On December 10, 2024, the Office of the United States Trade Representative (USTR) initiated an investigation of Nicaragua’s acts, policies, and practices related to labor rights, human rights, and the rule of law. The investigation will be conducted under Section 301 of the Trade Act of 1974. This is the first investigation that USTR has launched under Section 301 that focuses on human and labor rights violations as reasons for initiating an investigation.

In USTR’s formal notice, USTR detailed the allegations against the Nicaraguan government’s violations of labor and human rights, as well as the dismantling of the rule of law. The notice cited examples of the violations, such as forced labor, repression of collective bargaining, politically-motivated arrests, and the elimination of legislative and judicial independence.

USTR asserted that these violations have the potential to negatively impact U.S. workers and companies because they could facilitate unfair competition, loss of sales and exports for domestic enterprises, and loss of investment and business opportunities. Although the notice did not mention specific industries, the top imports from Nicaragua in recent years include insulated wire, gold, and goods in the textile and apparel industry. These imports could be impacted by the results of USTR’s investigation.

Since Section 301 investigations take up to one year to complete following the date of initiation, the investigation into Nicaragua’s labor and human rights practices will be completed during the upcoming Trump administration. If USTR reaches an affirmative decision, the potential actions include the imposition of additional duties, withdrawal or suspension of trade agreement concessions, and negotiation of binding agreements.

The deadline for submitting written comments is January 8, 2025. A public hearing will be held on January 16, 2025.

Crowell and Moring, LLP continues to monitor developments in the customs and trade remedies space and their potential impact on businesses and customers going forward.