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28 Jul 2021

Daniel Rangel, Public Citizen

USMCA: A New Frontier for Labour Rights in Trade Deals

The US-Mexico border

Free trade agreements are often criticised for paving the way for corporations in richer countries to outsource their production to countries with lower wages, weaker unions and inferior environmental standards.

This valid criticism – applicable to the 1994 North American Free Trade Agreement (NAFTA) – has translated into skepticism and attacks against the revamped labour provisions of the renegotiated NAFTA, officially called the US-Mexico-Canada Agreement (USMCA).

However, the pact’s terms include a new powerful company-specific labour enforcement system, the Rapid Response Mechanism (RRM), which can be harnessed by independent unions in Mexico to fight for workers’ rights. Where a corporation or factory is proven to have suppressed rights they can face sanctions including a suspension of their ability to trade under the terms of the agreement.

This is unique to the USMCA, and is devised to protect workers’ rights to organise. Additionally, Mexico’s enactment of major labour reforms in 2019 would hardly have occurred without the requirements of the revised NAFTA.

This is because the deal includes both legal innovations in labour rights enforcement alongside commitments to undertake structural domestic reforms creating new rights and institutions to guarantee them. One could scarcely think of a trade agreement that has gone so far in representing workers’ interests.

And now Mexican independent unions are using this enforcement mechanism to support labour rights. In 2019, wildcat strikes arose throughout the US-Mexican border state of Tamaulipas when thousands of workers seized industrial parks and took to the streets to demand their employers honour a clause won decades previously, requiring wages to be raised in line with the federal minimum wage.

Many workers who engaged in the movement to obtain better wages later affiliated with an independent union, the Sindicato Nacional Independiente de Trabajadores de Industrias y Servicios “Movimiento 20/32” (SNITIS). More than 1,000 of the workers who affiliated were fired by their employer, Tridonex, a local subsidiary of a US auto parts maker. Local authorities refused to act on SNITIS’ demands challenging the control of the collective bargaining agreement over Tridonex plants. These clear abuses of labour rights led SNITIS, backed by US labour and consumer groups, to file the first complaint under the USMCA Rapid Response Mechanism.

The goals are to finally force Tridonex to recognise the independent union, to reinstate the wrongly-fired workers and for local government officials to stop harassing and threatening their lawyer, Susana Prieto Terrazas.

What will happen next? There is a chance the Mexican and US governments agree on a remediation plan. If this happens, the signatories of the complaint expect the plan to include comprehensive commitments that ensure Tridonex workers’ right to organise. If not, the company will face sanctions, which could extend to blocking its exports from entering the US market.

This is huge. After the 1994 entry into force of NAFTA, academics and news reporters documented the explosion of export-oriented maquiladora factories in the north of Mexico, marked by nefarious working conditions and heavily suppressed wages. Throughout the years, independent unions across the region have battled to unseat employer-friendly, non-independent ‘protection unions’ – sometimes also called yellow unions – which sign collective bargaining agreements (CBAs) with low wages and other terms that protect the employer’s interests, without workers having any say and often before any workers are even hired.

Such ‘protection unions’ are a pervasive practice in Mexico: Mexican local authorities are often coopted by corporations and ‘protection unions’ and do not provide an impartial, transparent forum to solve labour disputes among unions and between workers and employers. Independent unions in Mexico that strive to gain control over CBAs and truly represent workers’ interests have rarely been successful in challenging protection unions’ abuses.

Although promising, the RRM cannot by itself spur better working conditions and higher wages in Mexico. It would be impossible to elevate every case of infringement of the rights to organise in Mexico to the level of an international dispute. There are simply too many cases.

Structural changes both in Mexico’s institutions and labour relations are needed. The cornerstone of these changes is the broader domestic labour reform enacted by Mexico’s Congress in 2019, which delivers on demands independent unions have made for decades. This includes a guarantee that workers in unions can elect their leadership and approve their CBAs through free, direct and secret-ballot elections and that workers have access to an independent labour justice system where their new rights can be enforced.

Thanks to USMCA implementation being conditional on the passage of the 2019 reforms, these are now core pillars of Mexican labour law. Furthermore, since a great deal of the changes were included in USMCA as explicit commitments made by Mexico, the reforms are locked in and a reversal would constitute a breach of international law.

If they prove workable – and here the resolution of the Tridonex case will be enlightening – the new USMCA labour standards and the RRM could provide leverage for workers to create independent unions in Mexico and fight for better wages and working conditions. While there is an understandable distrust of trade deals in general, this example shows we should be thinking about how USMCA labour innovations could be tailored to fit other agreements that regulate bilateral or regional trade exchanges, so the respect of labour rights becomes a prerequisite for economic integration.

Daniel Rangel, Research Director, Public Citizen’s Global Trade Watch. Public Citizen was one of the organisations that filed the first USMCA labour Rapid Response Mechanism complaint before the US Government.

Trade and corporate accountability

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