US and Mexican Unions, Adopted by US Authorities, File First Labor Instances Below USMCA “Fast Response” Mechanism

The US and Mexican trade unions and the US government have filed the first labor cases under the Rapid Response Mechanism (“RRM”) of the Agreement between the US, Mexico and Canada (“USMCA”). The RRM was a relatively late addition to the USMCA – the result of negotiations between the Trump administration and House Democrats – and sees an institution-specific review by an independent panel and remedial action in response to allegations of “denial of rights” by Free Association and Collective bargaining. The USMCA is currently the only US free trade agreement that contains a mechanism to counter alleged violations of labor rights in certain facilities in the territories of the contracting parties.

On May 10, 2021, the American Labor Federation and the Congress of Industrial Organizations (“AFL-CIO”), the Service Employees International Union (“SEIU”), Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios Movimiento 20/32 ( “SNITIS”) and Public Citizen announced that they have submitted the first work case as part of the RRM. The petition alleges that auto parts maker Tridonex, a Philadelphia subsidiary of Cardone Industries, has committed the following labor violations, including against the current SITPME union, which operates as the Tridonex plant:

• “Tridonex has denied its employees the opportunity to read or receive copies of the collective agreement with SITPME. Tridonex has failed to file its CBAs with the Federal Conciliation and Arbitration Board under the Mexican Constitution. “
• “Tridonex and the SITPME union, which acts as the representative of Tridonex, have jointly denied Tridonex workers the opportunity to ratify their CBA, in violation of Article 4. 400 bis of the Federal Labor Act. “
• “Tridonex and SITPME, acting as representatives of Tridonex, have jointly denied members of SITPME at Tridonex the right to vote their union leaders in violation of Art. 4 by personal, free, direct and secret ballot. 358.II of the Federal Labor Act. “
• “SITPME, which acts as the representative of Tridonex, has failed to provide its members with statutory financial information reports in accordance with Art. 373 and Art. 358.IV of the Federal Labor Act. “
• “Tridonex retaliated against workers who signed petitions with the local CAB by firing more than 600 workers and forcing them to sign“ voluntary ”resignations in order to receive severance pay in violation of Article 47 of the Federal Labor Act and other workers refused services agreed by the CBA in violation of Article 396 of the Federal Labor Act. “

The petition also lists several labor violations by the government of the Mexican state of Tamaulipas, where the Tridonex facility is located:

• “By refusing to respond to SNITIS’s request to control the CBA, the Tamaulipas government denied Tridonex workers the right to a personal, free and secret ballot to elect their union representative guaranteed by Tridonex Art. 389 of the Federal Labor Act. “
• “The government of Tamaulipas, acting as Tridonex’s representative, has prosecuted, arrested, detained and conditionally arrested SNITIS director and attorney Susana Prieto Terrazas in retaliation for her advocacy of workers’ rights at Tridonex and other companies Punished in the state of Tamaulipas. As a result, she was banned from entering Tamaulipas State or from contacting the Matamoros Labor Office. She was internally exiled to Chihuahua, where the state government has brought criminal charges against her in connection with her union activities. These measures, taken as reprisals against workers ‘demands for democratic representation, have a deterrent effect on workers’ freedom of association. “

According to a Mexico-specific annex included in the agreement, the USMCA requires Mexico to adopt and maintain certain provisions in its labor laws, including those aimed at “ensuring the right of workers to engage in concerted collective bargaining or protection activities and to organize, form and join the association of your choice. “Given the alleged denial of these and related rights as noted above, a review is permitted under the RRM of the Agreement.

In relation to the process, the Interagency Labor Committee for Monitoring and Enforcement (“Labor Committee”), which oversees the United States’ domestic review process for RRM petitions, has 30 days to determine whether the petition has “sufficient, credible evidence a denial contains of rights. “If the Working Committee determines that the petition meets this criterion, the United States will request Mexico to investigate whether there has been a denial of rights. Mexico will then have 10 days to inform the United States of whether or not it has such a review will conduct, and in this case an additional 35 days (45 days total) to report the results of the review and any remedial action. Should Mexico fail to conduct such a review or if the parties are otherwise unable to reach a mutually acceptable solution for the To find the existence or the elimination of a denial of rights, either Contracting Party may request the formation of a Rapid Response Labor Panel (RRLP) ”).

Depending on the nature of the party’s panel request, an RRLP may proceed to “verify the compliance of the covered facility with the law in question and determine whether there is a denial of rights” or “determine whether there is a denial of rights”. Under the former scenario, when the complaining party requests a review, “the panel will formulate an appropriate review request based on the circumstances and nature of the allegations in the complaining party’s petition and any other submissions from the parties.” by a questioned party enables the RRLP to proceed directly to the determination of the alleged denial of rights. And any disruption of the review process can, if agreed, be taken into account by the RRLP in its determination. In the latter case, ie if the complaining party does not expressly do one Requesting a review, the RRLP may “request a review if it believes that a review is needed to … aid in its decision”.

The RRLP must take a decision on the denial of rights within 30 days of conducting a review, or 30 days of being set up if no review has taken place. A positive finding by the Panel that rights are denied may result in the complaining party seeking redress, including suspending preferential tariff treatment for goods manufactured in the Covered facility or imposing penalties on goods made in the Covered facility Facilities are established, or facility for services rendered by the Covered Facilities.

Separately, on May 12, 2021, the Office of the United States Commercial Representative (USTR) announced that the United States had asked Mexico to investigate whether they were workers at a General Motors (GM) plant in the Mexican state of Guanajuato denied the right to freedom of association and collective bargaining. This is the first case in which a USMCA party has itself invoked the RRM of the agreement in connection with alleged violations of labor law.

According to the USTR, the USTR and the US Department of Labor received information indicating serious violations of … Workers ‘rights… in connection with a recent workers’ vote organized by the existing union to approve their collective agreement. “Under the terms of the RRM and as explained above, Mexico has 10 days to indicate whether it will conduct the requested review and then, if it agrees to such review, an additional 35 days to complete the review and United States to inform of its determination, including any remedial action. Ultimately, if Mexico does not agree to conduct the review or finds that workers’ rights have not been denied, the United States may request the formation of an RRLP including the on-site review, as explained above.

Meanwhile, as directed by the USMCA, Ambassador Katherine Tai has directed the Treasury Secretary to suspend the liquidation of goods records from the relevant GM facility. The liquidation can be resumed as soon as the contracting parties have reached an agreement or an RRLP has determined that there is no denial of rights. Alternatively, and as discussed above, a positive determination by the Panel in a denial of rights may lead to a range of remedial action, including suspending preferential treatment for goods manufactured in the Covered facility or imposing penalties on goods manufactured in or services provided are produced by the covered facility.

We will continue to monitor these and other developments related to USMCA’s work requirements.