Nicaragua

In May 2007, the MFA Forum Americas Working Group organized a scoping visit to Nicaragua after extensive research of the region and where the MFA Forum's efforts could add the most value. The scoping visit was organized with the following objectives: to engage with local stakeholders; to understand the current status of labour law enforcement, working conditions and labour compliance; to understand the level of commitment to strengthening the industry including its competitiveness agenda; to understand if the MFA Forum could support or leverage current or necessary work through a multi-stakeholder approach with international and local stakeholders.

To achieve the scoping visit's objectives, the delegation sought key local actor's perspectives. Based on local interest identified during the visit, the MFA Forum would make a recommendation before re-engaging with regional actors to discuss possible next steps.

The scoping visit confirmed that there were clear calls from all stakeholders for increased investment, creation of employment and adherence to national and international labor standards. Unlike Mexico, the Dominican Republic or the other countries in Central America where factories are closing, Nicaragua's apparel industry is growing. Between 2006 and 2007, some 1,500 jobs were added in the free trade zone. Given the absence of alternative industries in expansion, the apparel sector is crucial for the Nicaraguan economy.

Still, all stakeholders are keenly aware that the country faces many challenges. Among these is the competition from China, Vietnam and other Asian apparel exporters. To compete, Nicaragua will need to make some significant improvements both in terms of industry productivity and in the infrastructure and services associated with it. Virtually all stakeholders emphasized the need to compete not only in terms of cost, but also by assuring that this competitiveness is sustainable and based on the compliance with national and international standards of 'decent work'.

The MFA Forum delegates all agreed that Nicaragua faced an opportune moment for multi-stakeholder engagement to build competitiveness in the maquila sector through the raising of labor standards. All Nicaraguan stakeholders (government, unions, NGOS, and the private sector) expressed their commitment to this agenda.

The Americas Working Group is currently exploring ways that the MFA Forum can support and engage with the BSR Responsible Competitiveness Project funded by the US Department of State, which includes six industries in DR-CAFTA countries, including the Nicaragua. In addition, the MFA Forum is looking to support the potential expansion of the International Labour Organisation's (ILO) Better Work Country programme to include Nicaragua.