A wave of consternation swept through the ranks of free trade zone (zona franca) workers in early February. Labor union officials had issued a statement protesting a reported threat from eight multinational textile firms to pull out of Nicaragua, affecting more than 8500 workers. Álvaro Baltodano, the President of the Free Trade Zone Corporation (government agency in charge of overseeing these operations throughout the country) quickly tried to assuage such fears, saying that only a thousand jobs are at stake at present.
The labor unionists claim that the clothing companies want to pull out because things have changed since the Sandinistas came back into power. Others point out that demand in the United States may have declined because of the burgeoning economic crisis there, though it is doubtful that the impact of that would be felt so quickly, especially when Nicaragua won a large quota for textile product imports to the USA in the negotiations of the regional free trade agreement (CAFTA).
Some in the know say it all has to do with the 10-year income tax shelter granted to such industries for setting up here, which in some cases is about to expire. Free trade zone enterprises are always on the lookout for the best conditions for maximizing profits, and paying more taxes is not one of them. They would also like the government to be more predictable with its announcements of increases in the minimum wage so that they can factor that increased cost into the bids they make for production contracts. Look for negotiations between the government and these companies to resolve the situation in such a way that US customers can continue to be supplied with different clothing lines.