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Guatemala labor practices violate trade deal: U.S.

By Doug Palmer

WASHINGTON, Pennsylvania (Reuters) - The United States on Friday accused Guatemala of violating labor provisions of a free-trade agreement and said it would file a formal complaint that could lead to hefty monetary fines.

"This is the first labor case the United States has ever brought against a trade agreement partner," U.S. Trade Representative Ron Kirk told workers at Allegheny Technologies, a specialty steel manufacturer.

The action comes as President Barack Obama faces stiff resistance from fellow Democrats, especially in union-heavy states like Pennsylvania and Ohio, on plans to move forward with free-trade pacts with South Korea, Colombia and Panama.

"We want to see the government of Guatemala take specific and effective action -- including, if appropriate, legislative reforms -- to improve systemic failures in enforcement of Guatemalan labor laws," Kirk said.

The AFL-CIO labor federation and six Guatemalan unions filed a complaint in April 2008, accusing the Guatemala government of failing to effectively enforce laws guaranteeing workers the right to organize and bargain collectively as well as the right of association and acceptable conditions of work.

Other Guatemalans "have tragically lost their lives in their quest to exercise their human rights as workers, while their government refused to act," AFL-CIO President Richard Trumka said in a statement applauding Kirk's move.

Congressional Democrats also praised the action, which many said underscored the need for future U.S. trade agreements to have strong and enforceable labor provisions.

Guatemala is one of the poorest countries in Latin America and mainly exports goods like clothing, flowers, jewelry, coffee and raw materials to the United States.

Kirk said the United States will ask Guatemala for consultations under dispute settlement provisions of the U.S.-Dominican Republican-Central American Free Trade Agreement, most commonly known as CAFTA.

If those talks fail, Washington would then ask for a panel to hear the dispute. Guatemala could be fined millions of dollars if the panel rules against it and it fails to comply.

A recent report from the International Confederation of Trade Unions named potential U.S. free trade partner Colombia the deadliest country for workers in 2009 with a total of 48 killings, including 22 senior trade union leaders.

Next most dangerous was Guatemala, with 16 dead, and another CAFTA member, Honduras, with 12.

Kirk expressed concern that anti-labor violence was escalating in Guatemala, but said that was not part of the United States' formal trade complaint.

CAFTA was the most bitterly contested trade deal of former President George W. Bush's eight years in office and barely won congressional approval.

U.S. union leaders vehemently oppose the Colombia agreement, which was signed in November 2006, the same month Democrats won control of Congress. Ratification has been stalled in Congress.

Kirk said the case against Guatemala sent a "strong message" the United States expects its trading partners to protect their own workers and it will not tolerate labor violations that place U.S. workers at a disadvantage.

It also shows "we are prepared to enforce the full spectrum of American trade rights from labor to the environment," Kirk said in a statement likely to reverberate with other potential U.S. free trade partners, like Vietnam.

His speech also outlined actions President Barack Obama's administration has taken to enforce U.S. rights under global trade rules and various bilateral agreements.

He touted Obama's decision last year to slap duties on Chinese-made tires in response to a plea from union workers who said a surge in imports threatened their jobs.

"No other U.S. president has ever used the United States' authority to hold China accountable for flooding our country with cheap products that undercut American goods and put our workers out of work," Kirk said.

(Reporting by Doug Palmer; editing by Anthony Boadle)