On Friday, December 13, 2024, the United States Trade Representative (USTR) announced that it has initiated an investigation into Nicaragua’s acts, policies, and practices related to labor rights, human rights, and the rule of law under Section 301 of the Trade Act of 1974. This investigation marks a historic first under Section 301, focusing on a country’s treatment of its workers and alleged human rights violations. By initiating this investigation, the USTR during the last days of the Biden Administration continues to implement its “worker-centric” trade policies by using trade enforcement tools to resolve long-standing concerns about trading partners’ labor practices.
If USTR determines that Nicaragua’s acts, policies and practices subject to this investigation are actionable, remedial measures, including potential duties, may be imposed on imports from Nicaragua. As the investigation unfolds, it will be crucial to monitor developments, particularly as it relates to the incoming Trump Administration’s decisions surrounding its continuation of this investigation.
Investigation Focus and Reasoning
In support of the initiation of the investigation, USTR’s Federal Register notice cites reports from various sourcing alleging that Nicaragua’s Ortega-Murillo regime is engaging in human rights violations including politically-motivated arrests, repression of religious and non-governmental groups, extrajudicial killings, and forced labor, among others. USTR argues that such actions not only harm Nicaraguan citizens but also destabilize the region and undermine fair trade practices.
The initiation notice states that the investigation will focus on four core areas: (1) alleged violations of international labor rights; (2) other human rights violations against its citizens or foreign residents, such as political imprisonment, banishments, and attempting to strip Nicaraguan nationals of citizenship; (3) allegations that the Ortega-Murillo regime has dismantled the rule of law in Nicaragua by rewriting the constitution, arbitrarily enforcing laws or punishments; (4) whether behavior by the Nicaraguan government, taken together or individually, impacts U.S. workers and/or companies.
USTR has requested consultations with the Nicaraguan government as part of this investigation. Additionally, public comments are being sought, and a public hearing will be held on January 16, 2025, to gather further insights and evidence. Parties wishing to submit comments or appear at the hearing must do so by January 8, 2025. USTR will also accept post-hearing rebuttal comments if they are submitted by January 23, 2025.
If, at the conclusion of the Section 301 investigation, USTR finds that Nicaragua’s acts, policies and practices subject to the investigation are actionable under the statute, USTR may impose measures, including tariffs, aimed at countering such actions.
USTR has 12 months from the date that the investigation is initiated to complete its investigation and determine whether Nicaragua’s acts, policies, or practices subject to investigation are actionable. We note that this timeline lasts beyond the current Presidential administration, and it is unclear how the incoming Trump Administration will handle the investigation or what measures, if any, will be imposed if USTR’s determination is affirmative.
The Husch Blackwell International Trade Team is monitoring the investigation’s developments closely and will post updates as needed. If you have any questions or concerns, feel free to reach out to us.