In one month, the United States asked Mexico to review possible labor violations in four different Mexican facilities under the Rapid Response Labor Mechanism (RRM) within the USMCA. Put into perspective, the RRM was implemented in July 2021 and since then, only seven complaints were submitted to Mexico by the U.S. before May 2023.
Newest cases extend beyond the automotive industry. One of the goals of USMCA is to create a level playing field by promoting labor rights and raising wages in Mexico, especially in the auto industry. A United States Trade Representative report stated that some provisions were “designed to promote production of both U.S. vehicles and core parts” and that is why the majority of the cases so far have involved automotive facilities. However, the two most recent cases extended to the garment and mining industries. Therefore, all employers in Mexico should be aware of the growing labor risks, including extensive remediation obligations under the USMCA.
The four recent cases involve:
- A U.S. auto parts manufacturer’s refusal to apply a sectoral agreement establishing wages and benefits and other terms of employment in Mexico.
- A U.S. self-initiated request against an auto parts facility regarding the termination of a union official and interference of related activities to control the union.
- Review of a petition by local Mexican unions against a U.S. garment company stating the company intervened in internal union activities, discouraged workers from attending union assemblies, and coerced workers to accept the terms of a collective bargaining agreement proposed by the company.
- A petition filed by the AFL-CIO, United Steelworkers and Los Mineros, that alleges Los Mineros should exclusively own the collective bargaining agreement at the San Martín mine. It also states that hiring workers to replace striking workers violated the collective bargaining agreement and Mexican law.
Outlook: The rapidly increasing use of RRM under the USCMA indicates growing risks for employers who operate in Mexico, regardless of industry or headquarters location. The trend will likely continue to align with the Biden administration’s international worker-centric labor agenda. The United States Trade Representative Ambassador Katherine Tai said, “...the United States invoked the Rapid Response Labor Mechanism at an Industrias del Interior garment facility, the first time we have used this tool in the garment sector. That action, combined with today’s announcement, highlights the RRM’s versatility in defending the rights of workers across industries.”
