This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 000426 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR DRL/IL, WHA/PPC, WHA/EPSC, WHA/CEN, AND EB 
STATE PASS USTR 
STATE PASS AID FOR LAC/CEN 
DOL FOR ILAB - A/DUS MAGAN 
DOL FOR BLS (SFLECK, PSB RM 2120) 
GUATEMALA FOR AID, COMATT, AND AGATT 
 
E.O. 12958: N/A 
TAGS: ELAB PREL PHUM PGOV ETRD EFIN EAGR HO
SUBJECT: DOL A/DUS MAGAN MEETS CA LABOR MINISTERS IN 
HONDURAS AND TALKS CAFTA; LABOR UNIONS OPPOSE CAFTA 
 
REF: A. TEGUCIGALPA 10 
     ¶B. TEGUCIGALPA 3040 
     ¶C. TEGUCIGALPA 2972 (ALL NOTAL) 
 
¶1. (SBU) Summary.  Associate Deputy Under Secretary for 
International Labor Affairs Mike Magan visited Honduras 
January 23-25 to attend the Central American Labor Ministers 
Meeting and held discussions with labor, management, and 
government on the U.S.-Central American Free Trade Agreement 
(CAFTA).  All three Honduran labor confederations oppose 
CAFTA, and complained that there had been a complete lack of 
consultation by the GOH with labor unions on CAFTA.  A/DUS 
Magan urged the labor leaders to make their views known on 
key issues related to CAFTA to the Ministry of Labor. 
Central American Labor Ministers are seeking a larger role in 
CAFTA, but it is not clear if that will happen.  End Summary. 
 
¶2. (U) Associate Deputy Under Secretary for International 
Labor Affairs Mike Magan visited San Pedro Sula, Honduras to 
attend the Central American Labor Ministers Meeting January 
23-25.  Deputy Under Secretary for International Labor 
Affairs Thomas Moorhead had been invited, but was unable to 
attend.  LabAtt accompanied A/DUS Magan to all meetings and 
the conference. 
 
¶3. (U) Ministers of Labor from Honduras, Costa Rica, the 
Dominican Republic, El Salvador, Honduras, and Nicaragua, as 
well as the Vice Minister of Labor from Belize, and a MOL 
official from Guatemala attended the meeting.  Former 
Panamanian Minister of Labor Joaquin Jose (JJ) Vallarino also 
attended.  President Ricardo Maduro opened the conference, 
and emphasized the importance of a career civil service in 
his remarks.  During the day and half conference the 
ministers heard presentations from various ILO technical 
assistance projects on OSH, labor relations, and 
modernization (but not child labor).  The best presentation 
was by the Spanish director of the Spanish-funded 
Modernization of the Administration of Work (MATAC) regional 
project, who emphasized the need for better coordination of 
technical assistance projects by international donors, the 
ILO, and Central American ministries of labor.  He noted that 
these projects could only succeed with the strong backing of 
the ministers and a civil service in the ministries that did 
not constantly turn over with political changes. 
 
 
Labor Unions Oppose CAFTA; Appreciate USG Outreach to Labor 
--------------------------------------------- -------------- 
 
¶4. (SBU) A/DUS Magan held a roundtable meeting January 23 
with the CGT (General Workers' Central) - Daniel Duron, 
SecGen, CGT is affiliated with World Confederation of Labour 
(WCL); CTH (Confederation of Honduran Workers) - Dinora 
Aceituno, SecGen, CTH is affiliated with the International 
Confederation of Free Trade Unions (ICFTU); and CUTH (United 
Confederation of Honduran Workers)- Israel Salinas, SecGen, 
CUTH is applying for affiliation with the ICFTU.  All three 
labor confederations oppose CAFTA, and are not supportive of 
free trade agreements in general.  The unions noted, as they 
have in the past, that several sectors of the Honduran 
business community, most notably agriculture, are opposed to 
or skeptical of CAFTA.  The unions shared the concern of 
Honduran agricultural producers, and feared that in general 
Honduran products would not be able to compete with U.S. 
products.  In response to complaints about U.S. agricultural 
subsidies LabAtt explained briefly the USG's proposal in the 
WTO and A/DUS Magan noted that European Union subsidies were 
higher than U.S. subsidies.  During the meeting the labor 
leaders discussed their concern that the GOH would be forced 
to make concessions on public sector salaries to reach a deal 
with the IMF (see ref A for more details on GOH-IMF 
negotiations).  They also criticized what they termed bad 
experiences with privatization in Honduras.  The unions 
complained that there had been a complete lack of 
consultation with labor unions on CAFTA.  The unions' 
concerns echoed comments from previous meetings that LabAtt 
and Political Counselor had held in December and January with 
the three confederations. 
 
¶5. (SBU) A/DUS Magan noted that input from civil society, 
including labor unions, is necessary for CAFTA.  He urged the 
labor leaders to make their views known on key issues related 
to CAFTA to the Ministry of Labor.  A/DUS Magan encouraged 
the leaders to work with the AFL/CIO Solidarity Center 
(regional office in San Jose), something that the CTH and 
CUTH said they are doing.  He emphasized that labor issues 
are a key part of U.S. Trade Promotion Authority (TPA). 
A/DUS Magan and the union leaders also discussed labor 
aspects of GSP, the U.S.-Chile FTA, and NAFTA.  He 
highlighted DOL-funded technical assistance projects in 
Honduras and the region, as well as the USAID-funded PROALCA 
II.  He also noted the use of trade adjustment assistance in 
the U.S. for industries affected by free trade. 
 
¶6. (U) Both the CGT and CTH told A/DUS Magan that the Embassy 
played a helpful role on labor issues.  They praised A/DUS 
Magan for meeting with them and noted that it was rare for 
the leaders of the three confederations to be in a room 
together for a meeting like this. 
 
Maquila Association - Strongest Supporter of CAFTA 
--------------------------------------------- ----- 
 
¶7. (SBU) A/DUS Magan had dinner January 23 with the Honduran 
Apparel Manufacturers Association (AKA the maquila 
association), including association president Jesus Canahuati 
(younger brother of Honduran Ambassador to the U.S. Mario 
Canahuati) and discussed CAFTA, the importance of respect for 
core labor rights, and the 1995 MOU between USTR and the 
Honduran Ministry of Labor.  (A/DUS Magan also spoke briefly 
January 24 with Honduran Council of Private Business (COHEP) 
President Jacobo Regalado, who was unable to make the 
dinner.)  The maquila association is by far the strongest 
private sector booster for CAFTA, a fact evidenced by 
Canahuati's past flirtations with the GOH about possibly 
leading the Honduran negotiating team, something that he 
chose not to do (see ref B for more information on GOH trade 
team).  The maquila association warned that in the business 
community the agricultural sector was the most skeptical 
about CAFTA.  The maquila association said they had a 
positive relationship, in general, with the three labor 
confederations and highlighted the importance of Salinas' 
support in lobbying for passage of the Caribbean Basin Trade 
Partnership Act (CBTPA), that benefits Honduran maquila 
exports. 
 
Central American Labor Ministers Seek Larger Role in CAFTA 
--------------------------------------------- ------------- 
 
¶8. (SBU) A/DUS Magan had a private meeting January 24 with 
the ministers to discuss CAFTA and labor issues (see ref C 
for more information on bilateral trade and non-trade issues 
potentially affecting CAFTA).  He gave them all a copy of the 
USTR Trade Facts "Highlights of Trade Capacity Building 
Initiatives In Support of the U.S.-CAFTA Negotiations" that 
describes DOL-funded regional technical assistance projects 
(CERSSO and the Freedom of Association, Collective Bargaining 
and Industrial Relations in Central America Project 
(RELACENTRO) that aims to promote industrial relations, 
collective bargaining, and conflict resolution in Central 
America).  He stressed that MOL officials had a role in the 
negotiations, as did labor unions and businesses.  The 
ministers noted that many unions opposed CAFTA.  A/DUS Magan 
suggested that governments reach out to unions, especially to 
individual unions that supported free trade.  He urged the 
ministers to use an inter-agency process to build consensus 
within the government on CAFTA issues. 
 
¶9. (SBU) The ministers bemoaned their anemic budgets, 
including a lack of travel funds for MOL officials to attend 
CAFTA negotiating sessions.  The ministers praised DOL-funded 
technical assistance projects, as well as the Spanish-funded 
MATAC.  Honduran Minister of Labor German Leitzelar 
emphasized that this technical assistance is even more 
important with CAFTA. 
 
¶10. (SBU) Note: Although he did not say it to A/DUS Magan, 
MOL Leitzelar told Department of State FTAA Coordinator Dr. 
Barbara Bowie-Whitman January 15 in an American Embassy 
Television Network (AETN) interactive program on CAFTA that 
with regard to labor issues in CAFTA, it would be 
insufficient to just call for the improved enforcement of 
existing labor laws and regulations.  The agreement will need 
to address core labor rights if it hopes to garner any union 
support in Honduras.  End Note. 
 
Maquila Tours Show Benefit of DOL-funded OSH Project 
--------------------------------------------- ------- 
 
¶11. (U) Prior to the start of the meetings A/DUS Magan toured 
January 23 the J.E. Morgan maquila (assembly manufacturing 
for export), a U.S.-owned Sara Lee maquila, and Dragon Maya, 
a Hong Kong/Honduran-owned maquila.  J.E. Morgan has been an 
active participant in the DOL-funded Regional Occupational 
Safety and Health Project (CERSSO) that aims to reduce the 
number of accidents and injuries in the workplace.  The plant 
manager proudly pointed out a sign on the wall that stated 
that the factory had gone 2,678,028 hours without a work 
accident.  A/DUS Magan and LabAtt noted that plant conditions 
were obviously superior at the U.S.-owned maquila. 
Separately, a recent visit by officials from the Customs 
Attache's office in Panama noted that the Honduran-owned 
maquila they inspected had superior working conditions and 
productivity to the Korean-owned maquila they inspected. 
 
Visit A Success, But Influence of Unions/MOL Remains Weak 
--------------------------------------------- ------------ 
 
¶12. (SBU) Comment.  A/DUS Magan's visit was successful from 
Post's perspective.  The ministers appreciated hearing 
insights on CAFTA and labor issues, and both the maquila 
association and labor unions thanked A/DUS Magan for engaging 
them in discussions.  At least in Honduras, it remains to be 
seen whether (a) the labor unions will work with the 
ministries of labor to voice their views on CAFTA, and (b) 
whether the Ministry of Labor will play a larger role in GOH 
policy formulation on CAFTA issues.  Post has a high opinion 
of Minister Leitzelar, but the fact of the matter is that 
Minister of Industry and Commerce is clearly in the driver's 
seat on CAFTA, and labor issues do not appear to be high on 
the GOH's CAFTA agenda.  End Comment. 
 
¶13. (U) A/DUS Magan did not clear this cable prior to his 
departure. 
Palmer