David versus Goliath

Guatemala has become the center of attention for many international relations specialists because it has instigated a dispute that could generate a precedent for global trade.

The United States accused Guatemala of violating CAFTA (Central America Free Trade Agreement) labor laws. In other words, the most powerful country in the world filed a lawsuit against the Guatemalans, which in the long run, may end in millions of dollars in fines.

“This is the first labor case the United States has ever brought against a trade agreement partner,” said U.S. Trade Representative, Ron Kirk, according to Reuters News Agency. “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,” he added.

Kirk’s statements were made during a speech to the workers of a steel plant in Pennsylvania, which along with an Ohio steel plant, form a conglomerate of labor unions that are unhappy with President Obama’s administration when it comes to investing in trade. Yet, President Obama announced his interest in reaching a free-trade agreement with South Korea by November, even though he is under extreme pressure because of the legislative elections that are happening in the upcoming months.

The powerful AFL-CIO (American Federation of Labor and Congress of Industrial Organizations) and six Guatemalan unions filed a formal complaint in April of 2008, accusing the Caribbean government of not guaranteeing workers the right to organize and bargain collectively for better wages and working conditions.

In Washington, the case is being observed under a magnifying glass by the staffs of congressmen and lobbyists. The outcome of this dispute could set a precedent that could influence labor rights concerning free trade agreements, one of the most important issues for the Democratic Party.

It is essential that labor rights are guaranteed in all corners of the planet, but mixing this issue with free trade agreements opens up a dangerous prerogative for the United States to interfere directly in the domestic laws of other countries, an option that Kirk even mentions in his speech.

The United States’ persuasive power is very heavy in this case, and it may even be seen as the real battle of David versus Goliath. Guatemala is one of the poorest countries in Latin America and its economy is dependent on the exportation of clothing, flowers, coffee and other commodities to the United States. Thus, to avoid millions of dollars in fines and a blockade of their products, Guatemala may be forced to cede part of its sovereignty.