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Sprinting into Trouble
Mexico Business / March 1996

By Larry Luxner

WASHINGTON -- Three years ago, the Clinton administration threw organized labor a bone so it would stop complaining about NAFTA: the inclusion of a side agreement created to expose Mexican labor violations and give exploited compañeros a legal basis to challenge the multinationals. At that time, no one imagined that an obscure Mexican union would one day use the treaty to fight worker abuses north of the border.

Guess again. The Sindicato de Telefonistas de la Republica Mexicana is accusing the United States of failing to enforce its own labor laws in a case involving Sprint Corp.'s now-defunct San Francisco subsidiary, La Conexión Familiar.

The case first came to light in July 1994, when the Communications Workers of America complained to the National Labor Relations Board that Sprint had unlawfully closed its long-distance facility because its predominantly female Hispanic telemarkerting employees were trying to organize. After conducting an investigation, the NLRB sued Sprint in September 1994; five months later, the Mexican union filed its own petition under NAFTA -- and turned the tables on corporate America.

Sprint, of course, has always maintained that it folded the subsidiary for economic reasons only -- a claim backed by administrative law judge Gerald Wacknov, who ruled last August that the shutdown was lawfully motivated and therefore did not violate Section 8(a)(3) of the National Labor Relations Act.

"La Conexión Familiar was closed down more than a year ago," said Bill White, Sprint's assistant vice-president for corporate communications. "It was losing on average $4 million a year, and saw its customer base drop from over 200,000 to 75,000 because new competing services were being introduced by MCI and AT&T. La Conexión, with its single product line, was unable to compete."

Yet Wacknov found that Sprint had in fact violated Section 8(a)(1) of the Labor Act by "threatening employees with plant closure, by interrogating employees regarding their union activities, and by other similar conduct."

White, who says the subsidiary's 235 workers were being paid an average of $8 an hour, concedes "there were some supervisors who broke NLRB rules in the way they spoke to employees and what was said to employees. They did this contrary to any training they received from Sprint. This is not the way we do business."

Under terms of NAFTA's North American Agreement on Labor Cooperation (NAALC) -- a parallel accord negotiated by the Clinton administration to curry favor from U.S. unions opposed to the treaty -- the U.S., Canada and Mexico each have National Administrative Offices (NAOs) to study labor laws and investigate charges of unequal competition and violations of workers' rights. If sustained by investigatory panels, the Dallas-based NAALC Secretariat can order trade sanctions against the offending nation.

"The use of the labor side agreement to allege that the United States doesn't enforce its own labor laws is ironic, but it confirms the fears of American business that this can come home to bite them," says Jerome Levinson, a labor attorney and visiting professor at the American University Law School.

Following a series of ministerial consultations over the La Conexión Familiar case, Mexico, the United States and Canada on Dec. 17 agreed to jointly "study the effects of sudden plant closings on the principle of freedom of association and the right of workers to organize in all three countries." In addition, U.S. Labor Secretary Robert B. Reich and his Mexican counterpart, Javier Bonilla, have agreed to hold a public hearing on the issue in San Francisco by mid-April 1996.

"This agreement with Secretary Bonilla is the result of hours of study and discussion that allowed both of us to learn a great deal about labor laws in each other's country," said Reich in a prepared statement. "It is another demonstration of the value and effectiveness of open communication and free trade between Mexico and the United States."

Empty talk, charges Levinson.

"Under the side agreement, the potential remedy of trade sanctions doesn't apply to industrial relations. You can only invoke sanctions for violations of child labor laws, minimum wage laws, and health and safety provisions. So even if the Mexicans found that the U.S. had failed to enforce its own laws in the Sprint case, there is no effective remedy. This reveals how hollow the side agreements really are."

Indeed, until the Sprint controversy broke, only three cases had been brought before the NAO board -- and all three involved U.S. unions charging the Mexican government with doing nothing as Mexican labor laws were being flagrantly violated. In the first case, the United Electrical Workers accused Compañía Armadora S.A., a General Electric subsidiary in Ciudad Juárez, of firing an employee who complained about working condi-tions to the press. In the second, the Teamsters accused Minneapolis-based Honeywell of firing 22 women for alleged union activities at the company's Chihuahua thermostat plant. In October 1994, Labor Secretary Reich ruled in favor of both Honeywell and GE, stating that neither had illegally dismissed any of its workers.

To back up his "hollowness" theory, Levinson points to the third case, which he says "is the only one that had gone completely through the process." In that petition -- originally filed by four non-governmental organizations -- the state government of Tamaulipas was accused of violently suppressing a protest by female workers at Sony Corp.'s Magnéticos de México factory in Nuevo Laredo. Yet even though the NAO eventually determined that, unlike in the two earlier cases, the Mexican government indeed had failed to uphold its own labor laws, no sanctions were ever applied against Sony, and the case received hardly any publicity.

Levinson, who represented the Sony workers in their efforts to form an independent union, says the controversy reinforces his belief that NAFTA doesn't protect workers on either side of the border -- whether they're in San Francisco or San Luis Potosí.

"Clearly and categorically, there's no remedy under the NAFTA side agreement [in the Sprint case], though there is a remedy under the National Labor Relations Act," he said. "They can order that an election be held and the workers reinstated if they find that the shutting of the company was a dodge to avoid organization. The problem is making the finding that the claim of bankruptcy was bogus, and I think that's going to be very difficult."

For its part, Sprint claims it's not worried.

"The only thing we can do is focus on the debate," says White. "It's our belief that labor laws have been followed and enforced by the U.S. Department of Labor." He adds that of the 235 workers laid off when La Conexión Familiar closed down, 150 took part in Sprint-sponsored outplacement services -- and 135 have since found other jobs.

Asked if the controversy has caused Sprint to regret its initial enthusiasm over NAFTA, White responded: "Not at all. We're very supportive of NAFTA because it makes good economic sense for all the countries involved, and also because it knocks down barriers to telecommunications."

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