US embassy cable - 05GUATEMALA56

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