Companies Have Options to Determine If Mexican Vendors Are Honoring USMCA Labor Rights, Panelists Say

During an online seminar Sept. 9 on the Rapid Response Labor Mechanism of USMCA hosted by the National Customs Brokers & Forwarders Association of America, labor and trade attorneys from Mexico and the U.S. and an international labor law scholar discussed how the rapid response labor mechanism might affect importers and exporters.

Gabriela Peregrina Espino, head of the labor department at DeForest Abogados in Mexico City, said that the Mexican labor reform gave companies until May 2023 to settle contracts with democratically elected unions. For either new unions, or existing unions, at least 30% of workers must vote for what union they want to represent them. Peregrina Espino said U.S. companies should ask their vendors if the workers at their plant have a copy of the union contract, if they are represented by a union. She said that 90% of Mexican companies don't provide a copy of the agreement. “Those things can be a sign that your company is not working well with this labor reform,” she said.

She said U.S. companies should be asking: What is the plan to get a legitimate union contract as soon as possible? She said it's tricky, because the company cannot try to influence workers on which union to choose to represent them. But at the same time, companies would prefer the current unions continue to represent their workers, since those unions are a known quantity. But those current unions have to start an education process with their members as to why they should keep them. “They don’t know they have a union, they don’t know what union they have, so we are starting from zero,” she said. Of 180 clients she's tracking, only three have held democratic union elections, so far.

Asked if companies are required to have union representation in Mexico, Peregrina Espino said no, that many don't, because workers are satisfied with how the company treats them.

Emilio Arteaga, a partner at Vazquez Tercero & Zepeda Abogados, a trade law firm in Mexico City, advised that U.S. firms put in their contracts with Mexican vendors that the vendors must certify they are complying with Mexican labor law.

Tequila Brooks, an international labor lawyer, said the International Labor Organization and the Fair Labor Association can help international companies with best practices and help them understand what freedom of association and the right to collectively bargain entail. She also recommended Verite, a nonprofit that will do audits of supply chains to see if labor rights are being honored.

If an exporter is the subject of a rapid response complaint, Arteaga said, Mexico's Ministry of Labor will do the fact finding. Olga Torres, managing member of Torres Law, reminded viewers that goods from a factory that is ruled out of compliance could not only not receive tariff benefits, but the exporter might have to pay monetary penalties as well.

Viewers asked if Mexico would use the rapid response tool against firms in the U.S., or if Canada would use it in Mexico. Mexico can only resort to the mechanism in cases wherein the National Labor Relations Board decisions against companies have been upheld by a federal judge, which is the third level of enforcement, after an administrative law judge decision and then an appeal to the national board. There are about 50 cases a year that reach that level and go against the company, but Arteaga said he doesn't expect an offensive case from Mexico any time soon. He said under NAFTA, the labor complaints Mexico filed were supporting the rights of Mexican citizens working the U.S., primarily in agriculture. Agriculture is not considered a “priority sector,” according to the treaty, and the sector must be one wherein goods are traded, which would eliminate construction and restaurant work, which are also sectors where many Mexican workers are concentrated.

Brooks said Canada tends to focus more on assistance and aid, rather than punishment, so she doesn't expect Canadians to use the mechanism.