"It's almost inevitable that the case will go to an arbitration panel," said Economy Minister Sergio de la Torre, speaking of the imminent start of a U.S. arbitration process against Guatemala for alleged breach of labor standards established by the DR-CAFTA.
The American Federation of Labor - Congress of Industrial Organizations (AFL-CIO) and 6 Guatemalan unions, have called for the process because they believe that Guatemala has not made any progress in 4 years in ensuring compliance with labor rights in the country.
June sees the expiry of the deadline set by the USTR for Guatemala to comply with the restoration of power for the Ministry of Labour to set sanctions, and the requirement for a deposit for companies covered in the Maquila Decree Law 29-89, failure to do so would mean the installation of an arbitration panel, reported Prensalibre.com.
"The problem is not going to an arbitration panel, but the impact it would have on the country, mainly because Guatemalan products may lose preference in the international market," said De la Torre.
Guatemala and the U.S. have proposed to reach an amicable settlement and not to activate the NAFTA arbitration panel, over labor demands.
The agreement would save the country paying a $15 million financial penalty.
Economy Minister Sergio de la Torre said, "We have a formal offer from the USTR, as yet verbal, to enter into an amicable settlement before going to an arbitration panel", adding that on the part of the executive branch there is a willingness to comply with the necessary actions to enforce labor laws.
Demands have been made for the U.S. Department of Labor to form an arbitration panel against the country over the lack of progress in labor matters.
From a press release by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO):
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest trade union center in the U.S., in conjunction with the largest unions of Guatemala as a gesture of appreciation over the lack of labor rights protection under the Central American Free Trade Agreement (CAFTA, for its acronym in English), today sent a letter to the U.S. Labor Department, the U.S. Trade Representative , and the ministers of labor and economy in Guatemala, in which they called for an arbitration panel to be reinstated. The "Implementation Plan" was signed by the two governments on April 26, 2013.