(Updates with background, quotes from speech, paragraph 3 to
end)

WASHINGTON, Pa. (Reuters) - -The United States on
Friday accused Guatemala of violating labor provisions of a
free-trade agreement and said it would file a formal complaint
that could lead to trade penalties.

"This is the first labor case the United States has ever
brought against a trade agreement partner," U.S. Trade
Representative Ron Kirk said in the prepared text of a speech
at Allegheny Technologies, a specialty steel manufacturer.

The action comes as President Barack Obama faces stiff
resistance from fellow Democrats, especially in union-heavy
states like Pennsylvania and Ohio, on plans to move forward
with free-trade pacts with South Korea, Colombia and Panama.

A recent report from the International Confederation of
Trade Unions named Colombia the deadliest country for workers
in 2009 with a total of 48 killings, including 22 senior trade
union leaders.

Next most dangerous was Guatemala, with 16 dead, and
Honduras with 12. Both countries are members of the
U.S.-Dominican Republic-Central American Free Trade Agreement,
mostly commonly known as CAFTA.

That pact was the most bitterly contested trade deal of
former President George W. Bush's eight years in office and
just barely won approval from Congress.

U.S. union leaders even more vehemently oppose the Colombia
agreement, which was signed in November 2006, the same month
Democrats won control of Congress, and ratification has been
stalled in Congress.

Kirk said the case against Guatemala sent a "strong
message" the United States expects its trading partners to
protect their own workers and it will not tolerate labor
violations that place U.S. workers at a disadvantage.

It also shows "we are prepared to enforce the full spectrum
of American trade rights from labor to the environment," Kirk
said in a statement likely to reverberate with other potential
U.S. free trade partners, like Vietnam.

The text of his speech did not detail what labor provisions
the United States believe Guatemala violated, but Kirk said
Washington was "very concerned" that labor-related violence is
becoming increasingly serious in the crime-ridden country.

His speech also outlined actions President Barack Obama's
administration has taken to enforce U.S. rights under global
trade rules and various bilateral agreements.

He touted Obama's decision last year to slap duties on
Chinese-made tires in response to a plea from union workers who
said a surge in imports threatened their jobs.

"No other U.S. president has ever used the United States'
authority to hold China accountable for flooding our country
with cheap products that undercut American goods and put our
workers out of work," Kirk said.

Still, in a speech focused on trade enforcement, Kirk was
silent on the biggest concern of many union workers and
lawmakers, China's exchange rate policy, which they believe
gives Chinese companies an unfair trade advantage by keeping
the Chinese yuan undervalued against the dollar.

Members of both parties have urged the administration to
declare China a currency manipulator and to challenge Beijing's
currency practices at the World Trade Organization, actions
which Obama has resisted as much as Bush did.

In fact, the Obama administration has filed just two cases
at the WTO -- one against China and the other against the
Philippines -- in its first 18 months in office, despite
expectations raised by Democrats that it would unleash a slew
of new trade litigation.

Kirk defended the administration's record, saying he
preferred to resolve disputes through negotiation rather than
fight it out at the WTO. But he said USTR attorneys are often
preparing for legal action in case talk fail.

"It is not only the right thing to do, but it is the smart
thing to do," Kirk said. "We will not negotiate indefinitely
where the rights of U.S. workers and businesses are
concerned."
(Reporting by Doug Palmer; Editing by Neil Stempleman)