The U.S. is withdrawing from suing the Guatemalan State for breach of labor rules before an international tribunal provided by the DR-CAFTA.
"In order to prevent the creation of an international panel that could lead to Guatemala paying a penalty of up to $15 million for violating labor laws, the Government has agreed with the United States to abide by a commitment to a plan to implement policies respecting these rules ", reported Prensalibre.com.
Guatemala is preparing a plan to inspect factories in order to avoid a possible arbitration, forced by the US, for non-compliance of labor standards under CAFTA.
The Labour Ministry is preparing a program to inspect working conditions in the textile factories which could take six months to complete. The plan must conform to the standards set by enterprises under the 29-89 scheme (Law on Promotion of Export Activity and Maquilas).
The Office of U.S. Trade Representatives (USTR) has given Guatemala 6 months to meet two commitments on labor issues.
Failure to comply with these provisions, included in the Free Trade Agreement, would mean the matter would proceed to arbitration.
Of the 17 commitments required by the U.S. to ensure respect for labor standards, Guatemala is compliant with 15, the two outstanding are the restoration the Ministry of Labour’s power to sanction and the establishment of a deposit for companies operating under the Maquila Law.
The government has made a committment to the E.U. to submit a reform bill and its regulations within 60 days, so as not to adversely affect the labor market.
The U.S. has complained since 2010 that the Guatemalan government has not ensured acceptable working conditions and rights of association for its workers.
"Regarding the issue, the document says: A company that wishes to be covered by Decree 29-89 should finance a fund in order to guarantee and cover the amount of compensation and other benefits that are unwaivable for workers".
The U.S. government believes that Guatemala has not taken sufficient measures to resolve problems with labour conditions.
In 2010 the U.S. censured the Guatemalan government for not ensuring acceptable work conditions nor rights of association for its workers.
According to an article in cnn review.com.gt, Ron Kirk, a representative of U.S. Trade, said in a press release, "Although Guatemala has taken positive steps in recent months, their actions and proposals have been insufficient to address what we see as systematic failures."
The government accepts ministerial queries from the USA relating to the enforcement of the country's labor laws.
The Guatemalan government's Ministry of Foreign Affairs website reports that several months ago it suggested a broad review of the free trade agreement implementation. To date it has not received a response from the Office of the United States Trade Representative in Central America.
The USA condemns the Guatemalan government for not guaranteeing acceptable working conditions or the right to form unions.
The US commercial representative, Ron Kirk, indicated that, "we want to see the Guatemalan government take specific and effective measures, including, if necessary, leglislative reform in order to reduce the systemic failings of the country's labor laws".