Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce
September 05, 2023
The labor dispute at a Grupo México mine in Zacatecas, Mexico, presents a complex cross-border challenge regarding the jurisdiction of the rapid response labor mechanism (RRM) under the United States-Mexico-Canada Agreement (USMCA). The controversy arises from the U.S. filing its twelfth labor rights review request on behalf of the Mexican union, Los Mineros, along with strong support from AFL-CIO and United Steelworkers.
Like past examples, USTR’s petition alleges that the facility’s ongoing operations during a strike and continued negotiation and implementation of collective bargaining agreements with an unauthorized labor union have resulted in the denial of workers’ rights to free association and collective bargaining. The complaint requests that Mexico review the labor concerns at the facility, but Mexico has declined — a first for the RRM.
Mexico contends that the USMCA does not apply to this case, as the events occurred before the agreement's implementation in 2020. The mine had been undergoing a strike since 2007 and reopened in 2019, leading to conflicting claims from the union and the company. Additionally, Mexico determined that the mine is not a Covered Facility, therefore the mine does not fall under the jurisdiction of the USMCA RRM. Mexico's government is taking a strong stance, insisting that the dispute should be resolved within domestic courts as a matter of national sovereignty. Just a few weeks later, Mexico declined to review a subsequent petition from USTR, this time alleging that workers’ rights were being denied at a Grupo Yazaki facility. Similarly, Mexico concluded there was no evidence of these allegations.These moves echo complaints from Mexican officials that the U.S. has become too quick to leverage the RRM, perhaps not surprising given the current administration in Washington.
In response to Mexico’s decision, the U.S. requested a panel for the first time. Over the course of the next few weeks, the panel will be established, conduct a preliminary review of the petition, and issue a request for verification to Mexico. Mexico will have the opportunity to communicate its position with the panel and consent to the verification, although consent is not necessary for the panel to complete the verification. Ultimately, the panel will determine whether there was a denial of rights. If the panel finds rights are being denied at the mine, the U.S. may impose remedies, including the suspension of preferential tariff treatment. The USMCA allows for additional consultations and actions to take place to ensure the denial of rights has been fully remediated.
The RRM is drawing new scrutiny as it enters uncharted territory. While the result of the panel is unknown, what is certain is that this dispute exposes the delicate line between enforcing labor rights and respecting national sovereignty. As developments unfold, business leaders in both nations must be mindful of the implications that arise from the resolution process and seek ways to mitigate potential economic impacts.