAFTA with President of Congress . . . 
--------------------------------------------- --------- 
 
9. (SBU) Chairman Kolbe met with Vice President Alberto Diaz 
Lobo, President of the National Congress Porfirio "Pepe" 
Lobo, and Minister of the Presidency Luis Cosenza.  Kolbe 
provided background on the importance that he and his 
committee attach to the negotiation of a successful CAFTA 
agreement.  He also explained the status of the Millennium 
Challenge Account (MCA) authorization and appropriation 
language in the U.S. Congress.  Pepe Lobo noted that 
conclusion of the free trade agreement was vital for the 
survival of the textile and apparel sector in Honduras and to 
the growth of employment in manufacturing.  However, to sell 
the CAFTA agreement in Honduras, CAFTA will also need to 
provide significant additional market access for Honduran 
agricultural products, while providing protection and time 
for adjustment for vulnerable small producers. 
 
. . . And MCA With Minister of the Presidency 
--------------------------------------------- 
 
10. (SBU) Cosenza emphasized the importance of prompt action 
on the MCA.  He explained that the Honduran government is 
working closely with the Embassy to ensure it meets the 
eligibility criteria, and to develop solid grant proposals. 
AID Director commented that Honduras' first proposal may be 
for funding of the Logistical Corridor connecting El Salvador 
and Guatemala with Honduras' port at Puerto Cortes on the 
Caribbean coast with a modern trucking corridor, along with 
improvements at the port itself.  Cosenza explained that 
Honduras has embarked on a port security program that will 
ensure Honduras' ports meet the criteria in the U.S.' 
Maritime Transportation Security Act and are successfully 
certified after July 1, 2004.  He asked for the establishment 
of a U.S. Customs Service office at Puerto Cortes. 
 
Enforcement of Labor Laws is Critical 
------------------------------------- 
 
11. (SBU) Comment:  The CODEL visit provided a realistic view 
for the members of the importance of CAFTA to Honduras, and 
particularly to the survival of the textile and apparel 
sector after quotas are removed in 2005.  They also were able 
to see the development challenges that Honduras faces, and 
the fears of many here about the ability to compete with U.S. 
products after liberalization, particularly in agriculture. 
The CODEL was well informed about the devastating effect in 
the countryside of the historically low world prices for 
coffee and were impressed by the USAID-funded agricultural 
diversification projects underway.  At least one member of 
Congress commented that the three-country trip had convinced 
her to support the CAFTA agreement when it reaches the 
Congress for ratification. 
 
12. (SBU) The private sector gave a generally positive 
assessment of labor relations in Honduras.  Several of the 
Congressmen who attended the labor meeting, however, 
commented that they were glad to have the opportunity to 
"hear both sides of the story".  Labor leaders welcomed the 
opportunity to voice their concerns about labor rights and 
CAFTA directly to U.S. congressional representatives, 
following on past meetings when they had done the same with 
EmbOffs and experts from the Departments of State and Labor 
(refs B-C).  Post has urged the Ministry of Labor to improve 
the enforcement of labor laws and work with the business 
community to improve respect for core labor rights (ref A). 
Post will continue to engage the GOH, labor, and business on 
this key part of CAFTA.  End Comment. 
 
13. (U) This cable was not cleared with members of the CODEL. 
 
Palmer