USTR Initiates Section 301 Review on Nicaragua Over Labor and Human Rights

The next Senate Foreign Affairs Committee chairman, several Finance Committee members and Sen. Marco Rubio, who is expected to be the next secretary of state, asked the administration three years ago to remove Nicaragua from CAFTA-DR (see 2106140023). While there is a mechanism for the U.S. to withdraw from the Dominican Republic-Central America Free Trade Agreement, the pact does not require that participating countries remain democracies. The planks on governance address corruption that would affect international trade and investment, not free elections or an independent judiciary.

The announcement was timed to International Human Rights Day. USTR Katherine Tai said, "Unfortunately, numerous reports suggest the Government of Nicaragua is engaging in repressive acts that harm Nicaragua’s own workers and people, undermine fair competition, and destabilize our region. USTR will thoroughly investigate the alleged violations of labor rights and human rights, and dismantling of the rule of law.” The release said there are credible reports of extrajudicial killings, repression of union activity, forced labor, spurious seizures of property, restrictions on freedom of expression, and the end of judicial and legislative independence. "Such actions exacerbate worker exploitation and diminish economic growth and trade opportunities," the release said. It also said Nicaragua's government has not responded to U.S. concerns about the dismantling of the rule of law and human rights abuses.

House Ways and Means Committee ranking member Rep. Richard Neal, D-Mass., issued a statement hailing the investigation as deploying "trade policy as a force for good." He added, "The use of Section 301 is an appropriate use of a powerful tool to respond to shocking allegations of labor suppression and gross violations of civil and human rights."

USTR is accepting comments through Jan. 8, and will hold a public hearing on Jan. 16.

National Council of Textile Organizations CEO Kim Glas issued a statement that said "there should be repercussions for the Ortega-Murillo regime" for violating human rights, labor rights and the rule of law. However, she added, "we ask that any response by the Biden administration be carefully calibrated. The U.S. trading relationship with Nicaragua does not exist in a vacuum given the interconnected nature of the U.S.-Central American textile and apparel supply chain." She said U.S. textile companies exported nearly $350 million worth of product to Nicaragua last year, and that many U.S. firms export yarn and fabric to Honduras and Guatemala that is later shipped to Nicaragua for cut and sew operations.

"Any U.S. penalty actions against Nicaragua should be leveled at those directly responsible for the abuses and not in a manner that harms working people," she wrote. "Destabilizing the U.S.-CAFTA-DR production platform would have serious implications for U.S. and regional workers, migration, economic development, and pending and future investment. We stand ready to assist the U.S. Trade Representative’s office as it conducts its investigation and will further engage in the public comment process to promote a policy response that advances and balances shared values of fairness, opportunity, and economic stability in the Americas.”

The phone number at the Nicaraguan embassy was unattended; an email sent to the Nicaraguan embassy was not answered by press time. The government in Managua also did not respond to a request for comment from the Associated Press.