[Congressional Record Volume 151, Number 77 (Monday, June 13, 2005)]
[House]
[Pages H4394-H4398]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CORRECTION TO THE CONGRESSIONAL RECORD OF THURSDAY, JUNE 9, 2005, AT 
                               PAGE H4345

                                 ______
                                 

                          PROBLEMS WITH CAFTA

  The SPEAKER pro tempore (Mr. Mack). Under the Speaker's announced 
policy of January 4, 2005, the gentleman from Michigan (Mr. Levin) is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. LEVIN. The Dominican Republic-Central America Free Trade 
Agreement presents an important crossroads for trade policy. It 
involves issues broader than those, for example, relating to sugar or 
textiles; and indeed, as President Bush said recently, it involves 
issues beyond trade, including ramifications for the future path of 
democracy.

                              {time}  1730

  It is an important test for globalization. What has been unfolding in 
Latin America, including Central America, is that substantial portions 
of the citizenry are not benefiting from globalization. They have 
increasingly responded with votes at the ballot box or in the streets. 
Doing so, they have raised sharply an underlying issue and that is 
whether the terms of expanded trade need to be shaped to spread the 
benefits or simply to assume that trade expansion by itself will 
adequately work that out.
  It is for these reasons, not more narrow interests, why the issue of 
core labor standards in CAFTA is important for Central America and for 
the United States of America. The way it is handled in CAFTA undermines 
the chance that the benefits of expanded trade will be broadly shared. 
The goal of globalization must be to expand markets and raise living 
standards, not promote a race to the bottom.
  An essential part of this leveling up is the ability of workers in 
developing nations to have the freedom to join together, to have a real 
voice at work, so they can move up the economic ladder. This is not 
true in Central America where recent State Department and International 
Labor Organization reports confirm that the basic legal framework is 
not in place to protect the rights of workers and enforcement of these 
defective laws is woefully inadequate. Regretfully, CAFTA as negotiated 
preserves the status quo or worse, because it says to these countries 
``enforce your own laws'' when it comes to internationally recognized 
labor standards.
  The Latin American region possesses the worst income inequality in 
the world and four of the Central American nations rank among the top 
10 in Latin America with the most serious imbalances. Poverty is 
rampant in these countries. The middle class is dramatically weak. As 
has been true in the experience of other nations, including our own, 
this will not change unless workers can climb up the ladder and help 
develop a vibrant middle class.
  A huge percentage of workers in this region are not actively 
benefiting from globalization because the current laws in these nations 
do not adequately allow them to participate fully in the workplace. The 
suppression of workers in the workplace also inhibits the steps 
necessary to promote democracy in society at large. The core labor and 
environmental provision in CAFTA--that each country must merely enforce 
its own law--is a double standard. This standard is not used anywhere 
else in CAFTA, whether as to intellectual property, tariff levels, or 
subsidies.
  ``Enforce your own laws'' is a ticket to a race to the bottom. Such 
an approach is harmful all around: for the inability of workers to earn 
enough to enter the middle class so badly lacking in and needed by 
Central American countries; for American workers who resist competition 
based on suppression of workers in other countries; and for our 
companies and our workers who need middle classes in other countries to 
purchase the goods and services that we produce.
  CAFTA is a step backwards also from present trade agreements. The 
Caribbean Basin Initiative standard states: in determining whether to 
designate any country a benefit country under CBI, the President shall 
take into account ``whether or not such country has taken or is taking 
steps to afford workers in that country, including any designated zone 
in that country, internationally recognized rights.''
  The GSP, Generalized System of Preferences, standard is this: the 
President shall not designate a country, a GSP beneficiary country if 
``such country has not taken or is not taking steps to afford 
internationally recognized worker rights to workers in that country 
including any designated zone in that country.''
  So CAFTA is a step backward from these standards. The provisions in 
CAFTA on worker rights as currently negotiated are substantially weaker 
than current U.S. law and would replace that current law. I will give 
you an example. In Guatemala over 900 Del Monte banana workers were 
fired in 1990 for protesting labor conditions. A GSP petition led USTR 
for the first time ever to self-initiate a worker rights review for 
Guatemala in October 2000. Guatemala subsequently passed labor reforms 
in April 2001, which included granting farm workers new rights to 
strike.
  In preparation for CAFTA, however, Guatemala's constitutional courts 
struck down key parts of the 2001 labor reforms. In August of 2004, the 
Court rescinded the authority of the Ministry of Labor of that country 
to impose fines for labor rights violations, a key element of the 2001 
agreement. Under CAFTA, the U.S. would have no recourse to challenge 
that development.
  Now, let me go on, if I might, to a next point and that relates to 
the examples of Morocco and Chile and Singapore because those 
agreements are often used as examples as to why we should vote for 
CAFTA. I supported the agreements with Chile, with Morocco, and with 
Singapore. The situation in each of those countries was very different 
from Central American countries.
  Chile has the international labor standards incorporated in their 
laws

[[Page H4395]]

and they enforce them. There is a vibrant labor movement and an active 
middle class. The same is essentially true in Singapore, active labor 
movements, workers have their right to associate if they want to 
organize, to form unions; and they have a tradition of a labor movement 
in Singapore.
  Morocco, the question is asked, well, I voted for Morocco, why not 
CAFTA? And the answer is there are vast differences between the 
situations. Morocco took steps in the last years before the free trade 
agreement with them to truly, truly reorganize their labor laws. Also, 
Morocco has a tradition of a vibrant labor movement in the private 
sector as well as the public sector. So Central America is very 
different.
  We voted, many of us on the Democratic side, for Morocco, Chile and 
Singapore; we believe in expanded trade as long as the terms of those 
of that trade agreement and of those trade agreements are shaped to 
spread the benefits across the population.
  Let me say a word about Central American countries and the 
deficiencies in their laws, because much has been said of this and much 
was said today by our new USTR, a former colleague, Rob Portman. Look, 
USTR has tried to gloss over what the ILO says. They have tried to 
gloss over what is in the State Department reports themselves. But any 
objective look confirms that those reports say that the laws of those 
countries in terms of the basic international standards are defective. 
And this was spelled out in a letter that was sent by us on April 4 by 
the gentleman from New York (Mr. Rangel), the gentleman from Maryland 
(Mr. Cardin), the gentleman from California (Mr. Becerra), and myself 
to the acting trade representative, Peter Allgeier.
  Mr. Speaker, this letter will be placed in the Record at the end of 
my remarks.
  What the reports show is exemplified in a fairly recent case, and I 
will refer to it briefly. It relates to port workers in El Salvador. In 
that case they tried to organize, they tried to be represented, they 
tried to bring about democratic rights within the workplace. Thirty-
four of the workers were fired last December when they were trying to 
form a union. And not only did the law not require their reinstatement, 
but only severance pay, which is a cheap bargain for an employer who 
wants to violate rights.
  But a month later, the labor ministry denied the labor union's 
registration petition since now there were only seven workers left. 
Others had been fired. El Salvador law requires at least 35 members to 
form a labor organization, a provision that itself has been criticized 
by the International Labor Organization.
  I just ask everybody to read the letter that we sent to Mr. Allgeier 
and the attached analysis of laws from the ILO reports and State 
Department reports. President Bush has correctly talked about freedom 
and democracy. He has said that everywhere. But what this CAFTA does is 
to sanction the status quo where there is no democracy in the 
workplace.
  President Bush last month urged a vote for CAFTA because it would 
bring ``stability and security'' to the region.
  I think the opposite is true. If workers are suppressed, it is a step 
towards insecurity and towards instability. Labor market freedom is a 
source of security, undercutting insecurity. What is a threat, what is 
a real threat to undemocratic forces, those who do not believe in 
democracy, is democracy in the workplace.
  The President likes to quote the writings of Natan Sharansky, who has 
been minister in Israel until recently. Natan Sharansky says that a 
test of democracy is whether somebody can arise in the town square and 
speak his or her mind without punishment. If you use that test to the 
workplace, most places in Central America, the answer is there is no 
democracy. If somebody raises their voice too often, they are fired.
  Now, let me just say a word about another argument that is used and 
that is, well, the problem is enforcement and the United States is 
going to help the nations of Central America with their enforcement. We 
are going to provide monies so that there is a stronger department of 
labor, et cetera, et cetera.
  Well, today, Rob Portman, our ambassador, outlined a number of 
proposals for more funding to help CAFTA countries in technical 
assistance to strengthen enforcement of labor laws. He said the problem 
is not labor laws; it is enforcement. The correct analysis is there is 
a deep problem in their laws and a severe problem with the enforcement 
of flawed laws. But when you look at what was urged today by Mr. 
Portman, and I do not question his good faith about it, but I do 
question the credibility of it because it is the record, not the 
rhetoric, that really matters. And the record of this administration in 
providing technical assistance for the strengthening of labor unions in 
other countries is miserable.
  This year, I just give a few examples, this year President Bush 
proposed crippling cuts to the budget for the International Labor 
Affairs Bureau known as ILAB. He proposed cutting funding by 87 percent 
from $94 million to $12 million.

                              {time}  1745

  According to the President, the 2006 budget, ``returns the agency to 
its original mission of research, analysis and advocacy.'' Well, what 
that means is there is not any emphasis on technical assistance.
  Also, the President's five budget requests in previous years proposed 
funding cuts for ILAB of more than 50 percent.
  So I do not believe that the answer is simply more money going to 
agencies in other countries. I think the laws have to be in order. The 
regulations must not strangle efforts of people to assert their freedom 
in the labor market, but I do think better enforcement would be useful 
of good laws. The record of the administration in terms of technical 
assistance is terribly weak, in fact.
  Now, let me discuss another issue that has come up when we discuss 
CAFTA. Increasingly, this administration has used our trade challenges 
from China as a reason to vote for CAFTA. This is happening more and 
more. It is not credible. It is at best boot strap. Look, we have to 
shape trade policy so that there can be effective competition with 
China, that is for sure. That relates to currency, and we just a short 
time ago had, I think, a rather ineffective meeting with the 
administration on the currency issue.
  It also includes trade in apparel and textiles. We have seen a major 
influx of apparel from China with the end of the quotas. In order to 
have an effective trade policy, vis-a-vis, China, in the apparel and 
textile areas, we have to do the following.
  Number one, we have to actively use remedies that were written into 
the agreement with China in its accession to the WTO. We worked hard to 
get those provisions into the WTO China accession agreement, and the 
administration has hesitated to use them effectively. They did not 
effectively anticipate this problem, and when the problem really 
sprouted, their response initially was very weak.
  Second point regarding this: We do need to have and take steps to 
bring about a strong Caribbean apparel and textile structure, Caribbean 
including the United States. To do that, one of the steps that is 
necessary is to have compliance with international core labor 
standards. That would be a source of strength, not of weakness. It 
would be trying to compete and compete effectively, rather than trying 
to compete with China as to who can most suppress worker rights.
  In that regard, I do think we ought to look at what is sometimes 
pointed to, and that is, the Clinton legacy because I have read some 
articles that have said that those of us who have raised this set of 
issues about globalization, who have raised this set of issues about 
shaping trade policy and have applied it to this critical step, vis-a-
vis, CAFTA, that those of us who are doing that are taking a step 
backwards from where the Clinton administration was. The contrary is 
true. The contrary is really what this is all about.
  For example, Jordan. Today, Ambassador Portman, and I am glad to call 
him ambassador now, he was a colleague, said that the Jordan agreement 
is not as strong as CAFTA when it comes to core labor standards. That 
simply is an incorrect analysis of Jordan. Jordan has a clear reference 
to the core standards: child labor, forced labor, anti-discrimination 
and the

[[Page H4396]]

right of workers to associate and to bargain collectively. It has 
references to those five core labor standards in the Jordan agreement, 
number one.
  Number two, Jordan has a provision to make sure that Jordan cannot 
slip backwards, cannot move away from that standard. That is not true 
in CAFTA. Enforce your own laws, it can be present laws or revised laws 
that are even worse.
  Thirdly, as to enforcement, it is not at all correct to say that the 
provisions in CAFTA, that those provisions are nearly as strong as was 
negotiated with Jordan. Essentially the Jordan FTA, the U.S.-Jordan FTA 
said that each country could take the necessary steps to enforce the 
obligations of the other, and it is true the Bush administration later 
entered a letter, a side letter, that put some brakes on the ability of 
the Bush administration to implement the Jordan agreement, but that is 
not what was negotiated.
  What President Clinton did increasingly in his later years was to say 
to the world, I favor expanded trade, I believe in it, it has to be 
done in ways that shape so that there is a leveling up and not down. 
That is language that he used in his speeches. He referred to them at 
the University of Chicago speech, and that was the flavor of his speech 
at Davos. I was there when he gave the speech. He spent half of his 
time talking about the benefits of expanded trade. He also spent the 
second half saying if those benefits were going to be real and move 
globalization ahead, there needed to be, he said, a leveling up and not 
a leveling down.
  When people say we cannot impose standards on other countries, and 
that was said I think it was yesterday or maybe earlier today by the 
chairman of our committee, I do not understand that. Trade agreements, 
like any other contract, involve imposition. We are going to have to 
change laws as a result of trade agreements. That was true under the 
Uruguay Round agreements. It is true of tariffs. We are going to have 
to change our laws regarding tariffs.
  Now we are not talking about imposing American standards in CAFTA. 
What we are talking about is placing internationally recognized 
standards in the declaration of the ILO that every country involved 
here, Dominican Republic, Central American, U.S., has endorsed putting 
them into the agreement, in the body of the agreement enforceably with 
reasonable transition. That is important.
  So let it be clear, the opposition to CAFTA, as negotiated, is not 
being led by those the administration likes to dismiss as in 
``protectionists'' or ``isolationists.'' Those shoes do not fit. The 
opposition leadership involves those of us who have favored expanded 
trade and have helped to shape and pass trade agreements in the last 
decade.
  For us, CAFTA is an important line in the sand, affecting the future 
effectiveness of globalization. If the U.S. does not seize the 
opportunity to shape the rule of trade and competition in CAFTA, it 
will have chosen simply to be on the receiving end of the consequences, 
both positive and negative of globalization.
  I favor a CAFTA but not this agreement as it stands, and we can 
quickly fix this agreement by renegotiating CAFTA to include 
internationally recognized labor standards, with enforcement and a 
reasonable transition. In doing so, we would advance the interests of 
U.S. businesses and workers and expand the benefits of globalization 
beyond the status quo and any privileged minority in any of these 
countries.
  We would take also an important step, and I want to emphasize this, 
an important step towards reestablishing a bipartisan foundation for 
trade. That bipartisan foundation has been eroded under this 
administration, and it is that bipartisan foundation that needs to be 
reestablished because it is so critical for tackling tough trade issues 
ahead, for example, in the Doha Round. We cannot tackle these tough 
issues of agriculture, various parts of agriculture, or of services, 
including financial services, we cannot tackle them, nontariff 
barriers, unless there is a solid, nonpartisan, bipartisan foundation. 
We cannot do it by trying to squeeze out a one vote majority.
  Security, economic and political, is best achieved in the region of 
Central America by closing the dangerous gap between rich and poor, by 
development of a real middle class and a larger middle class and by 
expansion of freedom operating in the workplace and spreading 
throughout the society, it did, by the way, not only in our country, 
but in Poland and so many other places.
  I want to close by emphasizing what is at stake, that this security, 
economic and political, is in the self-interest of our country, of our 
businesses and of our workers. We need to address this issue of core 
labor standards, not only for the benefit of the workers in the other 
countries, of the development of a so badly needed middle class in 
those countries, but also because our workers increasingly refuse to 
compete with countries where the workers are suppressed. That is 
eroding the support for international trade in this country, and we 
need to reaffirm its importance by reaffirming some basic principles. 
That is going to be good, as I said, for our country, for our 
businesses, and for our workers.
  I am not sure of the timetable for CAFTA. What I am sure is as of 
today, it would not pass. There may be an effort to try to make it pass 
by all kinds of deals, which those of us who favor expanded trade would 
never agree to. It may be endeavored to pass through some kinds of 
deals unrelated to trade, offering this and that, unrelated again to 
trade. That would be a terrible mistake.
  We have an opportunity here to reconfigure CAFTA in a way that would 
bring about strong bipartisan support and be a foundation for the 
development of stable relationships within Central America and the 
Dominican Republic and between them and ourselves.
  Also, as I said, we would be able to reestablish the bipartisan 
foundation that once prevailed for international trade in this 
institution. Without it, CAFTA, in my judgment, should not and cannot 
pass, and there is likely trouble in tackling the other issues that 
need to be addressed boldly, honestly and effectively.
  The material I referred to previously I will insert into the Record 
at this point.

                                         House of Representatives,


                                  Committee on Ways and Means,

                                    Washington, DC, April 4, 2005.
     Hon. Peter Allgeier,
     Acting U.S. Trade Representative,
     Washington, DC.
       Dear Ambassador Allgeier: In recent weeks, advocates for 
     the Central American Free Trade Agreement (CAFTA) have made 
     assertions that the CAFTA countries' laws comply with basic, 
     internationally-recognized rules that ensure common decency 
     and fairness to working people. These advocates argue that 
     the only outstanding issue concerning the rights of workers 
     in the CAFTA countries is a lack of adequate enforcement of 
     existing labor laws.
       Unfortunately, CAFTA advocates' rhetoric is not supported 
     by the facts. There are still no fewer than 20 areas in which 
     the CAFTA countries' labor laws fail to comply with even the 
     most basic international norms, as documented by the 
     International Labor Organization (ILO), the U.S. Department 
     of State and multiple non-governmental organizations.
       More than a year ago, in November 2003, a number of us 
     wrote to you outlining these problems in detail. We had hoped 
     that doing so might lead to actions to remedy those problems, 
     or at least to a constructive dialogue about them. However, 
     the Members who signed that letter have yet to receive any 
     response to the list of problems documented in that letter--
     either from your office or from the countries concerned. In 
     fact, the labor laws in at least one of the CAFTA countries 
     have been weakened in recent months.
       In light of the fact that Congress may soon be considering 
     the CAFTA, it is important to move beyond rhetoric to the 
     facts. We urge you to provide documented information 
     concerning any amendments CAFTA countries have made to their 
     laws to address the shortcomings noted in the attached list. 
     Those shortcomings cannot be overcome with better enforcement 
     efforts. Even the best enforcement of inadequate laws--
     whether relating to intellectual property, services 
     regulation or technical standards for manufactured products--
     cannot yield acceptable results.
       We support the right CAFTA for the Central American 
     countries and the Dominican Republic, just as we have 
     strongly supported the Caribbean Basin Initiative (CBI) 
     programs. These programs have done much to strengthen 
     economic ties with our friends and neighbors in Central 
     America and the Caribbean in ways that benefit both the 
     United States and the region.
       However, the CBI programs were built on the dual pillars of 
     expanded economic opportunity and a strong framework for 
     trade. In particular, the programs were expressly conditioned 
     on the countries making progress in achieving basic labor 
     standards. By contrast,

[[Page H4397]]

     the CAFTA moves backward by not including even these minimum 
     standards, and using instead a standard for each country of 
     ``enforce your own laws.'' Ensuring that the CAFTA countries 
     both adopt and effectively maintain in their laws the most 
     basic standards of decency and fairness to working people is 
     important to their workers, their societies, and to U.S. 
     workers. It also is critical to ensuring strong and 
     sustainable economic growth and promoting increased standards 
     of living.
       We welcome and support all efforts to improve the capacity 
     of Central American countries to improve the enforcement of 
     their labor laws. In fact, for the last four years, we have 
     fought for better funding of such programs and against 
     massive Administration budget cuts for labor technical 
     assistance programs--many of these programs eroded-out or 
     slashed by up to 90 percent in budgets submitted by the 
     Administration. The Administration's track record gives us 
     little confidence that the one-time grant of $20 million 
     included in the FY05 Foreign Operations Appropriations Act 
     for labor and environmental technical assistance in the CAFTA 
     countries represents the kind of real and sustained 
     commitment needed in these areas. Moreover, such efforts on 
     enforcement are no substitute for getting it right on basic 
     laws.
           Sincerely,
     Benjamin L. Cardin,
       Ranking Member, Subcommittee on Trade.
     Xavier Becerra,
       Member.
     Charles B. Rangel,
       Ranking Member.
     Sander M. Levin,
       Ranking Member, Subcommittee on Social Security.
                                  ____


  U.S. State Department and International Labor Organization Reports 
                Confirm Deficiencies in CAFTA Labor Laws

       The 2004 U.S. State Department Country Reports on Human 
     Rights Practices, the October 2003 ILO Fundamental Principles 
     and Rights at Work: A Labor Law Study (``the Report''), and 
     other ILO reports released in recent years confirm the 
     existence of at least 20 areas in which the labor laws in the 
     CAFTA countries fail to comply with two of the most basic 
     international norms of common decency and fairness to working 
     people--the rights of association (ILO Convention 87) and to 
     organize and bargain collectively (ILO Convention 98).
       Each of these deficiencies, discussed in detail below, was 
     identified in a letter sent in November 2003, from Reps. 
     Rangel, Levin and Becerra to then U.S. Trade Representative 
     Zoellick. Neither USTR nor the governments of the Central 
     American countries have provided information responding to 
     these inconsistencies.


                               COSTA RICA

       Use of Solidarity Associations to Bypass Unions. Costa 
     Rican law allows employers to establish ``solidarity 
     associations'' and to bargain directly with such 
     associations, even where a union has been established. The 
     failure to explicitly prohibit employers from bypassing 
     unions in favor of employer-based groups violates ILO 
     Convention 98.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``[T]he report of the technical assistance mission . 
     . . drew attention to the great imbalance in the private 
     sector between the number of collective agreements and the 
     number of direct pacts . . . the CEACR recalled that direct 
     negotiation between employers and workers' representatives 
     was envisaged `only in the absence of trade union 
     organizations.' ''
       (2) Onerous Strike Requirements. Costa Rican law includes a 
     number of onerous procedural requirements for a strike to be 
     called. These requirements contravene ILO guidelines for 
     regulation of strikes, and taken as a whole, make it nearly 
     impossible for a strike to be called. For example, Costa Rica 
     requires that 60% of all workers in a facility vote in favor 
     of a strike in order for it to be legal. These requirements 
     violate ILO Convention 87.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``The general requirements set out by the legislator 
     [sic] for a strike to be legal . . . include the requirement 
     that at least 60 per cent of the workers in the enterprise 
     support strike action. The CEACR has stated that if a member 
     State deems it appropriate to establish in its legislation 
     provisions for the requirement of a vote by workers before a 
     strike can be held, `it should ensure that account is taken 
     only of the votes cast, and that the required quorum and 
     majority are fixed at a reasonable level.' ''
       (3) Inadequate Protection Against Anti-Union 
     Discrimination. Costa Rica's laws do not provide for swift 
     action against anti-union discrimination. For example, there 
     is no accelerated judicial review for dismissal of union 
     leaders.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``[A]s the CEACR has indicated, legislation needs to 
     be amended `to expedite judicial proceedings concerning anti-
     union discrimination and to ensure that the decisions thereby 
     are implemented by effective means.' ''


                              EL SALVADOR

       (1) Inadequate Protection Against Anti-Union 
     Discrimination. El Salvador fails to provide adequate 
     protection against anti-union discrimination. In particular, 
     El Salvador fails to provide for reinstatement of workers 
     fired because of anti-union discrimination, which violates 
     ILO Convention 98. There also are widespread reports of 
     blacklisting in export processing zones of workers who join 
     unions. Salvadoran law does not prohibit blacklisting, as it 
     bars only anti-union discrimination against employees, not 
     job applicants.
       The 2004 U.S. State Department Report on Human Rights 
     Practices confirms this deficiency: ``The Labor Code does not 
     require that employers reinstate illegally dismissed workers. 
     . . . Workers and the ILO reported instances of employers 
     using illegal pressure to discourage organizing, including 
     the dismissal of labor activists and the circulation of lists 
     of workers who would not be hired because they had belonged 
     to Unions.''
       (2) Restrictive Requirements for Formation of Industrial 
     Unions. El Salvador has repeatedly been cited by the U.S. 
     State Department and the ILO for using union registration 
     requirements to impede the formation of unions. These 
     formalities violate ILO Convention 87.
       The 2004 U.S. State Department Report on Human Rights 
     Practices confirms this deficiency: ``[I]n some cases 
     supported by the ILO Committee on Freedom of Association . . 
     . the Government impeded workers from exercising their right 
     of association. . . . [T]he government and judges continued 
     to use excessive formalities as a justification to deny 
     applications for legal standing to unions and federations.''
       A 1999 Report by the ILO Committee on Freedom of 
     Association confirms this deficiency: The Committee observes 
     that ``legislation imposes a series of excessive formalities 
     for the recognition of a trade union and the acquisition of 
     legal personality that are contrary to the principle of the 
     free establishment of trade union organizations . . .''


                               guatemala

       (1) Inadequate Protection Against Anti-Union 
     Discrimination. Guatemala's laws do not adequately deter 
     anti-union discrimination. The failure to provide adequate 
     protection from anti-union discrimination violates Convention 
     98.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: ``An ineffective 
     legal system and inadequate penalties for violations hindered 
     enforcement of the right to form unions and participate in 
     trade union activities. . . .''
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``[T]he CEACR hopes that . . . `measures will soon be 
     adopted to ensure rapid and effective compliance with 
     judicial decisions ordering the reinstatement in their jobs 
     of workers dismissed for trade union activities and that 
     effective penalties will be established for failure to comply 
     with such decisions.' ''
       Note: In August 2004, the Constitutional Court of Guatemala 
     issued a ruling rescinding the authority of the Ministry of 
     Labor to impose fines for labor rights violations. Following 
     this decision, it is not clear whether Guatemala's law 
     permits any fines to be assessed for labor violations.
       (2) Restrictive Requirements for Formation of Industrial 
     Unions. Guatemala requires a majority of workers in an 
     industry to vote in support of the formation of an industry-
     wide union for the union to be recognized. This requirement 
     violates Convention 87.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: The high, 
     industry-wide threshold creates ``a nearly insurmountable 
     barrier to the formation of new industry-wide unions.''
       (3) Onerous Requirements to Strike. Guatemalan law includes 
     a number of provisions that interfere with the right to 
     strike. The Guatemalan Labor Code mandates that unions obtain 
     permission from a labor court to strike, even where workers 
     have voted in favor of striking, In addition, the Labor Code 
     requires a majority of a firm's workers to vote in favor of 
     the strike. These laws violate Convention 87.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: Noting that 
     ``procedural hurdles'' helped to make legal strikes rare, the 
     Report states, ``The Labor Code requires approval by simple 
     majority of a firm's workers to call a legal strike. The 
     Labor Code requires that a labor court consider whether 
     workers are conducting themselves peacefully and have 
     exhausted available mediation before ruling on the legality 
     of a strike.''
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``[O]ne of the general requirements laid down in the 
     legislation . . . is still under criticism by the CEACR: 
     `only the votes cast should be counted in calculating the 
     majority and . . . the quorum should be set at a reasonable 
     level.' ''
       (4) Ambiguity in Certain Criminal Penalties. Guatemala's 
     Penal Code provides for criminal penalties against anyone who 
     disrupts the operation of enterprises that contribute to the 
     economic development of the country. Whether and how these 
     penalties apply to workers engaged in a lawful strike is 
     unclear, and this ambiguity has deterred workers from 
     exercising their right to strike. The CEACR has stated that 
     application of these penalties to a worker who engaged in a 
     lawful strike would violate ILO Conventions 87 and 98.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``The CEACR has drawn

[[Page H4398]]

     the attention of the Government to the fact that certain 
     provisions of the Penal Code are not compatible with ILO 
     Conventions . . . noting that . . . sentences of imprisonment 
     can be imposed as a punishment . . . for participation in a 
     strike.''
       (5) Restrictions on Union Leadership. Guatemala maintains a 
     number of restrictions with respect to union leadership 
     including: (1) restricting leadership positions to Guatemalan 
     nationals; and (2) requiring that union leaders be currently 
     employed in the occupation represented by the union. These 
     restrictions violate Convention 87.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``Both the Constitution and the Labour Code prohibit 
     foreign nationals from holding office in a trade union. . . . 
     The Labour Code requires officials to be workers in the 
     enterprise. . . . These restrictions have given rise to 
     observations by the CEACR.''


                                HONDURAS

       (1) Burdensome Requirements for Union Recognition. Honduran 
     law requires more than 30 workers to form a trade union. This 
     numerical requirement acts as a bar to the establishment of 
     unions in small firms, and violates ILO Convention 87.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: ``The [ILO] has 
     noted that various provisions in the labor law restrict 
     freedom of association, including . . . the requirement of 
     more than 30 workers to constitute a trade union. . . .''
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``[T]he requirement to have more than 30 workers to 
     constitute a trade union . . . has prompted the CEACR to 
     comment that this number is `not conducive to the formation 
     of trade unions in small, and medium size enterprises.' ''
       (2) Limitations on the Number of Unions. Honduran law 
     prohibits the formation of more than one trade union in a 
     single enterprise. This restriction violates ILO Convention 
     87 on the right of workers to join or establish organizations 
     of their own choosing, and fosters the creation of monopoly 
     unions.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: ``The [ILO] has 
     noted that various provisions in the labor law restrict 
     freedom of association, including the prohibition of more 
     than 1 trade union in a single enterprise. . . .''
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``Such a provision, in the view of the CEACR, is 
     contrary to Article 2 of Convention No. 87, since the law 
     should not institutionalize a de facto monopoly. . . .''
       (3) Restrictions on Union Leadership. Honduras requires 
     that union leaders be Honduran nationals, and be employed in 
     the occupation that the union represents. These restrictions 
     violate ILO Convention 87.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: ``The [ILO) has 
     noted that various provisions in the labor law restrict 
     freedom of association, including . . . the prohibition on 
     foreign nationals holding union office, the requirement that 
     union officials must be employed in the economic activity of 
     the business the union represents. . . .''
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``The Labour Code prohibits foreign nationals from 
     holding trade union offices and requires officials to be 
     engaged in the activity, profession or trade characteristic 
     of the trade union. . . . The CEACR has objected to these 
     provisions, which it deems incompatible with Article 3 of 
     Convention No. 87. . . .''
       (4) Inadequate Protection Against Anti-Union 
     Discrimination. The ILO CEACR has faulted Honduras for a 
     number of years for not providing adequate sanctions for 
     anti-union discrimination. For example, under the law, only a 
     very small fine equivalent to approximately US$12-$600 can be 
     assessed against employers for interfering with the right of 
     association. This Honduran law violates ILO Convention 98.
       This deficiency was confirmed by a 2004 Report of the ILO 
     Committee of Experts on the Application of Conventions and 
     Recommendations (CEACR): ``The penalties envisaged . . . 
     against persons impairing the right to freedom of association 
     (from 200 to 2,000 lempiras, with 200 lempiras being 
     equivalent to around $12) had been deemed inadequate by one 
     worker's confederation. . . . The Committee once again hopes 
     that [legislation will be prepared] providing for 
     sufficiently effective and dissuasive sanctions against all 
     acts of anti-union discrimination.''
       (5) Few Protections Against Employer Interference in Union 
     Activities. Honduras prohibits employers or employees with 
     ties to management from joining a union; it does not, 
     however, prohibit employers from interfering in union 
     activities through financial or other means. The failure to 
     preclude employer involvement violates ILO Convention 98 on 
     the right to organize and bargain collectively.
       This deficiency was confirmed in a 2004 Report of the ILO 
     CEACR: ``[T]he Convention provides for broader protection for 
     workers' . . . organizations against any acts of interference 
     . . . in particular, acts which are designed to promote the 
     establishment of workers' organizations under the domination 
     of employers or employers' organizations, or to support 
     workers' organizations by financial or other means, with the 
     object of placing such organizations under the control of 
     employers or employers' organizations. In this respect, the 
     Committee once again hopes that [labor law reform will 
     include provisions] designed to . . . afford full and 
     adequate protection against any acts of interference, as well 
     as sufficiently effective and dissuasive sanctions against 
     such acts.''
       (6) Restrictions on Federations. Honduras prohibits 
     federations from calling strikes. The CEACR has criticized 
     this prohibition, which contravenes the right to organize.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``Federations and confederations do not have a 
     recognized right to strike . . . which has prompted the CEACR 
     to recall that such provisions are contrary to Articles 3, 5 
     and 6 of Convention No. 87 . . .''
       (7) Onerous Strike Requirements. Honduras requires that 
     two-thirds of union members must support a strike for it to 
     be legal. This requirement violates ILO Convention 87.
       This deficiency was confirmed in the October 2003 ILO 
     Report: ``[T]he CEACR has recalled that restrictions on the 
     right to strike should not be such as to make it impossible 
     to call a strike in practice, and that a simple majority of 
     voters calculated on the basis of the workers present at the 
     assembly should be sufficient to be able to call a strike.''


                               NICARAGUA

       (1) Inadequate Protection Against Anti-Union 
     Discrimination. Nicaragua's laws permit employers to fire 
     employees who are attempting to organize a union as long as 
     they provide double the normal severance pay. This allowance 
     violates ILO Convention 98.
       This deficiency was confirmed in the October 2003 ILO 
     Report: The Annex to the Report states that the Labor Code 
     provides that ``if the employer does not carry out 
     reinstatement, he/she shall pay double the compensation 
     according to the length of service.''
       (2) Use of Solidarity Associations to Bypass Unions. 
     Nicaragua allows employers to create ``solidarity 
     associations'' but does not specify how those associations 
     relate to unions. The failure to include protections against 
     employers using solidarity associations to interfere with 
     union activities violates ILO Convention 98.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: ``The Labor Code 
     recognizes cooperatives into which many transportation and 
     agricultural workers are organized. Representatives of most 
     organized labor groups criticized these cooperatives and 
     assert that they do not permit strikes, have inadequate 
     grievance procedures, are meant to displace genuine, 
     independent trade unions and are dominated by employers.''
       (3) Procedural Impediments to Calling a Strike. Nicaragua 
     maintains a number of restrictive procedural requirements for 
     calling strikes. (According to the 2002 U.S. State Department 
     Human Rights Report, the Nicaraguan Labor Ministry asserts 
     that it would take approximately 6 months for a union to go 
     through the entire process to be permitted to have a legal 
     strike.) Since all legal protections may be withdrawn in the 
     case of an illegal strike, the practical outcome is that 
     workers who strike often lose their jobs, thus undermining 
     the right to strike protected by Convention 87.
       This deficiency was confirmed in the 2004 U.S. State 
     Department Report on Human Rights Practices: ``Observers 
     contend that the [process for calling a strike] is 
     inappropriately lengthy and so complex that there have been 
     few legal strikes since the 1996 Labor Code came into effect 
     . . .''

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