Caribbean Basin initiative: setting labor standards Essay

On January 1, 1984, the Caribbean Basin Initiative went into effect,
eliminating tariffs for most products exported by that region to the
United States. This preferential access to American markets is expected
to increase the flow of investment into Caribbean countries with high
unemployment, and thus create additional jobs.

The Caribbean Basin Economic Recovery Act lists 27 countries as
potentially eligible for the trade benefits, but directs the President
of the United States to undertake a rigorous process of designation.
This process includes a review of 18 criteria for designation. The
criteria are quite varied; they range from whether a country is
Communist to whether commercial stations in that country pirate U.S.
television broadcasts.

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Although only 7 of the 18 criteria are mandatory, the
Administration has persuaded each designated country–20 as of
mid-1984–to meet all of the criteria. At the end of the bilateral
discussions, each country interested in being designated was asked to
submit a letter to the United States explaining how each of the 18
criteria were met. These letters contain both declarations and
commitments regarding present and future policies. In some cases,
governments are required to take specific actions before the designation
letters are accepted. The labor criterion

One of the most controversial criteria is that regarding labor.
This provision requires the President to consider the degree to which
workers in the country are afforded “reasonable workplace
conditions” and enjoy the “right to organize and bargain
collectively.” In practice, this has meant that in countries with
restrictive labor policies, the U.S. negotiating teams have encouraged
the governments to agree to changes in their policies.

The primary reason for the labor criterion is a concern that the
labor laws and conditions in some countries would prevent the benefits
of the Caribbean Basin Initiative from reaching the workers. By
promoting free trade unions, the United States intended not only to
contribute to democratic pluralism, but also to provide foreign workers the institutional base needed to earn their rightful share of the income
generated by the Initiative. A second reason for the labor criterion is
to safeguard American workers from unfair foreign competition. By using
the statutory labor criterion, the United States would have leverage
against a participating country that exported to the American market
products made under “sweatshop style” working conditions.

Aside from the narrow provision in U.S. trade law that prohibits
the importation of products made by convict or forced labor, the
Caribbean Basin Initiative is the only U.S. law that makes foreign labor
conditions a specific consideration in providing trade benefits to other
countries. While international fair labor standards have been a
longtime goal of organized labor in the United States, the Initiative is
the first time this concept has been incorporated into U.S. tariff
legislation. Defining the standard

In implementing the labor criterion, the Administration faced 27
countries with a wide range of labor conditions–from very good to very
poor. Realizing that it could not apply the same standards to countries
with different cultures and legal systems, the United States adopted a
two-step procedure. One, all countries are reviewed with respect to a
few very basic labor standards. Two, countries with inadequate labor
rights are asked to make some improvements. The approach the United
States takes in each country, of course, also depends on the number of
negotiation issues involving the other Caribbean Basin Initiative

The first area of concern is freedom of association, or the right
to organize unions, form labor federations, and affiliate with
international trade union organizations. In defining this standard, the
United States relied heavily on the Freedom of Association Convention
(Convention 87) of the International Labor Organization (ILO).

The second area of concern is workplace conditions. At a minimum,
this means freedom from forced labor and child labor abuses–a universal
standard applicable to all countries. The United States also looks at
laws on minimum wage and occupational health and safety, but each
country’s laws are judged on an individual basis. This approach was
suggested by the legislative history, because the House had considered
but failed to enact a bill to make U.S. occupational safety and health
laws the standard for the labor criterion.

The third area of concern is government protection of unions from
harassment and nonrecognition by employers. In each country, the United
States looks for laws to promote collective bargaining, to protect union
organizers from being fired, and to permit peaceful strikes. Where
these laws do not exist, the countries are urged to consider reforms.

The fourth area of concern is the Export Processing Zones in many
of the Caribbean Basin Initiative countries. Such zones, also called
“free trade zones,” are exempt from many of the commercial
laws that apply in the rest of the country. Because these zones serve
as platforms for export to the American market, the United States seeks
assurances that the labor standards in these zones are not less than the
standards in the rest of the country. This issue came up because, in
the past, some of these zones had abusive labor conditions, compared
with the rest of the country, that gave the zone’s production an
unfair competitive advantage in international markets. For example, in
some of these zones, the governments prohibited trade unions.

Before the U.S. team visits a country, the U.S. Department of
Labor consults closely with the AFL–CIO and the American Institute for
Free Labor Development to obtain information and insight into the labor
problems of that country. These consultations, together with embassy
analyses and ILO reports, enable the U.S. team to focus on the most
serious labor problems within the time constraints of short visits.
Major labor provisions

Several of the agreements call for significant improvements in
labor conditions.

Although Haiti had a handful of weak trade unions, the Haitian
government’s history of repressing unions under former President
Francois Duvalier had made it anathema in the international free trade
union community. The Initiative program coincided with plans of the
present Haitian government to improve its labor laws, and so the Haitian
government agreed with the United States that a well-publicized labor
law reform would give a boost to Haiti’s labor unions and lead to
needed assistance by the ILO.

Specifically, Haiti’s designation letter includes the

* Several changes in labor code provisions which impeded the free
operation of unions,

* an official announcement that the stringent registration
provisions of the penal code did not apply to trade unions,

* a clarification of the government law prohibiting strikes and an
agreement to ask the ILO for assistance in studying improvements in that

* a letter to all Haitian unions notifying them of their right to
form federations and affiliate with international trade union

* a letter to international trade union organizations advising them
that affiliation is allowed and welcoming them to visit Haiti,

* an agreement to use a weekly radio show to clarify the labor code
to workers,

* a statement that workers who report minimum wage violations will
be protected from punishment by employers,

* a statement that Haitian sugar workers going to the Dominican
Republic are allowed to keep their travel documents and contracts,

* instructions to the Haitian Embassy in the Dominican Republic
regarding improved inspections of sugar plantation conditions, and

* a request to the ILO to provide technical assistance with regard
to the problems of the sugar workers.

In the Dominican Republic, the Administration sought commitments to
improve the working conditions of the Haitian migrant sugar workers. In
1983, a special ILO Commission of Inquiry had found very poor working
conditions including, in some cases, “forced labor.”
Specifically, the Dominican designation letter includes the following:
(1) an agreement to allow workers to choose the plantation they work on,
(2) an agreement that the national police will make sure that plantation
security forces do not prevent workers from quitting their jobs and
leaving the plantation, (3) a statement that further improvements in
working conditions will be made in 1984, (4) a statement that sugar
workers are given a break during the day and 1 day off per week in
accordance with the contract, (5) a statement that workers do receive at
least the minimum wage ($3.50 per day), and (6) a commitment to provide
government inspectors to oversee the weighing of cane. With regard to
the export processing zone, the government stated that the right to form
unions and bargain does apply there. The Dominican government also
agreed to ask its Congress to speed up consideration of pending labor
law reforms, which include protection of employees from dismissal
because of union organizing activities.

In El Salvador, the Administration sought commitments regarding the
past violent attacks on trade union leaders. The letter from El
Salvador specifically states: (1) the government will take special
measures to assure that its security forces provide more effective
protection against illegal attacks or detention of trade unionists or
employer organizations and (2) the government will take suitable
measures to assure that the necessary organization exists within the
security forces to investigate illegal acts of violence against labor
leaders and seek evidence to present to a court of justice. With regard
to labor laws, El Salvador’s letter includes: (3) a statement that
workers can join free trade unions, that unions can form federations,
and that federations can affiliate internationally, (4) an agreement
that in the new Constitution, the right of farm workers to associate in
labor unions will be established, (5) an agreement that the government
will propose to the tripartite labor code commission sanctions adequate
to act as a deterrent to employers who refuse to bargain or who
intimidate trade unions, and (6) a statement that the labor code applies
to the free trade zone and that union organizers would henceforth be
permitted to enter the zone.

In Honduras, the United States sought to investigate allegations
that some of the firms in the free zone prohibited unions. In the
Honduran letter, the government stated that the labor code applies in
the free zone and that the government would investigate charges that
workers in one company were obliged to sign an agreement not to
establish a trade union. The government also pledged to send additional
inspectors to the zone to assure that workers know their rights and
protections under the labor code.

In Guatemala, the United States sought the government’s legal
recognition of the new Guatemalan labor confederation, the Confederation
of Labor Unity. The Guatemalan letter stated that the Confederation has
been recognized and that unions have a right to form federations and
affiliate with international organizations.

The designation letters of the other 15 countries also discuss
labor rights and conditions, but the United States did not press for
significant reforms in these countries (for example, Barbados) because
their labor conditions already met the Administration’s standard.
Future of labor standards in trade

In summary, the designation process of the Caribbean Basin
Initiative provides an important boost to organized labor in several
countries where there were serious labor problems. In the months ahead,
the U.S. Government will work closely with American and international
unions to monitor these designation letters to assure that the Caribbean
Basin governments adhere to them. Such monitoring is particularly
important because many of the statements on labor involved prospective

During the next few years, many parties will be analyzing the
impact of the labor criterion under the Caribbean Basin Initiative. This
analysis will involve a weighing of the benefits and costs of promoting
labor rights in these countries. Both economic and political factors
will need to be considered. If the labor criterion is judged to be
successful, the next step would be to consider extending it to other
countries receiving trade preferences from the United States.


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