Central American Labor Pact Stirs Strong Emotions

The most recent textile factory organizing campaign in Guatemala ended earlier this month after the factory closed. Nobland, a South Korean-owned company that opened here in 2001, cited continuing economic losses for the factory's closure. Leaders of the union at Nobland and labor activists say they believe the goal was to squelch the union.

Vidalia Garcia, secretary general of the union, wiped tears from her red eyes after a distraught worker called her at the union's office earlier this month to tell her the factory was closing. "What are we going to do?" she said softly.

About 350 people lost their jobs, more than 100 of them were union affiliates, she said.

"Here in Guatemala there isn't much work. It's a critical situation. Because we're union members, we're on a blacklist and can't enter other factories," Garcia said. "If you defend your rights, they try to fire you or throw pieces of fabric in your face."

Keith Kim, owner of the factory, said in an e-mail that the union's demands for double-digit salary increases and the letters and e-mails they sent to his customers asking them to stop doing business with him influenced his decision to close Nobland, but the primary cause was lack of profitability.

"Guatemala was just not competitive for our products after the world became quota-free this year," he wrote. "We have been getting less and less work for our factory in Guatemala and finally we did not have any work to put in there."

Stephen Coats, executive director of U.S./Labor Education in the Americas Project, which has a representative in Guatemala, said CAFTA will make it more difficult for the U.S. government to prod the Guatemalan government to investigate closures such as Nobland. Coats's group and others have used current laws governing trade with Central American countries to request that the United States withdraw trade benefits from Guatemala. The Generalized System of Preferences and Caribbean Basin Trade Partnership Act allows the U.S. government to rescind trade benefits from any country that is falling short in meeting its labor commitments. One appeal filed in 1992 prompted the United States to put Guatemala under review because of violence against workers there. That review ended in 1997.

Under CAFTA, the governments of Central America and the Dominican Republic would be required to enforce the labor laws on their books, and if a government is found to be derelict in enforcing its laws, that government could be subject to monetary fines, up to $15 million per violation, with the money used to help address the labor problem in question. The Bush administration contends that these protections go beyond those contained in previous U.S. trade deals with other countries. Administration critics disagree.

The Central American governments have released action plans aimed at improving their labor law enforcement, including blueprints for strengthening their labor ministries and judiciaries. U.S. Trade Representative Rob Portman, in a bid to win over skeptics, pledged in a speech earlier this month that the Bush administration will beef up efforts to help Central American governments meet those goals, and he suggested that an international donor conference should be held in coming weeks to raise money for that purpose.

Beyond the debate about whether CAFTA's labor provisions are tough enough, proponents say the main point is that by generating economic growth, CAFTA will do more for workers in Central America and the Dominican Republic than any law or regulation could achieve. That is because worker rights are more likely to be strengthened when demand for labor is strong, thereby giving workers bargaining power.

Alejandro Ceballos, lawyer for Polar Industries, one of Guatemala's largest textile factories, said CAFTA could be key to his industry's survival. The accord has won the endorsement of key congressional committees, and the White House hopes for a vote before the July 4 recess.

In the first six months of this year, twice as many factories have closed there than closed in all of 2004. They could not survive the competition with China, a low-cost, highly efficient producer, according to Guatemala's apparel industry association. Thousands may have already lost their jobs.

CAFTA is going to force Guatemalan textile companies with poor labor practices "to become formal businesses and to comply with the law and requirements," Ceballos said. "Today, not all of the companies are following the law. But when Wal-Mart comes and demands that they must obey the law, then yes, they'll obey the law."

Blustein reported from Washington. Staff researcher Richard Drezen contributed to this report.