USMCA Rapid Response Mechanism debuts
In 2019, Mexico passed a labor reform bill intended to meet the requirements of the labor provisions agreed to in the United States-Mexico-Canada agreement, which went into effect on July 1, 2020. Passing the bill and ratifying the USMCA, Mexico agreed to implement and enforce workers’ rights, including freedom of association and the right to collective bargaining.
Prior to the passage of the USMCA, Mexican unions could be recognized without employee approval and were often established before employees were hired. These “protective unions” have been criticized for negotiating minimum benefits on behalf of settlement workers and for protecting the interests of the establishment and the ruling political party rather than workers. Attempts to dismantle protection unions were met with swift retaliation and even the imprisonment of a prominent labor lawyer, Susana Prieto. Under Mexico’s new labor law, unions must obtain at least 30% approval to be officially recognized. The USMCA goes further by requiring that Mexican legislation include elections by secret ballot. (It’s a little ironic that in the union-backed PRO law, organized labor seeks to undermine secret ballot elections in the United States) Mexico has set a four-year deadline from 2019 to implement labor reforms. Specifically, Mexico has three years to transfer all collective agreements to the Federal Center for Conciliation and Labor Registration (Federal Center) and four years for the Federal Center to begin conciliation operations (SHRM). The Federal Center is responsible for registering trade unions. Despite this grace period, the nation faces complaints for alleged violations that occurred, in part, before the USMCA took effect.
Under the USMCA, new labor complaints can now be brought by one country against another and adjudicated using the Rapid labor response mechanism (RRLM). The complaining party must believe, in good faith, that workers at a covered facility have been denied the right to free association and collective bargaining. The RRLM, in theory, allows the two nations to resolve the complaint either through a mutually agreed resolution or through a resolution awarded by a jointly appointed panel. Currently, this agreement exists between the United States and Mexico and Mexico and Canada, but not between the United States and Canada.
The first two complaints using the RRLM were filed in May this year. The AFL-CIO filed a complaint against Tridonex on May 10 and the US Trade Representative filed a complaint against GM on May 12.
A Covered Installation is a Priority Sector Installation in the territory of the Party that produces a good or provides a service that is either traded between the two Parties or competes in the territory of the other Party. Every Mexican facility that is a priority sector facility is subject to complaints and the RRLM. On the other hand, the USMCA provides that only US facilities in the priority sector that are “under the enforcement order of the National Labor Relations Board” (NLRB) can be the subject of complaints. The limited number of vulnerable US facilities makes filing a complaint against a facility in Mexico much more likely than filing a complaint against a facility in the United States
The AFL-CIO, the SEIU, the Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios Movimiento 20/32 (SNITIS) and Public Citizen filed a case under the USMCA RRLM against Tridonex. The auto parts plant is located in Tamaulipas, Mexico, and its parent company, Cardone Industries, is based in Philadelphia. The complaint alleges that Tridonex violated the right of workers to organize and bargain collectively. These rights are protected by the labor provisions of the USMCA. Specifically, the complaint states that workers were harassed and more than 600 fired for trying to organize with SNITIS rather than the Matamoros Assembly and the Maquiladora Workers’ Union (SITPME). , the union currently in place.
According to Reuters, Cardone Industries denied the allegations and called for a full investigation to take place. SITPME President Jesus Mendoza also denied the allegations, assuring that SITMPE has the full support of Tridonex employees.
The AFL-CIO sent its complaint to the Labor Interagency Committee for Monitoring and Enforcement (ILC) — co-chaired by U.S. Trade Representative (USTR) Katherine Tai and Department of Labor Secretary Marty Walsh. The ILC determined on June 10 that the complaint was credible. In turn, the USTR took the matter to the Mexican government and asked Mexico to reconsider the complaint. On June 19, Mexican officials informed the United States that the country would review the matter. Mexico must report the results of the review to the United States by July 24, 2021. If the Mexican government determines that workers have indeed suffered a denial of rights, the two nations will consult to develop a mutually agreed upon resolution. it does not interrupt the trade. If remedies are not agreed upon, the USTR may request the formation of the panel. Similarly, if the Mexican government’s review concludes without a finding of denial of rights, the USTR may request the formation of the panel.
In the event that a panel is formed (detailed information on the formation and confirmation of the panel can be found here), the Panel has 30 days to determine whether a denial of rights has occurred and, if requested by Mexico, provide recommendations to remedy it. Remedial action must be equal to the seriousness of the violation and may include penalties or suspension of preferential tariff treatments on goods or services provided by the facility in question – in this case, Tridonex. In serious cases, remedies may include refusal of entry of the goods.
On May 12, 2021, Ms. Tai announcement that the United States used the RRLM in asking Mexico to review a denial of rights at a General Motors (GM) plant in Guanajuato, Mexico. the request alleges that workers at the GM plant have been denied the right to free association and collective bargaining. The request specifically asks Mexico to review the case and attempt to remedy within 45 days if it is determined that the facility has denied workers rights. Mexico agreed to the request, and GM condemned any violations of labor rights and denied that such violations took place at the plant. On June 28, Mexico officially notified the United States that it believed a denial of rights had occurred at the GM plant, prompting the two countries to begin a 10-day consultation period. to agree on a repair plan. Mexico has also asked the GM plant to hold a new vote on the union contract by August 20, 2021 or terminate the contract. At this point, remedial courses are speculative. It is possible that GM holding a new vote will satisfy the US complaint and the RRLM will end. Alternatively, tariffs may be imposed on GM trucks imported into the United States. Either way, the process and conclusion of the GM and Tridonex deals should be watched carefully.
Mexico also made allegations about labor practices in the United States. First, Esteban Moctezuma Barragan, Mexican Ambassador to the United States, wrote a letter to Labor Secretary Marty Walsh accusing the United States of neglecting the rights of migrant workers in the agriculture and agribusiness industries. In his letter to Walsh, Moctezuma alleged that the United States was denying Mexican migrant workers overtime pay, minimum wages, the right to organize and bargain collectively, that American facilities were not respecting the mandates of health and safety and that cases of sexual harassment and violence were not handled appropriately. Moctezuma demands that the United States guarantee labor rights under the USMCA to migrant workers and work with Mexico to address his concerns.
Second, a group of Mexican women filed a complaint against the United States alleging violation of sex discrimination laws. As in the Tridonex case, the Mexican government must consider the women’s claims and formally take the case to the United States under the USMCA. It should be noted that Mexico will need to provide specific examples of denial of rights occurring at a covered facility in order for the RRLM to be used.
Deputy Assistant Secretary for International Labor Affairs Thea Lee responded to Mexico’s complaints at the first USMCA Labor Council meeting held on June 29. During the meeting, Lee declared that the United States takes Mexico’s allegations “very seriously” and has described the harassment suffered by migrant workers as “absolutely unacceptable”. The rights of migrant workers became one of the main topics discussed at the meeting, along with forced labor, the implementation of Mexican labor laws and the future cooperation of nations within the USMCA. The next meeting must take place within two years.
While the House is and was an advocate for the USMCA at large, these early uses of the USMCA RRLM raise concerns about the lack of due process protections found in the Labor Agreement and Settlement Chapters. disputes. By responding to the AFL-CIO’s petition, the Labor Committee is allowing remedies to be imposed on an institution for an alleged denial of rights that occurred before the USMCA took effect. Additionally, the current interim procedural guidance does not allow the facility to be included in any consultation or remediation efforts resulting from a review, nor do the guidelines allow the facility to submit evidence or to attempt to remedy the problem itself. In short, the RRLM in its current form is an exclusionary and untapped tool that has the ability to violate legitimate rights protections and set a dangerous precedent. Before moving forward with the following petitions, final procedural guidelines that establish a transparent and inclusive process must be issued.
The results of these cases are not yet known. What we do know is that Lee’s goal is for the RRLM to encourage companies to consider whether their labor practices comply with the USMCA. Read the House’s comments on the USMCA labor meeting here, and dive deeper into the USMCA RRLM process here.
About the authors
Senior Manager, Employment Policy