U.S. unions lodge first Mexico labor grievance under new NAFTA

May 10, 2021

By Daina Beth Solomon

MEXICO CITY (Reuters) – The AFL-CIO, the biggest U.S. labor federation, on Monday will file the first petition for the U.S. government to bring a labor complaint against Mexico under the trade deal that replaced the North American Free Trade Agreement, the union said.

The AFL-CIO’s petition, which it shared with Reuters, states that workers at the auto parts plant Tridonex in Matamoros, a Mexican city on the border with Texas, were denied independent union representation in violation of the United States-Mexico-Canada Agreement (USMCA) that replaced NAFTA last year.

Since the 1994 NAFTA, which had few enforcement tools for labor rules, wages in Mexico have stagnated and now rank as the lowest in the Organisation for Economic Cooperation and Development (OECD), a club of 37 industrialized nations.

The USMCA was designed to change that by giving more power to workers to demand better salaries, which was also meant to prevent low labor costs from leeching more U.S. jobs.

Reuters reported last week that hundreds of workers had sought to be represented by a new union led by activist-attorney Susana Prieto since 2019, yet state labor officials never scheduled an election. Prieto said 600 of her supporters at Tridonex last year were fired, in what some workers described as retaliation for their efforts to switch unions.

Tridonex’s parent is Philadelphia-based Cardone Industries, which is controlled by Canadian company Brookfield Asset Management.

Under USMCA’s “Rapid Response Mechanism,” firms in Mexico and the United States can face tariffs and other penalties for failing to ensure worker rights, such as freedom of association.

The AFL-CIO’s petition marks the first time the trade deal’s labor enforcement is being put to use, and will be closely watched by companies and labor activists.

“This is precedent-setting,” said Cathy Feingold, director of the international department of the AFL-CIO, which lobbied for better worker rights provisions in the USMCA. “It’s going to be a test for this new system.”

The AFL-CIO will send its petition to the U.S. Office of Trade and Labor Affairs, which has 30 days to review the claim and determine whether to bring the case to the Mexican government for further review.

Mexican labor officials would then work with U.S. counterparts to agree on terms of remediation. The entire process, including a final stage to determine potential sanctions and penalty fees, must be resolved within five months.

“Most of this could get fixed pretty quickly if the political will is there,” said Benjamin Davis, director of international affairs for the United Steelworkers, part of the AFL-CIO.

Mexican President Andres Manuel Lopez Obrador, who signed a labor reform into law in 2019, has vowed do away with Mexico’s ubiquitous protection contracts that critics say put company interests over worker rights – also a priority of the USMCA.

Yet, the new law is being gradually rolled out throughout Mexico, and changes will not start to reach Tamaulipas state, home to Matamoros, until 2022.

Davis said Mexico still has an obligation to guarantee the reform is playing out on the ground.

“The rights start right away, even if institutions aren’t in place yet,” he said.

The petition was also backed by the Service Employees International Union, which represents Cardone employees in the United States, along with U.S. non-profit Public Citizen’s Global Trade Watch, and Prieto’s union, called SNITIS.

(Reporting by Daina Beth Solomon; Editing by Leslie Adler)