AFL-CIO Complaint First Test of USMCA’s ‘Rapid Response Mechanism’

Trade Update • MAY 11, 2021

A petition filed yesterday by the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) together with Service Employees International Union (SEIU), Mexico’s Independent National Union of Industry and Service Workers (SNITIS) and the D.C. watchdog group Public Citizen against a Mexican auto parts factory is the first test of the new North American trade pact’s novel “Rapid Response Mechanism” for addressing unfair labor practices.

The groups say the landmark case will also test whether Mexico’s labor reforms can deliver for Mexican workers denied their fundamental right to organize and bargain for better wages and working conditions.

Background

Whereas the North American Free Trade Agreement contained largely unenforceable provisions concerning labor issues that were limited and lacked teeth, stronger worker protections and more robust enforcement measures were a key demand made by Democratic lawmakers and their union allies for backing passage of the United States-Mexico-Canada Agreement.

The Rapid Response Mechanism is a bilateral agreement between the U.S. and Mexico covering certain priority sectors consisting primarily of automotive and aerospace, industrial food operations, electronics, call centers, and raw material mining and production sectors, e.g., steel and aluminum. Canada and Mexico also have an identical agreement, but one does not exist between the U.S. and Canada.

Unlike the broader sort of claims available through state-to-state dispute settlement under Chapter 31, the RRM focuses on the denial of specific labor rights, as defined in the USMCA, and establishes strong remedies that quickly penalize (or even prohibit) certain imports.

Tridonex Accused of Multiple Labor Violations

The labor organizations filing the petition accuse auto parts manufacturer Tridonex of harassing, beating and firing hundreds of workers at its factory in Matamoros in the northern state of Tamaulipas, Mexico, for trying to organize with SNITIS, the independent Mexican union of their choice, instead of the corrupt, company-sponsored “protection union.”

The groups allege that labor violations at the Tridonex facility are carried out with the consent of the Tamaulipas state government, which they also claim acted on the company’s behalf to block the workers’ demand for an election before going on to arrest the border maquiladora labor lawyer and activist who had been organizing worker protests at the plant.

According to AFL-CIO President Richard Trumka, the government’s harsh treatment of Susana Prieto Terrazas while imprisoned on “bogus criminal charges” until she eventually agreed to internal exile in another Mexican state and a ban on appearing in court, is “a textbook violation of the labor laws Mexico has pledged to uphold.”

“USMCA requires Mexico to end the reign of protection unions and their corrupt deals with employers,” said Trumka.

Tridonex is a subsidiary of Philadelphia-based auto parts maker Cardone Industries Inc., which in turn is majority-owned by Canadian private equity firm Brookfield Business Partners.

Washington Reaction

Congressional Democrats welcomed the AFL-CIO’s labor complaint, calling it “a decisive step toward fulfilling the promise of the USMCA and ensuring that workers’ rights are meaningfully upheld across North America.”

In a statement, Ways & Means Chairman Richard Neal and trade subcommittee Chairman Earl Blumenauer called on the Biden administration “to use all available resources to take aggressive enforcement action in this case.” The lawmakers also said they expect the U.S. Trade Representative to use the resources we provided under the USMCA Implementing Act “to aggressively enforce the agreement and self-initiate other cases where workers’ rights have been violated.”

Administration officials have repeatedly indicated their support for strict enforcement of the USMCA. In particular, USTR Katherine Tai, who helped Congress negotiate the trade pact’s tougher labor provisions, told a Senate hearing last month that she was “not afraid to use the enforcement tools” at her disposal.

“In order to do USMCA justice… we need to use all of these tools to see if they work and then improve them and our use of them,” Tai said. “That is the point of doing a trade agreement. It’s not to put it on a shelf and look at it; it’s to make sure that it works.”

Next Steps

The Department of Labor Office of Trade and Labor Affairs has 30 days in which to review the petition and determine whether to bring the AFL-CIO’s complaints to the Mexican government for further action.

The Mexican government may agree with the complaint and take action to impose sanctions or it could refer the matter to a panel for further review and determination.