Background

The possibility of U.S. trade measures against imports from a Mexican automotive factory have subsided for the time being after the U.S. and Mexico announced July 8 steps to resolve concerns about labor rights at that factory.

In its first-ever self-initiated labor complaint under a U.S. trade agreement, the Office of the U.S. Trade Representative charged in May that workers’ rights at the Mexican factory had been violated in connection with a vote to approve a collective bargaining agreement. However, under a “course of remediation” jointly announced this week, workers at this factory will vote by Aug. 20 on whether to approve their collective bargaining agreement and the vote will be monitored by Mexican and international officials. In addition, Mexico has agreed to investigate and sanction anyone responsible for the conduct that led to the suspension of the earlier vote and any other violation of law related to that vote. 

“This action shows the Biden-Harris Administration’s commitment to workers and a worker-centered trade policy,” a USTR fact sheet said, which “requires protecting workers’ rights, including ensuring American workers are not forced to compete against foreign workers who are deprived of their rights, including the right to organize and collectively bargain.”

If this case had resulted in a dispute settlement panel confirming the alleged violations, the U.S. could have suspended preferential treatment under the U.S.-Mexico-Canada Agreement for goods made at the Mexican factory, which would have resulted in the reimposition of U.S. tariffs on those goods. If the factory had committed repeat offenses, its products could have been barred from entry into the U.S.

While these measures are off the table for now, USTR said that if the problem has not been remediated by Sept. 20 “the U.S. may decide to impose further remedies.”

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