Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce
August 25, 2022
USMCA has shifted into fifth gear as it races to address the fifth Rapid Response Labor Mechanism (RRLM) case.
On June 21, 2022, the Interagency Labor Committee received a petition filed under the USMCA by Mexican labor union La Liga Sindical Obrera Mexicana and worker advocacy group Comité Fronterizo de Obreras. In the petition, the groups claim that the workers’ ability to organize with a union of their choosing was infringed upon, a direct violation of workers’ rights to free association and collective bargaining as protected by the USMCA Labor Chapter.
One month after the petition was filed, USTR officially requested for Mexico to review whether the denial of rights occurred at the automotive components supplier facility, and Mexico agreed. The U.S. further requested that Mexico attempt to remediate the issue by September 4, 2022 — 45 days from the initial request.
This is the fifth time the RRLM has been triggered in response to a labor complaint.
More recently, USTR announced the resolution of a prior labor complaint that originated at the Teksid facility in Frontera, Mexico. As part of the remediation plan, Teksid has agreed to the following actions:
- Provide the independent union with access to the facility for the purpose of carrying out worker representation
- Provide a designated office space within the company’s facility to the independent union, to facilitate the representation of workers within the facility
- Pay the union dues withheld from workers and owed to the independent union
- Reinstate and offer back pay to 36 workers and compensation to an additional worker, who were all allegedly terminated for participating in a protest against the company
- Issue a neutrality statement and a statement that the only valid collective bargaining agreement is the one deposited at the federal level
USTR has since directed the U.S. Treasury to resume the liquidation of unliquidated goods entering the U.S. from the Teksid facility. In simple terms, liquidation is an administrative process in which the Customs and Border Patrol (CBP) formally closes out a customs entry. When the liquidation of goods is suspended, CBP keeps the entry log “open,” allowing for later action against those entries. If a Denial of Rights is found by a panel, remedies can be imposed, including the suspension of preferential tariff treatment.
While the suspension of liquidation does not necessarily impede the importation of goods, it certainly has the potential to make trade more expensive for facilities under review. Auto manufacturers operating in Mexico should continuously review their labor practices to ensure compliance with the USMCA labor provisions and Mexico’s labor laws.
About the authors
Stephanie Ferguson is the Director of Global Employment Policy & Special Initiatives. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.