Background

The first two labor-related actions under the rapid response mechanism of the U.S.-Mexico-Canada Agreement were initiated recently. These actions could result in trade measures against goods made in specific Mexican factories by the end of the year.

The AFL-CIO and others filed a complaint alleging that for two years workers at an auto parts factory in Mexico have been denied the right to organize and bargain for better wages and working conditions. They also claimed that the government of the Mexican state where the factory is located has acted on the company’s behalf by blocking workers’ demand for an election and imprisoning a union leader who has led worker protest movements.

The U.S. government will review the complaint and determine whether there is evidence of a violation. If so, Mexico will be asked to conduct its own review. If that review comes to a different conclusion, the U.S. could request the establishment of a joint panel to investigate the allegations.

Separately, the Office of the U.S. Trade Representative announced its first-ever self-initiated labor complaint under a U.S. trade agreement charging that workers’ rights at another Mexican automotive factory are being violated in connection with a vote to approve a collective bargaining agreement. USTR states that it will now request that Mexico review the charges and attempt to remediate any issues it finds. If the two sides are subsequently unable to agree that the issue has been resolved, a joint panel may be established.

In either case, preferential treatment under the USMCA could be suspended for goods made at the named factory if the violations are confirmed, which would result in the reimposition of U.S. tariffs on those goods. If the factory commits repeat offenses, its products could be barred from entry into the U.S.

USTR adds that in the second case it has directed U.S. Customs and Border Protection to suspend liquidation of entries of goods from the factory at issue. Liquidation will resume once there is a bilateral agreement or panel finding that there is no denial of worker rights.

House Ways and Means Committee Chairman Richard Neal, D-Mass., and Trade Subcommittee Chairman Earl Blumenauer, D-Ore., called on the Biden administration to “take aggressive enforcement action” in these cases and to “self-initiate other cases where workers’ rights have been violated,” noting that that they expect these complaints to be “the first of many.”

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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