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Cablegate: Argentina: Supreme Court Ruling Opens the Door for Trade

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DE RUEHBU #1580/01 3241939
ZNR UUUUU ZZH
O 191939Z NOV 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2500
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE
RUEHGV/USMISSION GENEVA 0737

UNCLAS BUENOS AIRES 001580

USDOL FOR TMCCARTER

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ELAB PGOV AR
SUBJECT: ARGENTINA: SUPREME COURT RULING OPENS THE DOOR FOR TRADE
UNION COMPETITION

1. (SBU) SUMMARY: The Argentine Supreme Court declared Article 41 of
the Trade Unions Law unconstitutional and upheld the right of a
workers' union that lacks official legal recognition to elect its
own delegates. The ruling, if widely applied to organized labor,
would expand representation rights to any labor delegate affiliated
with unions simply registered with the Labor Ministry (MOL). This
could potentially increase competition among labor unions and
threaten the monopolistic model of union representation in Argentina
that has prevailed for more than 60 years. General Labor
Confederation (CGT) representatives immediately rejected the ruling,
calling it ""a provocation that would cloud the social climate.""

2. (SBU) GOA officials swiftly sought to minimize the ruling's
impact. Labor Minister Carlos Tomada stated that the ruling would
only apply to the specific case decided by the Supreme Court.
Interior Minister Florencio Randazzo indicated that the ruling's
applicability would be limited to the public sector. Meanwhile,
opposition parties are working on different initiatives either to
reform the Trade Unions Law or to bring Article 41 in line with the
Supreme Court's ruling. However, the bills will most likely not
pass in the Kirchner-controlled Congress. END SUMMARY.

-------------------------------------------
""SIMPLE"" REGISTRATION VS. LEGAL RECOGNITION
-------------------------------------------

3. (SBU) For over 60 years, Peronists have controlled the General
Confederation of Labor (CGT), which has had a virtual monopoly over
worker representation since state-structured unionization was first
introduced by Labor Minister and then-President Juan Domingo Peron
in the mid-1940s. The CGT has approximately 3 million members, and
represents over two-thirds of the unionized workforce.
Approximately 40 percent of Argentina's workforce is unionized.

4. (SBU) Under Argentine law, the GOA recognizes two types of
unions, each with a different set of rights: 1) unions that are
simply registered with the MOL and have a limited scope of rights;
and 2) unions that are not only registered with the MOL, but have
also been officially recognized as the most representative union in
a given sector. Legally recognized unions can exercise a wider
range of privileges, such as calling for elections to appoint
delegates, exercising the right to strike, negotiating bargaining
agreements, appointing delegates to international organizations, and
compelling employers to directly deduct union dues from unionized
workers' salaries. For years, the government has only granted legal
recognition to the CGT and its affiliates, although former President
Nestor Kirchner and his wife, current President Cristina Fernandez
de Kirchner, have flirted with the idea of granting legal
recognition to a rival confederation known as the Argentine Workers
Confederation (CTA) since 2003.

-------------------
A LANDMARK DECISION
-------------------

5. (SBU) In 2003, the Public Employees' Association (ATE), a
CTA-affiliated union, was prevented from holding elections by the
CGT-affiliated Civil Servants of the Armed Forces Union (PECIFA).
PECIFA cited Article 41 of the Trade Unions law which stipulates
that only state-recognized unions are entitled to call elections to
vote for delegates, and that these delegates must be members of that
union. ATE filed a petition in protest that same year, and its
petition was subsequently dismissed by both the Ministry of Labor
and the Labor Court of Appeals.

6. (SBU) On November 11, the Argentine Supreme Court deemed Article
41 to be in breach of the constitution, which guarantees freedom of
association and union democracy, as well as of several international
conventions adopted by Argentina, including the International Labor
Organization (ILO) Convention 87 on Freedom of Association and
Protection of the Right to Organize. (Note: Since 1989, the ILO has
called on Argentina to reform its labor laws to bring it into
compliance with Convention 87.) In their ruling, the judges said
""by favoring or not favoring a given trade union with respect to
others, governments can influence workers' decisions when they
select a union to join."" In addition, the ruling asserted that the
MOL's ""discretion"" in awarding official union recognition ""violates
international treaties."" The ruling, if broadly applied, would
expand representation rights to labor delegates affiliated with
unions that are simply registered with, but not legally recognized
by, the Labor Ministry (MOL).

---------------------
CTA HAILS DECISION...
---------------------

7. (SBU) The Supreme Court's decision surprised government

officials and CGT and CTA representatives alike. The CTA, which has
been unsuccessfully demanding legal recognition by the MOL for 16
years, celebrated the decision. (Note: The CTA is an autonomous,
politically non-partisan organization, with an estimated 1.5 million
members, including public and private employees, as well as
unemployed and retired people.) The CTA and other labor groups not
affiliated with the CGT had long contended that the Trade Unions Law
guaranteed the CGT and its affiliated unions a virtual monopoly over
unionized labor. They argued that this contravened ILO Convention
87 and prevented the CTA and CTA-affiliates from obtaining full
legal standing. Although the Supreme Court's decision refers
specifically to Article 41 of the Trade Unions Law, several labor
experts consider this a landmark decision as it upholds the
supremacy of international treaties over domestic labor law. CTA
legal representative Horacio Meguira asserted that the decision will
compel the Congress to amend the current Trade Unions Law in order
to honor Argentina's international obligation to guarantee the right
to freely organize.

8. (SBU) The GOA has considered the possibility of granting legal
recognition to the CTA since Nestor Kirchner took office in 2003,
and had relaxed some labor regulations to allow the CTA to gain
extra rights in recent years, such as a seat on the Wage Council and
on the Board of the National Institute of Social Services for
Retirees and Pensioners (PAMI). CTA lawyers say they believe the
verdict not only cracks open the CGT's monopoly on worker
representation, but also sets a precedent for legal rulings in favor
of union freedom and democracy in future cases.

----------------------------------------
...WHILE GOA SEEKS TO MINIMIZE IMPACT...
----------------------------------------

9. (SBU) GOA officials swiftly sought to minimize the ruling's
impact. Labor Minister Carlos Tomada stated that the ruling would
only apply to ATE, and indicated that unions that wanted similar
treatment would have to go through the courts. He dismissed
outright the possibility of amending the Trade Unions Law. Justice
Minister Anibal Fernandez opined that the Supreme Court had resolved
an abstract case between two unions in the public sector, and
Interior Minister Florencio Randazzo stated that the decision was
limited to civil servants in the public sector.

-----------------------------------
...AND THE CGT CALLS IT ""A MISTAKE""
-----------------------------------

10. (SBU) CGT representatives strongly criticized the decision.
Hugo Moyano, CGT Secretary General and Vice President of the
Peronist Party (PJ), called the ruling ""a mistake."" CGT spokesman
Hector Daer said the confederation would accept the decision, but
would urge the government to make a ""political decision regarding
the issue."" CGT Human Rights Secretary and leader of the Judicial
Workers' Union Julio Piumato called it ""a provocation that would
cloud the social climate."" CGT Assistant Secretary Juan Belen
characterized the decision as ""crazy"" and said it ""lacks common
sense."" Others stated the judicial decision seeks to divide the
labor movement. CGT legal representative and National Deputy of the
Kirchners' ruling Victory Front coalition Hector Recalde blamed
journalists for having ""distorted the Supreme Court's decision"" and
defended current domestic regulations. He warned that allowing
several trade unions the power to represent workers in the same
company or line of work could ""dilute the strength of unions, at a
time when the economy is becoming increasingly concentrated.""

11. (SBU) Moyano and other CGT leaders have been supportive of both
Kirchner administrations and have even delayed or minimized labor
demands to accommodate the government. Energized by the Supreme
Court decision as well as the prospect of imminent layoffs due to
the expected economic downturn, CGT leaders have suddenly turned
belligerent and are publicly calling for a 500 peso (US$155)
year-end bonus for all workers plus restrictions on layoffs,
including the imposition of double or triple severance pay on
employers, in addition to calling on the GOA to circumscribe the
impact of the Supreme Court decision.

-------------------------------------------
CHAMBERS OF COMMERCE BELIEVES DECISION WILL COMPLICATE LABOR
RELATIONS
-------------------------------------------

12. (SBU) Representatives of commercial and industrial chambers
also expressed concern over the ruling, but for diametrically
opposed reasons. They predicted that competition among labor unions
would result in tougher labor demands. The President of the
Argentine Industrial Chamber (UIA) Juan Carlos Lascurain said the
chamber's legal team was analyzing the ruling, but opined that

freedom of association is always a ""complicated"" issue. The
President of the General Economic Confederation (CGE) Guillermo
Gonzalez Galicia said the decision would mean that industry would
have to negotiate with more than one representative, each with
different labor demands, making it even more difficult for industry
to reach agreements with labor. The President of the Argentine
Confederation of Medium-Sized Companies (CAME), Mr. Osvaldo Cornide,
echoed the sentiment, saying that small- and medium- size companies
always benefited from negotiating with one union per sector, and
that the ruling would imply labor relations chaos. CTA lawyer
Meguira downplayed these concerns saying that there are many
examples where different unions have negotiated jointly with
employers. He cited seven unions in commercial air transport and
12 in the maritime and ports sector as examples.

---------------------------
Experts Praise the Decision
---------------------------

13. (SBU) Labor and constitutional experts alike praised the Supreme
Court's Decision. Enrique Rodriguez, former Labor Minister under
ex-President Carlos Menem, opined that the ruling would allow more
than one union per sector to obtain legal recognition.
Constitutional scholar Daniel Sabsay said it would eliminate
monopoly control over labor relations and encourage greater
democracy in trade union activity. Both Sabsay and Rodriguez agreed
that the CTA should now receive legal recognition.

-----------
NEXT STEPS
-----------

14. (SBU) While Labor Minister Tomada denied any plans to amend the
current Trade Unions Law, Senator Gerardo Morales, the Chairman of
the Labor and Social Security Committee in the Senate and Head of
the opposition Radical Party (UCR), announced his intention to amend
current regulations to establish freedom of association and
affiliation, ensure internal democracy in trade unions, allow
minority representation in unions, prohibit reelection of labor
leaders, and demand greater transparency in the management of union
funds and union-managed healthcare organizations. Radical Deputy
Miguel Giubergia introduced a bill on November 14 to bring Article
41 of the current Trade Union Law in line with the Supreme Court's
ruling. Other opposition blocs like the Civic Coalition, dissident
Socialists, and leftist groups are drafting their own bills to
establish a more democratic labor union system. Meanwhile, FPV
Deputy and CGT lawyer Recalde said he is working on a bill to limit
the ruling's impact, although the CFK administration and FPV
Congressional leaders have not yet backed this initiative publicly.
Although opposition blocs are enthusiastic about reforming the Trade
Unions Law, their initiatives will most likely not pass in the
Kirchner-controlled Congress.

-------
COMMENT
-------

15. (SBU) The Supreme Court's ruling demonstrates that judicial
independence still has a pulse in Argentina. The ruling attacks
the core of this country's Peronist-corporatist Model, seeking to
check the previously unchallenged power of the CGT. If applied
broadly, the ruling not only threatens CGT hegemony over labor
relations, but also the very foundation upon which Peronism is
based. Argentina's trade union system has long been the central
pillar of the corporatist model put in place by Peron 60 years ago,
and it has successfully resisted reform efforts by military and
democratic governments seeking a more pluralistic system for over
half a century. It is not surprising that the CGT and, the current
neo-Peronist government will seek to limit the ruling's
applicability, but the Court's decision could be a positive step if
it helps introduce greater competition, democracy, and transparency
into Argentina's labor movement. END COMMENT.

WAYNE

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