Setting a precedent for how union disputes are settled under the United States-Mexico-Canada Trade Agreement (USMCA), the United States and Mexico agreed to hold a new union legitimization vote at an automaker’s facility following Mexico’s invalidation of an earlier vote. This case will significantly impact global companies’ operations in Mexico as 80,000 to 100,000 contracts expect to be ratified prior to April 2023 under the new Mexican labor reforms.
The rapid response labor mechanism (RRLM) under the USMCA allows a complaint to be filed with the United States against any “covered facility” in Mexico for violating workers’ rights to organize or collectively bargain. In this case, the current union, the Confederation of Mexican Workers (CTM), allegedly interrupted the original contract vote in May and destroyed unfavorable ballets. After a series of reviews and consultations, the two countries agreed to several solutions, detailed below.
The Courses of Remediation include:
- A new legitimization vote will be facilitated at the plant by August 20. If it fails to take place, CMT will lose the collective bargaining contract.
- There will be 32 federal inspectors on site to verify workers’ identification and protect ballots from interruption.
- Observers from the International Labor Organization (ILO) will be present at the facility, which is rarely seen in transnational labor complaints.
- Mexico’s Labor Administration, STPS, will set up a hotline to receive and respond to complaints from workers about the voting process.
Notably, the company will issue a statement of neutrality, indicating they will not oppose the union's efforts to organize their workers.
The RRLM filing and adjudicating process: The U.S. Chamber of Commerce recently published a series of flow charts to explain how RRLM works. Below is a simplified summary of the current case:
- The U.S. requested Mexico to review an alleged Denial of Rights infraction in the facility, and Mexico had 45 days to respond.
- 45 days later, Mexico agreed there was a Denial of Rights infraction in the facility. As a result, the two nations entered a 10-day consultation period to agree on a course of remediation.
- Depending on the new vote results, the U.S. can either be satisfied with the solution or impose tariffs on the products imported from that particular plant.
HR Policy Global’s take: This case will significantly impact global companies’ operations in Mexico as 80,000 to 100,000 contracts are expected to be ratified prior to April 2023 under new Mexican labor reform. The outcome of this vote will set a precedent for how RRLM will be used for future union disputes in the country. Employers operating in Mexico should understand the filing and adjudicating process of RRLM and educate their HR teams accordingly. HR Policy Global will carefully watch the developments and is planning a group discussion in the near future.