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 theUnited States.

This preferential access to American markets is expectedto increase the flow of investment into Caribbean countries with highunemployment, and thus create additional jobs. The Caribbean Basin Economic Recovery Act lists 27 countries aspotentially eligible for the trade benefits, but directs the Presidentof the United States to undertake a rigorous process of designation.This process includes a review of 18 criteria for designation. Thecriteria are quite varied; they range from whether a country isCommunist to whether commercial stations in that country pirate U.S.television broadcasts. Although only 7 of the 18 criteria are mandatory, theAdministration has persuaded each designated country–20 as ofmid-1984–to meet all of the criteria. At the end of the bilateraldiscussions, each country interested in being designated was asked tosubmit a letter to the United States explaining how each of the 18criteria were met.

These letters contain both declarations andcommitments regarding present and future policies. In some cases,governments are required to take specific actions before the designationletters 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 whichworkers in the country are afforded “reasonable workplaceconditions” and enjoy the “right to organize and bargaincollectively.” In practice, this has meant that in countries withrestrictive labor policies, the U.S. negotiating teams have encouragedthe governments to agree to changes in their policies.

The primary reason for the labor criterion is a concern that thelabor laws and conditions in some countries would prevent the benefitsof the Caribbean Basin Initiative from reaching the workers. Bypromoting free trade unions, the United States intended not only tocontribute to democratic pluralism, but also to provide foreign workers the institutional base needed to earn their rightful share of the incomegenerated by the Initiative. A second reason for the labor criterion isto safeguard American workers from unfair foreign competition. By usingthe statutory labor criterion, the United States would have leverageagainst a participating country that exported to the American marketproducts made under “sweatshop style” working conditions.

Aside from the narrow provision in U.S. trade law that prohibitsthe importation of products made by convict or forced labor, theCaribbean Basin Initiative is the only U.S. law that makes foreign laborconditions a specific consideration in providing trade benefits to othercountries. While international fair labor standards have been alongtime goal of organized labor in the United States, the Initiative isthe first time this concept has been incorporated into U.S.

tarifflegislation. Defining the standard In implementing the labor criterion, the Administration faced 27countries with a wide range of labor conditions–from very good to verypoor. Realizing that it could not apply the same standards to countrieswith different cultures and legal systems, the United States adopted atwo-step procedure.

One, all countries are reviewed with respect to afew very basic labor standards. Two, countries with inadequate laborrights are asked to make some improvements. The approach the UnitedStates takes in each country, of course, also depends on the number ofnegotiation issues involving the other Caribbean Basin Initiativecriteria. The first area of concern is freedom of association, or the rightto organize unions, form labor federations, and affiliate withinternational trade union organizations. In defining this standard, theUnited 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 universalstandard applicable to all countries.

The United States also looks atlaws on minimum wage and occupational health and safety, but eachcountry’s laws are judged on an individual basis. This approach wassuggested by the legislative history, because the House had consideredbut failed to enact a bill to make U.S. occupational safety and healthlaws the standard for the labor criterion. The third area of concern is government protection of unions fromharassment and nonrecognition by employers.

In each country, the UnitedStates looks for laws to promote collective bargaining, to protect unionorganizers from being fired, and to permit peaceful strikes. Wherethese laws do not exist, the countries are urged to consider reforms. The fourth area of concern is the Export Processing Zones in manyof the Caribbean Basin Initiative countries. Such zones, also called”free trade zones,” are exempt from many of the commerciallaws that apply in the rest of the country.

Because these zones serveas platforms for export to the American market, the United States seeksassurances that the labor standards in these zones are not less than thestandards in the rest of the country. This issue came up because, inthe past, some of these zones had abusive labor conditions, comparedwith the rest of the country, that gave the zone’s production anunfair competitive advantage in international markets. For example, insome of these zones, the governments prohibited trade unions. Before the U.S.

team visits a country, the U.S. Department ofLabor consults closely with the AFL–CIO and the American Institute forFree Labor Development to obtain information and insight into the laborproblems of that country. These consultations, together with embassyanalyses and ILO reports, enable the U.

S. team to focus on the mostserious labor problems within the time constraints of short visits.Major labor provisions Several of the agreements call for significant improvements inlabor conditions.

Although Haiti had a handful of weak trade unions, the Haitiangovernment’s history of repressing unions under former PresidentFrancois Duvalier had made it anathema in the international free tradeunion community. The Initiative program coincided with plans of thepresent Haitian government to improve its labor laws, and so the Haitiangovernment agreed with the United States that a well-publicized laborlaw reform would give a boost to Haiti’s labor unions and lead toneeded assistance by the ILO. Specifically, Haiti’s designation letter includes thefollowing: * Several changes in labor code provisions which impeded the freeoperation of unions, * an official announcement that the stringent registrationprovisions of the penal code did not apply to trade unions, * a clarification of the government law prohibiting strikes and anagreement to ask the ILO for assistance in studying improvements in thatlaw, * a letter to all Haitian unions notifying them of their right toform federations and affiliate with international trade unionorganizations, * a letter to international trade union organizations advising themthat affiliation is allowed and welcoming them to visit Haiti, * an agreement to use a weekly radio show to clarify the labor codeto workers, * a statement that workers who report minimum wage violations willbe protected from punishment by employers, * a statement that Haitian sugar workers going to the DominicanRepublic are allowed to keep their travel documents and contracts, * instructions to the Haitian Embassy in the Dominican Republicregarding improved inspections of sugar plantation conditions, and * a request to the ILO to provide technical assistance with regardto the problems of the sugar workers. In the Dominican Republic, the Administration sought commitments toimprove the working conditions of the Haitian migrant sugar workers. In1983, a special ILO Commission of Inquiry had found very poor workingconditions 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 plantationsecurity forces do not prevent workers from quitting their jobs andleaving the plantation, (3) a statement that further improvements inworking conditions will be made in 1984, (4) a statement that sugarworkers are given a break during the day and 1 day off per week inaccordance with the contract, (5) a statement that workers do receive atleast the minimum wage ($3.50 per day), and (6) a commitment to providegovernment inspectors to oversee the weighing of cane.

With regard tothe export processing zone, the government stated that the right to formunions and bargain does apply there. The Dominican government alsoagreed to ask its Congress to speed up consideration of pending laborlaw reforms, which include protection of employees from dismissalbecause of union organizing activities. In El Salvador, the Administration sought commitments regarding thepast violent attacks on trade union leaders. The letter from ElSalvador specifically states: (1) the government will take specialmeasures to assure that its security forces provide more effectiveprotection against illegal attacks or detention of trade unionists oremployer organizations and (2) the government will take suitablemeasures to assure that the necessary organization exists within thesecurity forces to investigate illegal acts of violence against laborleaders and seek evidence to present to a court of justice. With regardto labor laws, El Salvador’s letter includes: (3) a statement thatworkers can join free trade unions, that unions can form federations,and that federations can affiliate internationally, (4) an agreementthat in the new Constitution, the right of farm workers to associate inlabor unions will be established, (5) an agreement that the governmentwill propose to the tripartite labor code commission sanctions adequateto act as a deterrent to employers who refuse to bargain or whointimidate trade unions, and (6) a statement that the labor code appliesto the free trade zone and that union organizers would henceforth bepermitted to enter the zone.

In Honduras, the United States sought to investigate allegationsthat some of the firms in the free zone prohibited unions. In theHonduran letter, the government stated that the labor code applies inthe free zone and that the government would investigate charges thatworkers in one company were obliged to sign an agreement not toestablish a trade union. The government also pledged to send additionalinspectors to the zone to assure that workers know their rights andprotections under the labor code.

In Guatemala, the United States sought the government’s legalrecognition of the new Guatemalan labor confederation, the Confederationof Labor Unity. The Guatemalan letter stated that the Confederation hasbeen recognized and that unions have a right to form federations andaffiliate with international organizations. The designation letters of the other 15 countries also discusslabor rights and conditions, but the United States did not press forsignificant reforms in these countries (for example, Barbados) becausetheir labor conditions already met the Administration’s standard.Future of labor standards in trade In summary, the designation process of the Caribbean BasinInitiative provides an important boost to organized labor in severalcountries where there were serious labor problems. In the months ahead,the U.S. Government will work closely with American and internationalunions to monitor these designation letters to assure that the CaribbeanBasin governments adhere to them. Such monitoring is particularlyimportant because many of the statements on labor involved prospectivechanges.

During the next few years, many parties will be analyzing theimpact of the labor criterion under the Caribbean Basin Initiative. Thisanalysis will involve a weighing of the benefits and costs of promotinglabor rights in these countries. Both economic and political factorswill need to be considered. If the labor criterion is judged to besuccessful, the next step would be to consider extending it to othercountries receiving trade preferences from the United States.

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