Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce
February 14, 2023
In June 2022, LSOM, an independent Mexican labor union, and Comité Fronterizo de Obreras, a labor organization in Mexico, filed a complaint under the USMCA Rapid Response Labor Mechanism (RRM) alleging that workers’ rights were being denied at the VU Manufacturing facility in Coahuila, Mexico. The U.S. requested for Mexico to review the petition and both nations agreed that a violation of labor rights took place. During the review period, the workers at VU Manufacturing elected LSOM to represent them in collective bargaining negotiations. Following the vote, both Mexico and the U.S. agreed that the denial of rights was resolved. The U.S. announced the resolution of the fifth USMCA RRM case on September 14, 2022.
Despite the swift resolution, VU Manufacturing is once again facing allegations that workers are being denied their labor rights and a new petition was filed in December 2022. The alleged violations range from the company failing to bargain in good faith, to members of the LSOM union being threatened and intimidated.
This is the first time a second USMCA labor complaint has been levied against the same facility. In the previous RRM cases, remediations were achieved quickly and were relatively mild. Most often, facilities were required to hold a new union vote, reinstate employees who were fired for union activity, and provide back pay to fired employees. Under the USMCA, covered facilities that have received a prior denial of rights determination are subject to the suspension of preferential tariff treatment, penalties on the goods or services provided by the facility, and even the denial of entry of goods in significant cases.
In an open letter to U.S Department of Labor Secretary Marty Walsh and U.S Trade Representative (USTR) Katherine Tai, Representative Dan Kildee (MI-05) urges the Interagency Committee to “rigorously investigate” the second VU manufacturing complaint, to keep RRM cases open until there are “concrete assurances” that a denial of rights will not reoccur, and to consider imposing the remedial measures made available in the USMCA.
On January 30, 2023, USTR heeded Mr. Kildee’s advice and initiated a labor complaint against the facility, leveraging the USMCA RRM for the sixth time. According to the complaint, VU Manufacturing is alleged to favor an older union, CTM, and disfavor LSOM by affecting access to the facility, disciplining workers that support LSOM, and showing support for CTM. In all, the USTR stated its concern that the actions taken by the facility have negatively affected the collective bargaining process.
Mexico must now determine if it will review the labor complaint. If the Mexican government moves forward with a review and determines a denial of rights did occur, it will have 45 days to attempt remediation.
The U.S. Chamber of Commerce will closely watch how this most recent complaint unfolds. In the meantime, businesses with operations in Mexico are strongly advised to review the USMCA Labor Chapter as well as Mexico’s new labor reform, which is entering the final stage of enforcement.