Complaints Filed Over Alleged Labor Violations in Mexico, Testing the USMCA

May 14, 2021

Two landmark complaints were filed under USMCA scheme by U.S. unions and lawmakers as U.S. Trade Representative Katherine Tai vowed to use the USMCA's "rapid response" labor mechanism to address Mexico’s labor issues.

The AFL-CIO filed a complaint with the Biden administration over claims of labor violations at an auto part factory in Mexico.  The U.S. union alleged an independent Mexican union’s members, led by Susan Prieto, were harassed and dismissed by the company.  

In the same week, U.S. lawmakers filed another complaint alleging a powerful local union disrupted a contract voting process at an auto factory.  In response, the Mexican Labor Ministry ordered that a re-vote would take place within 30 days.  If the U.S. and Mexico don't subsequently agree that the problem has been solved, the U.S. can request a panel be established to make a decision.  Importantly, labor remedies under the USMCA include revoking tariff-free access for a violating factory's goods.

HR Policy Global members discuss Mexico’s outsourcing ban bill:  The USMCA actions come in the wake of a new Mexican law broadly banning outsourcing, which has yet to be fully clarified by the government.  Participants on an HR Policy Global call this week pointed out that employers should prepare to comply with the new amendment despite a short timeline and certain ambiguities as noncompliance could result in monetary penalties, legal liability, and tax implications.  The speakers encouraged employers to review their current talent and compliance structure to distinguish their “core business” from “specialized services.”