By Rod Nickel
SASKATOON, Saskatchewan (Reuters) - Guatemala is confident it will defeat a U.S. challenge to its record on labor rights, the country's economy minister said on Wednesday, and he linked the challenge to White House efforts to win domestic support for several free trade deals.
The United States said last month it wanted a free-trade dispute settlement panel to hear its year-old complaint that Guatemala has failed to protect workers' rights as required under the Dominican Republic-Central American Free Trade Agreement, known as CAFTA-DR, to which the United States is a signatory.
"We respect the law, the work law, the unions and there is no background for the claims - no basis for it," Economy Minister Luis Velasquez told Reuters in an interview. "We think the United States is going to lose."
Velasquez was speaking before a meeting of the Cairns Group of agricultural exporting countries in Saskatoon, Saskatchewan.
Under Guatemalan law, the government can shut down or penalize companies that violate workers' rights, Velasquez said. "We are not a banana republic anymore."
In a complaint first filed in 2008, the U.S. AFL-CIO labor federation and six Guatemalan unions accused the Guatemalan government of failing to enforce laws guaranteeing workers the right to organize and bargain collectively, as well as the right of association and acceptable conditions of work.
Velasquez said the U.S. decision to escalate the AFL-CIO complaint into a formal free-trade challenge is linked to the Obama administration's hopes to win congressional approval of long-delayed free trade pacts with South Korea, Panama and Colombia.
"We are thinking the United States is trying to use us as a case. They want to show (they have) high standards," he said.
U.S. labor groups strongly oppose the pact with Colombia, which they call the most dangerous country in the world for trade unionists because of its history of anti-union violence.
Guatemala could face millions of dollars in fines if the panel finds it has violated CAFTA-DR.
Guatemala is one of the poorest countries in Latin America and Velasquez said it has increased exports of vegetables and textiles to the United States under the free trade deal.
Two-way trade totaled about $7.6 billion last year, with the United States having a $1.2 billion surplus.
Velasquez said Canada wants to include a labor chapter in a free trade agreement it is seeking with Guatemala, but that Guatemala has rejected that move .
(Additional reporting by Doug Palmer in Washington; editing by Janet Guttsman and Peter Galloway)