Nicaragua Solidarity Coalition Response to US Trade Representative Report on Labor and Human Rights in Nicaragua
USTR Action Pursuant to Section 301: Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights and Fundamental Freedoms, and the Rule of Law – Response by the Nicaragua Solidarity Coalition
About the Nicaragua Solidarity Coalition
The Nicaragua Solidarity Coalition is an international coalition of organizations and individuals in solidarity with Nicaragua, supporting its sovereignty and affirming its achievements. We are not affiliated with any governmental entity of any nation. We provide accurate, verifiable information and other resources about Nicaragua, and we work to counter misinformation about the country disseminated by the media, public events, and other sources. We share information from a variety of sources, including our personal experiences, in light of Nicaraguan history and current conditions.
This submission has been prepared by a group of people with detailed knowledge of Nicaragua, including longstanding residents of the country with experience of labor conditions.
Response to the USTR Action Pursuant to Section 301: Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights and Fundamental Freedoms, and the Rule of Law
Section 301 of the Trade Act of 1974 is designed to address “unfair foreign practices affecting U.S. commerce”. It can be used to respond to “unreasonable or discriminatory foreign government practices that burden or restrict U.S. commerce”. Yet the USTR appears to have little prior evidence of such practices in relation to Nicaragua. For example, we note that the USTR’s 2024 Special 301 Report includes reference to 27 countries, many of them in Latin America, but makes no reference to Nicaragua. Similarly, the USTR’s 2023 report also made no reference to Nicaragua.
It is therefore surprising and disturbing that the USTR should suddenly launch an investigation into Nicaragua, given that it was not on its “watch list” of countries and it appears to hold no evidence of problems that would warrant an investigation.
It is understood that a Section 301 should be confined to trade and business issues of interest to the US, and should not be a wider investigation into human rights or other issues, where these are not relevant to US business interests and urge the USTR to confine itself to business-related issues. It is unfortunate that the investigation seems to have strayed into wider political issues relating to Nicaragua, which are highly contentious but have little effect on trade between the two countries.
Our submission addresses the following issues:
· Response to sources cited in the USTR Section 301 Investigation Report on Nicaragua’s Acts, Policies, and Practices Related to Labor Rights, Human Rights and Fundamental Freedoms, and Rule of Law
· Response to issues of possible concern in USTR Section 301 Investigation Report – trade union and labor rights, women’s employment rights, safety and crime issues and human rights.
· The risks to US interests, specifically to the US apparel industry.
· The significance of the trade agreement with Nicaragua – CAFTA.
We urge the USTR to confine its actions to those allowed within the context of the Central American Free Trade Agreement and to take no action that would imperil US-Nicaragua trade relations.
Response to sources cited in the USTR Section 301 Investigation Report
The USTR Section 301 Investigation Report (Report) alleges that the Nicaraguan government violates labor regulations, including "allowing use of child and forced labor, human trafficking, repression of freedom of association and collective bargaining.” Evidence to back up these allegations, however, is not given in the report. Instead, the report mainly cites other reports, some of which are written by the U.S. State Department and U.S. Department of Labor, which do not cite their sources.
Other reports cited were written by Manuel Orozco, who founded and directed the Center for Migration and Economic Stabilization at Creative Associates International (CAI). CAI is a global agency that works to “engineer political transitions”[1] with over $2 billion in US government contracts. From 2019-2021, Orozco was the lead in a group of Nicaraguan agents which, according to the Nicaraguan public prosecutor, proposed and lobbied for economic sanctions against the state of Nicaragua; requested other foreign interference in internal affairs; and promoted destabilization against the democratically elected government of Nicaragua – all with foreign funding.[2] Orozco was charged with treason in Nicaragua, in absentia. For these reasons, we urge the USTR to disregard evidence provided by Orozco, when making decisions that will affect U.S-Nicaragua trade relations.
Other accusations against Nicaragua made are verbatim reports from Expediente Abierto, which is a Nicaraguan business owned by Javier Meléndez Quiñónez, formerly National Democratic Institute (NDI),[3] which is funded by the NED.[4] Meléndez Quiñónez is married to Deborah Ullmer regional director for the Latin America and the Caribbean Programs at the NDI, formerly Freedom House’s director for Latin America and the Caribbean programs and chief of party USAID in Nicaragua. Given the depth of Meléndez Quiñónez’ ties to entities known to be actively working to destabilize Nicaragua, we urge the USTR to disregard evidence provided by Meléndez Quiñónez, when making decisions that will affect U.S-Nicaragua trade relations.
Response to issues of possible concern in USTR Section 301 Investigation Report – trade union and labor rights, women’s employment rights, safety and crime issues and human rights
The Report fails to produce evidence of the Nicaraguan government's complacency in child or forced labor. In its description of human trafficking allegations, the Report describes chartered flights of migrants as human trafficking, which, in our view, is not an accurate depiction. Nicaraguan migratory regulations allow for visitors to enter the country upon purchasing a $10 tourist visa, regardless of their country of origin.[5] The Nicaraguan government can hardly regulate visitors’ movements once they leave Nicaraguan territory; if some visitors to the country continue north by land to migrate to the U.S., the Nicaraguan government is not at fault. To conflate Nicaragua’s tourist visa policy with state-sponsored human trafficking is misleading at best.
The Report seems to conflate industry trade associations with unions when describing “union arrests.” Those arrested in the report’s description were not, in fact, union leaders, but instead two leaders[6] of a business owners’ lobbying group who were arrested for acts of treason including requesting military interventions and planning terrorist acts with financing from foreign powers.[7]
Although the U.S. government sources cited in the Report claim that the Nicaraguan government does not adequately track and publish information, the Nicaraguan government’s own publicly available annual reports clearly show a track record of improvements in the area of labor rights since 2007.
According to the Nicaraguan Ministry of Labor, between January 2007 and December 2023, Nicaragua increased child labor inspections by 4600%, and 70,452 companies signed commitments to no child labor and to respect the rights of adolescent workers.
During that same period, 1,636 new unions were formed, making the total number of workers now affiliated in unions 1.2 million, or 38% of Nicaragua’s total labor force. There was a 300% increase in workplace labor inspections and 138,374 women who were working for less than minimum wage had their salaries raised to the minimum.
In total, the government accompanied workers in filing successful claims against their employers that resulted in $8.8 million in claims for workers. There have been 3,010 sessions carried out of tripartite labor negotiations among government, business and unions, and the minimum wage has increased 550% over 17 years.[8]
We urge the USTR to take these improvements in labor rights into account when making decisions that will impact U.S.-Nicaragua trade relations.
Women’s rights
Women’s rights in society and in the workplace are enshrined in its constitution and in legislation.
Business Insider notes[9] that Nicaragua is the leader for gender parity among economies in Latin America and the Caribbean. It is in sixth position in the World Economic Forum's “top 10” for gender parity in 2024.[10] Additionally, Nicaragua is one of only 12 countries that managed to close more than 50% of their political empowerment gender gap. It remained fifth at global level in the political empowerment ranking with top scores in both women in parliament and in ministerial positions.
Business Insider also praises “women's participation in professional and technical roles as well as for legislators, officials and senior managers." Nicaragua is one of the countries that tied for the top spot in the educational attainment subindex on gender parity.
We urge the USTR to take these advances in women’s rights into account when making decisions that will impact U.S.-Nicaragua trade relations.
Safety and crime
Low homicide rate
Nicaragua is one of the safest countries in Latin America. In 2023, the recorded homicide rate was 6.2, considerably lower than neighboring countries Honduras (31.1) and Costa Rica (17.2). Only El Salvador (2.4) has a lower rate in Central America.[11] In the rest of Latin America, only three countries (Paraguay, Chile and Peru) have a lower homicide rate.
Low on organized crime
Nicaragua is not a significant center of organized crime. The Organized Crime Index,[12] produced by the US government, ranks Nicaragua sixth out of eight Central American countries: only Costa Rica and Belize have lower indices. Furthermore, its ‘criminality score’ on this index (5.72) is lower than all of the major countries in the broader neighborhood, for example: Mexico (7.57), Colombia (7.75), Venezuela (6.72), Peru (6.4), Ecuador (7.07) and Brazil (6.77).
The Global Initiative Against Transnational Organized Crime (GI-TOC) has an index of organized crime in the Western Hemisphere, placing Nicaragua 15th out of 35 countries (the USA is 16th). Nicaragua has improved its score on this index since 2021, and scores much better than neighboring Honduras (5th), Panama (6th), Guatemala (9th) or El Salvador (13th).[13]
Low risk of extortion
GI-TOC recognizes extortion as a considerable problem in countries neighboring Nicaragua (Honduras, El Salvador, Guatemala) but not Nicaragua itself.[14]
Tackling money laundering
In Nicaragua, the primary law aimed at preventing money laundering is Law 977, officially called the "Law Against Money Laundering, Terrorism Financing, and Financing for the Proliferation of Weapons of Mass Destruction" which outlines measures to combat money laundering and related criminal activities by establishing mechanisms for prevention, investigation, and punishment of such offenses; it also includes provisions to strengthen national legislation and comply with international standards related to Anti-Money Laundering/Combating the Financing of Terrorism/Financing of Proliferation.
According to the internationally recognized Financial Action Task Force (FATF), Nicaragua has strengthened its efforts against money laundering and counter-terrorist financing. In its last report,[15] FATF noted that the country had addressed various deficiencies identified by FATF and was “no longer subject to the FATF’s increased monitoring process.”
We urge the USTR to take these improvements in safety and crime into account when making decisions that will impact U.S.-Nicaragua trade relations.
Human rights
In the words of the United Nations, “human rights” range from “the most fundamental - the right to life - to those that make life worth living, such as the rights to food, education, work, health, and liberty.”
Nicaragua has made huge advances in social and economic rights. Just one example, highlighted in a 2024 report[16] from ECLAC, is that Nicaragua is devoting a larger proportion of its budget to public health than most Latin American countries, and that one of the direct benefits is high life expectancy compared with the majority of the other, wealthier countries. This clearly suggests investment is of huge benefit to Nicaraguan workers. The public health system is open to foreign visitors to Nicaragua, with no charge.
We note that the USTR press release says that “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”. We strongly contest that assessment, and give one example below.
The press release refers to reports from various bodies; one of these is the UN Group of Human Rights Experts on Nicaragua (GHREN). The Nicaragua Solidarity Coalition and many other organizations have made representations to the GHREN which have been ignored. The GHREN has created open channels of communication to political opponents of Nicaragua’s government, but will not provide equal access to organizations whose evidence shows how opposition groups have undermined human rights in Nicaragua through violence, kidnappings, arson, robbery and assassinations. Nor will they accept evidence which identifies the many serious errors and omissions in their reports.
Similar points could be made about various other “human rights” reports which have deliberately avoided examining the wider picture of how the rights of ordinary Nicaraguans, and businesses (including, of course, US businesses) were badly affected by the violence, lootings and other crimes carried out by government opponents in 2018 and in some cases since then.
We therefore urge the USTR to review these “credible reports” critically, as they represent very limited perspectives on human rights in Nicaragua which do not accord with the experiences of most Nicaraguans. Few, if any, of the allegations in these reports are relevant to the circumstances of Nicaraguans in their places of work.
The purview of the USTR is not political posturing, but the rights of workers, the climate for US business, and the existence of fair competition. In our experience, Nicaragua is exemplary in all of these respects.
Risk to US interests in Nicaragua posed by the USTR investigation
U.S. consumers and corporations are likely to be the parties most negatively affected in a trade war against Nicaragua. Nicaragua forms part of a $1.1 billion integrated supply chain: textiles assembled in Nicaragua use components from other CAFTA-DR countries with goods traveling up and down the isthmus to make apparel for the U.S. market. Any weaknesses on this U.S.-CAFTA-DR production platform would have serious implications for U.S. and regional workers as well as pending and future investment. [17]
US textile and apparel exports to Nicaragua are very significant – though it is a very small country, Nicaragua was the sixth most important US export market in textiles in 2021.[18]
The United States Fashion Industry Association also points out that “Nicaragua plays an important role in the Western Hemisphere textile and apparel supply chain.” It adds that Nicaragua is a free trade agreement partner, and that “as a CAFTA partner and a critical element in the expanding sourcing opportunities in the Western Hemisphere, we hope that the 301 case will not destabilize the integration of U.S. and CAFTA textile and apparel manufacturers and U.S. brands and retailers.”
It is notable that neither of these trade organizations offers any examples of issues affecting their business in Nicaragua, and both warn against the possible risks to US interests if the investigation were to result in retaliatory action against trade with Nicaragua, which is intricately tied-in to production for the US apparel industry.
We urge the USTR to take consider the potential negative effects to US businesses if the regional production chains are upset when making decisions that will impact U.S.-Nicaragua trade relations.
US trade treaty with Nicaragua – CAFTA
The US is a signatory to the treaty known as CAFTA-DR, the Dominican Republic-Central America Free Trade Agreement (called here “CAFTA”, for short). The treaty was signed in 2004 by the United States, Nicaragua and four other Central American countries, and the Dominican Republic. Treaties signed by the US are binding under both international law and US federal law.
Trade between the US and Nicaragua has to be conducted within the terms of CAFTA. Depending on the outcome of its investigation, the USTR is required to request formal dispute proceedings as provided by the trade agreement. The following points should be borne in mind:
· Nicaragua cannot be excluded from CAFTA without the agreement of all its member countries.
· The US could only impose sanctions that conflict with CAFTA by claiming that Nicaragua is a threat to international or US security, which is not an issue within the scope of USTR.
· Reviewing Nicaragua’s compliance with requirements under CAFTA would be lengthy and complicated under CAFTA procedures. Any penalties would be financial, not exclusion from the treaty.
· Nicaragua cannot plausibly be sanctioned on the basis that it is a “nonmarket economy” (one of the provisions in CAFTA that allow a country to be sanctioned).
· CAFTA prevents general trade sanctions being applied; such sanctions could be challenged under CAFTA rules.
· Any restrictions on US citizens investing in Nicaragua would appear to conflict directly with the CAFTA provisions on investment.
We urge the USTR to confine its actions to those allowed within the context of the Central American Free Trade Agreement and to take no action that would imperil US-Nicaragua trade relations.
Rule of law
We understand that the USTR investigation should be concerned solely with the rule of law as it applies to US businesses operating or potentially operating in Nicaragua.
Nicaragua’s legal system offers:
· A specific law (Law 344) to promote foreign direct investment in the country.
· A specific law relating to free trade zones (where almost 100,000 Nicaraguans are employed).
· Tax concessions for businesses which export at least 25% of their products.
· According to the World Economic Forum, Nicaragua has few bureaucratic procedures to open new businesses compared with other countries.
The World Bank Group’s Doing Business guide[19] ranks Nicaragua at the average for Latin America in terms of ease of starting a new business.
Doing Business categorizes Nicaragua as better than average in the region for enforcing contracts, and better than neighboring countries such as Costa Rica. It also does better than other countries on resolving insolvency.
Thomson Reuters’ Doing Business in Nicaragua: Overview gives more detail on the legal context for business in Nicaragua and provides a generally very positive overview.[20]
The Report has heavy focus on revocation of legal status for two non-profit organizations, one church and one university, although the legal reasons cited for revoking tax exoneration status was not mentioned in the report, and issues affecting these non-profit organizations are unrelated to potential issues for U.S. for-profit businesses. We urge the USTR not to consider issues that don’t affect U.S. business interests when making decisions that will impact U.S.-Nicaragua trade relations.
The Report contains a significant amount of information about the case of a U.S. company called Riverside Coffee which made a claim against Nicaragua for failing to protect its investment when groups in opposition to the government invaded its property and destroyed its investment during the violent coup attempt in 2018. Riverside coffee has lobbied the U.S. government heavily apply additional tariffs on Nicaraguan goods as a punitive measure.
In October 2025, however, the International Centre for Settlement of Investment Disputes (ICSID), the venue for the arbitration case on this issue, has dismissed Riverside Coffee’s US$286 million claim against Nicaragua over the seizure of its avocado plantation, finding that the state’s conduct fell within a treaty exception for essential security interests.[21] In light of this case’s dismissal, we urge the USTR to exclude Riverside Coffee claims when making decisions that will impact U.S.-Nicaragua trade relations.
Conclusion
Ultimately, all stakeholders would be negatively affected by a break down in U.S.-Nicaragua trade relations: U.S. businesses and consumers; Nicaraguan consumers, businesses, workers and small farmers; workers, producers and businesses throughout the CAFTA-DR region, all would be hurt by decisions that negatively impact U.S.-Nicaragua trade relations.
Nicaragua’s acts, policies, and practices are greatly misrepresented in the Report. Nicaragua’s acts, policies and practices to not harm Nicaraguans nor U.S. workers or businesses directly or indirectly.
We urge the USTR to take all the evidence into account, and to make a decision that strengthens trade ties in the Central America region and restores confidence in strong U.S.-Nicaragua trade relations.
[1] https://mronline.org/2021/09/06/want-regime-change-with-plausible-deniability-call-creative-associates-international/
[2] https://afgj.org/nicanotes-09-09-2021
[3] https://www.ndi.org/sites/default/files/1183_ni_defensa(2)_0.pdf
[4] https://www.ned.org/investing-in-freedom-an-introduction-to-the-national-endowment-for-democracy/
[5] https://afgj.org/nicanotes-is-it-nicaragua-that-is-weaponizing-immigration-or-is-it-washington
[6] https://www.nicasolidarity.com/newsletter/why-222-nicaraguan-criminals-were-deported
[7][7] https://ticotimes.net/2021/10/21/nicaragua-detains-business-union-leaders-as-crackdown-widens
[8] http://www.mitrab.gob.ni/news/nota-de-prensa-05-ene-2024
[9] See https://www.businessinsider.com/gender-parity-world-economic-forum-pay-gap-education-womens-rights-2022-7#7-nicaragua-7
[10] See https://www.weforum.org/publications/global-gender-gap-report-2024/digest/
[11] See https://www.statista.com/statistics/947781/homicide-rates-latin-america-caribbean-country/
[13] See Global Initiative Against Transnational Organized Crime (GI-TOC) Índice global de crimen organizado 2023.
[14] See https://globalinitiative.net/analysis/manual-de-accion-para-la-resiliencia-comunitaria-2024/
[15] See https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/Increased-monitoring-october-2022.html
[16] See https://www.cepal.org/en/publications/80859-social-panorama-latin-america-and-caribbean-2024-challenges-non-contributory
[17] https://www.etextilecommunications.com/news/ncto-issues-statement-on-section-301-investigation-into-nicaragua-s-acts-policies-practices/article_b37f068c-b8fe-11ef-a916-3bbe850979f4.html
[18] See https://www.usitc.gov/research_and_analysis/tradeshifts/2021/textiles
[19] World Bank Group Doing Business guide: Nicaragua.
[20] See https://content.next.westlaw.com/practical-law/document/I89288256de0611e498db8b09b4f043e0/Doing-Business-in-Nicaragua-Overview
[21] https://globalarbitrationreview.com/article/nicaragua-defeats-claim-over-seizure-of-avocado-farm
