U.S. and Mexico Exchange USMCA Labor Complaints

Trade Update • MAY 18, 2021

Close on the heels of a groundbreaking petition filed recently by the AFL-CIO and other groups against a Mexican auto parts maker under the United States-Mexico-Canada Agreement’s new “Rapid Response Mechanism,” the Biden administration announced last Wednesday that it has initiated a request for review under that same provision regarding another case.

The first actual use of the Rapid Response Labour Mechanism by any USMCA country concerns whether workers at a General Motors facility in Silao, in the central Mexican state of Guanajuato, are being denied the right of free association and collective bargaining. According to a May 12 statement, the U.S. Trade Representative and Department of Labor have “received information appearing to indicate serious violations of these workers’ rights… in connection with a recent worker vote, organized by the existing union, to approve their collective bargaining agreement.”

“Gross Labor Rights Violations”

As detailed in a May 11 letter sent by three Democratic Michigan lawmakers to GM CEO Mary Barra expressing their concerns about the matter, the existing so-called “protection” union, the Confederación de Trabajadores de México, is accused of “gross labor rights violations” including limiting voting to 15 hours for more than 6,000 workers; hiding the union contract from workers; refusing to hand over ballots to labor officials; and, threatening to fire employees if they didn’t vote for them.

The Mexican government has already taken action against the GM plant, suspending a recent worker vote on a collective bargaining agreement after being made aware of serious irregularities, such as the breaking open of ballot boxes and destruction of ballots voting against the existing union.

GM denied any involvement in the alleged labor violations and has since retained a third-party firm to conduct an independent and thorough review of the situation. The company said it supports the new labor provisions of the USMCA and that it “will cooperate with the U.S. Government and the Mexican Labor Ministry and other stakeholders to protect the integrity of the process.”

Next Steps

Should the Mexican government agree to conduct the review, it will have 45 days to make a determination on the matter. If Mexico agrees that workers’ rights have been violated, the two countries will begin to discuss remediation, possibly through some form of trade remedy, if necessary.

In the event the Mexican government determines otherwise, the Biden administration may still request an independent panel investigation of the GM facility, which could lead to the suspension of preferential tariff treatment or the blocking of the entry of goods produced in that facility as soon as 120 days after a dispute is initiated.

Mexico Complains About Migrant Labor Conditions in U.S. Agri-Food Industries

Whether purely coincidental or not, on the same day as the USTR’s request, Esteban Moctezuma Barragán, Mexico’s ambassador to the U.S., sent a letter to Labor Secretary Marty Walsh raising concerns about the “lack of application” of labor laws in the U.S. agriculture and meatpacking industries.

The letter noted that while federal labor rights in the U.S. protect all workers regardless of their migration situation, in practice various factors such as “lack of awareness, fear and abuse on the part of some employers prevent migrant workers from fully exercising their labor rights in some industries and states.”

Among the violations cited by Mexico regarding certain employers in these sectors are their failures to:

• pay overtime and in some cases even minimum wage;
• allow workers to organize and negotiate in a collective way;
• give workers sufficient breaks;
• follow Covid-19 health protocols; and
• address cases of violence and sexual harassment.

Without renouncing the USMCA’s new dispute settlement labor mechanisms, the Mexican government is proposing “a space for cooperation… with the aim of identifying actions to address the non-compliance of labor laws in certain sectors and States in the U.S. and therefore, fully guarantee the labor rights included in the U.S. federal law and chapter 23 of the USMCA.”

President López Obrador said Thursday that provisions in the three-way trade pact are “reciprocal,” explaining that “just as they can present complaints about the situation in which employees work in our country, we too can present complaints if there are violations of rights of workers in the United States.”