Stephanie Ferguson
Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce

Published

May 03, 2022

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The USMCA Labor chapter requires Mexico to adopt and maintain labor laws protecting labor rights, including the rights to collective bargaining and freedom of association. As part of Mexico’s labor reform, all existing collective bargaining agreements (CBAs) must be ratified by May 1, 2023.  As such, facilities in Mexico are required to give their employees an opportunity to keep or reject their current union contracts. Failure to adhere to the USMCA’s labor provisions can lead to invocation of the Rapid Response Labor Mechanism (RRLM)—USMCA’s Labor chapter enforcement tool— which can further lead to punitive actions against the facility, ranging from fees to export restrictions.

Last year, in compliance with USMCA’s requirements, workers at the Panasonic facility in Tamaulipas, Mexico voted to reject their union contract. On Monday, April 18, workers at the facility requested that the U.S. investigate the company for allegedly signing the workers into a new union contract with SIAMARM—a faction of the Confederation of Mexican Workers (CTM). According to the complaint, SIAMARM began withholding union dues from paychecks without the workers’ consent, and employees that protested the SIAMARM contract were fired—moves that would be in direct violation of the USMCA labor provisions. Days after the U.S. Government agreed to review the complaint, a new vote was held between SIAMARM and SNITIS. SNITIS, a relatively new union founded by Mexican labor rights activist Susana Prieto, won the union vote handedly, claiming 75% of the 2,150 votes.

New, worker-centric unions are slowly replacing Mexico’s older, “protection” unions. Earlier this year, GM workers in Silao severed their contract with CTM and voted instead to be represented by SINTTIA, a newly formed automotive industry union. Similarly, workers in the Tridonex Tamaulipas plant ousted CTM and elected SNITIS as their new union. The newer unions are certainly aggressive. SINTTIA is currently seeking a 19.2% wage increase for workers at the GM Silao plant.

While the Panasonic, Tridonex, and GM cases have received the USMCA RRLM spotlight, it has been confirmed by USTR that dozens of complaints have flowed through the USTR’s office.  However, these other cases have not resulted in invocation of the USMCA RRLM either due to insufficient evidence or information, or because the facility and/or Mexican authorities stepped in and the U.S.’s involvement was unwarranted.

Looking forward, Secretary Yellen, U.S. Trade Representative Tai, and Senator Brown, the co-creator of the RRLM, have all indicated their desire for future trade agreements to be worker-centric. Multinational employers should understand that this could mean future trade agreements will impose greater labor standards for workers abroad and include new enforcement tools, like the RRLM.  

About the authors

Stephanie Ferguson

Director, Global Employment Policy & Special Initiatives, U.S. Chamber of Commerce