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21 Jan 2021

The National Law Review (USA)

Mexico: New labour law sets US-Mexico supply chains challenges in implementation as free trade agreement entered into force

“Pressures on U.S. Manufacturers with Mexico Operations, Supply Chains to Comply with New Labor Laws”, 20 January 2020

...Mexico enacted sweeping labor law reforms on May 1, 2019, that overhauled the country’s labor laws to encourage meaningful unionization similar to what the United States has maintained for nearly 80 years...These reforms are designed to eliminate Mexican employers’ reliance on “protection contracts”...While Mexico’s federal labor law contemplates a four-year schedule to fully enact its reforms, the United States has sought faster reforms that could directly affect manufacturers that rely on Mexico...On December 15, 2020, the Independent Mexico Labor Expert Board issued its first mandatory report on the progress of labor law reform in Mexico... According to the Report, “Mexican workers who seek to exercise their rights under the new labor law have few options to learn how to implement the new law while constructing more democratic workplace relations.” To provide greater education to Mexican workers, the Report recommended greater cooperation between the unions in the United States and independent unions in Mexico. The Board proposed that the United States fund the training through grants to various parties that will encourage cross-border cooperation between unions... Manufacturers must review their operations (and supply chains) in Mexico diligently to ensure they comply with Mexico’s new federal labor law. It is no longer business as usual for manufacturers in Mexico. Any U.S. investigation into labor violations could significantly interrupt a company’s supply chain and immediately jeopardize the cost of goods coming from Mexico...