Analysis: US Unions Present Labor Complaint Against Mexico

The American Federation of Labor and Congress of Industrial Organizations, the Service Employees International Union (SEIU), the National Industry and Service Workers’ Independent Union Chapter 20/32 (SNITIS) and Public Citizen announced today that they have filed the first complaint under USMCA’s Rapid Response Mechanism against Tridonex, an auto parts facility located in Matamoros, Tamaulipas.

"The case will test whether Mexico’s labor reforms and USMCA’s Rapid Response Mechanism can work for Mexican workers who have been denied their fundamental right to organize and bargain for better wages and working conditions," said the organizations in a joint statement.

Context

The action taken by the aforementioned organizations does not come out of the blue. Tridonex has been called out on human rights issues by the Business & Human Rights Resource Centre following "massive layoffs" of workers with more than 10 years in the company. On top of that, workers at Tridonex, and many more in the Matamoros area, according to Reuters, aimed to leave their current union SITPME and join SNITIS with no success, which goes against recent Mexican labor reforms and USMCA guidelines that protect workers free union rights.

During Mexico Automotive Summit 2021, leaders discussed labor rights' priorities derived from USMCA. “The changes in the new treaty focus on a concept that for most companies in Mexico is difficult. However, for those that have already experienced a trade union environment, it is easier: the democratization of labor relations,” said Luis Monsalvo. "We have handled these changes gradually. During the pandemic, we have reacted in different ways and we are not the only ones who have faced this. Unions have helped us to think of ourselves as a team," said Marcela Barreiro, then HR Director and now current CEO & President at Daimler Mexico, a company with around 8,000 employees spread across the country.

According to Tridomex workers, SITPME's leadership "failed" to support them, Reuters reported last week. STIPME is the union that currently represents most of the workers in the Matamoros area. Their wish to change union representation gained traction during 2020, when workers at Tridonex and other manufacturing facilities successfully -and without union backing- demanded a 20 percent raise and a US$1,600 bonus from their companies.

SNITIS, the union workers demand to join, is led by long-term labor activist Susana Prieto. "Their lawyer, Susana Prieto Terrazas, gained international media notice after the Tamaulipas governor, who opposed the labor reform, had her jailed for a month in a state penitentiary that was ridden with COVID-19 on trumped-up charges. Prieto was only released after being exiled to another Mexican state and being banned from appearing in labor court," claims AFL-CIO.

The Labor Complaint

Labor representatives argue that for over two years, workers at Tridonex have been "harassed and fired" for trying to join SNITIS. “USMCA requires Mexico to end the reign of union protection and their corrupt deals with employers,” said AFL-CIO President Richard Trumka. “The ongoing harassment of Susana Prieto and SNITIS members is a textbook violation of the labor laws Mexico has pledged to uphold.” “Tridonex workers are suffering from the abuses of a corrupt and criminal union leader who is protected by the company so that it can continue providing precarious wages and working conditions,” said Prieto in the same joint statement.

Tridonex – with three plants in Matamoros – is a subsidiary of Philadelphia-based Cardone Industries. Union leaders also argued that Tridonex' actions have cost "hundreds of good manufacturing jobs in the US and now the company is doing the same to workers in Matamoros," said SEIU International President Mary Kay Henry.

The Rapid Response Mechanism

The Facility-Specific Rapid Response Labor Mechanism Between the US and Mexico, as it is officially named, aims to solve labor disputes brought by any of the member parties regarding labor rights at specific facilities. The mechanism was introduced in an amendment protocol in 2020 brought by the Democrats in the US Congress. Luis Monsalvo, who was appointed as one of the panelists of the mechanism, said in an interview with MBN that the challenge of the labor reform for companies was "to move on to effective and true union representation."

"The law says that in a four-year-period, the collective relations between companies and unions should be legitimized through an election within the union. To agree a collective bargaining agreement, a majority of the union members must support it. The reform also establishes that in order to request the execution of a collective bargaining agreement, the union will previously need to gather the support of at least 30 percent of the union workers, which is similar to the US labor system," he told MBN.

The rapid response labor mechanism ensures disputes can be settled in a matter of up to five months, unlike most general dispute settlement processes that can take more than a year. According to Monsalvo, the mechanism was specifically designed to address freedom of unionization and freedom of collective negotiation. "The mechanism is designed to address breaches at specific facilities. I genuinely believe that this scheme intends to ensure companies respect workers’ rights since this will ultimately benefit the people and the region," he said.

Sanctions

 The sanctions to which Tridonex may be subject to are included in Annex 31-A, Art. 10 of USMCA. These “may include suspension of preferential tariff treatment for goods manufactured at the Covered Facility or the imposition of penalties on goods manufactured at or services provided by the Covered Facility.” Although the word 'penalties' is not defined clearly, the labor panel will be instrumental in solving the dispute.

Formally, the labor complaint will be sent to the US Office of Trade and Labor Affairs, which will review the claim and determine if the process should continue as stated in USMCA or if other settlements could be reached. Monsalvo had previously warned that it was likely that a major number of claims will be presented from the US against Mexico. “For Mexico to present a case against the US, there needs to be a domestic ruling by the National Labor Relations Board (NLRB), while the US only needs an allegation to present a case against Mexico. Under these conditions, Mexico can expect that there will be a greater number of claims made by the US in this regard.”

The result of this case will set a precedent for upcoming labor complaints under the new standards set for manufacturing facilities under the new Mexican labor law and the era of USMCA’s labor standards.