May 26, 2021

First Complaints Filed Under the USMCA’s Rapid Response Labor Mechanism

By Pablo Sáenz y Daniel Ramírez

First Request for Rapid Response

On May 11, 2021, the first request for Rapid Response under the Labor Mechanism set forth in the United States-Mexico-Canada Agreement (“USMCA”) was filed by the American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”), Public Citizen, and the National Independent Union for Employees of Industries and Services (“SNITIS” for its acronym in Spanish).

The request was filed in connection with an allegation that Tridonex, a Mexican automotive company, violated its employees’ rights. The AFL-CIO alleges that employees have been harassed and fired because of their intention to join the SNITIS union.

The complaint is based on several allegations that Tridonex violated its employees’ labor rights, including: (i) that employees have not been allowed to choose their union leaders or legitimize their collective bargaining agreement; (ii) that more than 600 employees were fired in retaliation, and (iii) that the State of Tamaulipas has denied their right to choose which union the employees can join.

The USMCA provides for a Facility-Specific Rapid Response Labor Mechanism which allows the United States to request that measures be taken against Mexican companies that violate their employees’ rights to freely unionize and to bargain collectively. The U.S. government has 30 days to determine whether the complaint is admissible, and whether it will formally file such with the Mexican government, through Mexico´s Department of Economy (SE for its acronym in Spanish), giving such agency 45 days to respond as to whether or not the employees’ rights have been violated and, in the case of a violation, to propose a plan for remediation.

Second Request for Rapid Response

The second request for Rapid Response was filed by the United State Trade Representative (“USTR”) in connection with an alleged violation by General Motors of its employees’ rights to freely associate with any union and to enter into a collective bargaining agreement. The U.S. government determined that the complaint was meritorious; therefore, the Mexican government must commence the aforementioned process.

Mexico’s Department of Labor and Social Welfare (“STPS” for its acronym in Spanish) will be the governmental agency in charge of coordinating the legal evidence necessary to determine whether a violation of employees’ rights has occurred. It will do so by convening an Integral Analysis and Remediation Board (the “Board”), comprised of the SE, STPS, union associations, industry chambers, and representatives from the workplace involved in the allegations, to grant such parties the opportunity to offer additional evidence to document the matter and issue an advisory opinion.

If the Board determines that employees’ rights were violated, it is required to propose a plan of remediation which is well-grounded and sufficiently convincing so the complaining party, in this case the U.S. government, will accept it and therefore suspend the claim during its implementation. If the parties do not agree on a plan of remediation, the complaining party may request that a panel be appointed to determine if a violation of rights exists. The panel must be composed of a panelist from the complaining party, another from the respondent, and a third from the list of non-nationals, who will be responsible for presiding over the panel.

If the panel determines that the employees’ rights were violated, Mexico´s government will have five days to negotiate the nature of the sanctions, which may be any of the following: (i) suspension of preferential tariff treatment granted under the USMCA; (ii) imposition of penalties on related goods or services, and (iii) denial of entry of goods or services provided by the facility.

After the imposition of sanctions, the parties will continue to consult on an ongoing basis to ensure the prompt remediation of the violation and removal of the sanctions. As soon as the parties agree that the violation has been remediated, the complaining party shall immediately remove all sanctions implemented.

Finally, on May 11, 2021, the STPS published a communication regarding its determination that the process to legitimize the collective bargaining agreement for the General Motors facility located in Silao, Guanajuato will be replaced. Such decision comes from allegations of violations to employees’ rights to vote. The STPS instructed the National Union of Workers of the Metal-Mechanic Industry to replace the prior legitimization process within a period of 30 days, which time period may not be extended. This response is closely tied to the second request for Rapid Response.  It is expected that the aforementioned actions will be part of the plan of remediation the STPS would issue, if necessary.