The United States activated the Rapid Response Labor Mechanism for the first time under the T-MEC scheme in May 2021 . He did so to review the alleged violations of labor rights at the General Motors plant in Silao, Guanajuato, where the Chevrolet Silverado, Chevrolet Cheyenne and GMC Sierra pickups are produced.
After a union vote held in August 2021, which was monitored by national and international organizations, an independent union won the representation of the almost 7,000 employees of the plant. Recently, the new union negotiated a salary increase of 8.5%, in addition to higher bonuses and rest days.
Since then, and until today, the neighboring country to the north has resorted to this resource five times , with all requests directed at companies attached to the value chain of the automotive sector in Mexico, according to data from the Federal Center for Conciliation and Labor Registry (CFCRL), the new decentralized public body that keeps a record of unions and collective contracts at the national level.
What is the Rapid Response Labor Mechanism?
Since the entry into force of the T-MEC, on July 1, 2020, the country is obliged to guarantee freedom of association and the effective recognition of the right to collective bargaining. Both rights, which are also contained in Chapter 23 and Annex 23-A of the agreement, promoted the 2019 Labor Reform , through which the CFCRL was created, in charge of the legitimization of the collective bargaining agreements held between workers and companies in the country.
The Democratic administration of the United States has placed special emphasis on fulfilling the right of workers to elect their unions in the automotive sector, in order to have a more equal floor in terms of wages and benefits. In the past, auto unions in the United States and Canada have accused Mexico of using their unions to do ‘wage domping ‘. In other words, negotiating wages and working conditions with the assemblers and their suppliers that were well below the regional average.
While in the United States and Canada automotive wages exceed 15 dollars per hour, in Mexico they are around 3 dollars, according to data from the Institute for Industrial Development and Economic Growth (IDIC).
To balance the balance, a very liberal wing of the Democratic Party pressed in 2020 to have a stricter T-MEC on the labor issue for Mexico. The Rapid Response Labor Mechanism (MLRR) was the solution to this demand.
This mechanism is designed to repair violations of the rights to freedom of association and collective bargaining in companies and facilities that produce goods or provide services that are the object of trade between the T-MEC countries. Unlike other dispute resolution mechanisms, the trade sanctions derived from the MLRR are not applicable to the entire productive sector, but directly to the companies involved. In addition, it is characterized by the expected speed of its responses, since it can resolve a dispute in approximately four months.
the five cases
After activating the mechanism at the Mexican plant of General Motors, the US government decided to do it again in June of last year, after the alleged denial of the labor rights of workers at the Tridonex auto parts factory, located in Matamoros, Tamaulipas.
The Office of the United States Trade Representative (USTR, for its acronym in English) reported in a statement published in August that the resolution took only three months, a shorter period than that contemplated by the Ministry of Economy. As part of the settlement, Tridonex agreed to pay nine months’ wages, plus seniority, to 154 laid-off workers. The total amount of late payment was more than $600,000.
Although the USTR said that the Labor Rapid Response Mechanism,
It took almost a year for Katherine Tai, United States Trade Representative, to decide, in May of this year, to activate said mechanism for the third time. This time, at the Panasonic Automotive Systems plant in Mexico , located in Reynosa, Tamaulipas.
In June, Panasonic and the newly elected union, SNITIS, agreed to a 9.5% wage increase as part of a new contract that will be implemented if approved in a workers’ vote.
A week after requesting the activation of the mechanism at the Panasonic factory, the USTR activated it for the fourth time on June 6, also due to the alleged denial of the rights of free association and collective bargaining at the Teksid Hierro plant, the which is dedicated to the production and sale of components for the automotive industry.
The fifth request came less than two weeks ago, due to the same situation regarding labor representation at the VU Manufacturing plant, located in Piedras Negras, Coahuila, which is mainly responsible for making components for car seats. On Friday of last week, the Mexican government, through the Ministry of Economy, said that it will review the case “to determine whether or not there is a denial.”
The Confederation of Workers of Mexico, the National Union of Workers, Miners, Metallurgical, Steel and Similar Workers of the Mexican Republic and independent unions are some of the organizations that have fought for the representation of the 900,000 workers in the automotive industry.
“Mexico has developed a very important automotive activity. We understand that the great claim that the (United States) has today, is above all from its labor sector… Because Mexico has greatly increased its relevance in the automotive sector (in North America) and we know that the automotive sector is a branch that moves other industries”, asserts Alfredo Domínguez Marrufo, director of the CFCRL in an interview with Expansión .
At the end of 2021, Mexico remained the seventh largest producer of vehicles worldwide and the main importer of vehicles to the United States, according to data shared by the Mexican Association of the Automotive Industry.
A mechanism that is fashionable?
The CFCRL, which considers the automotive industry a ” strategic ” sector for the three T-MEC partners, says in an interview with Expansión that in the second half of this year, the United States could continue to use this resource to throw out land the so-called “protective” collective labor contracts, that is to say that they favor the interests of the companies, at a time when new investments are at stake.
“For us it will be very natural that more complaints will be triggered at the minimum alert of denial of rights in the terms in which this labor annex is proposed,” adds Domínguez Marrufo, without specifying a number on the Rapid Response Labor Mechanisms that may be requested for the final stretch of this year.
Before, collective bargaining agreements were negotiated between union leaders or lawyers and the companies, without the workers themselves knowing where they were affiliated or what this contract included. Now this affiliation process must be made transparent.
In addition, the workers in the sector are, perhaps, those who “are more aware” of the regulatory changes due to the Labor Reform and the T-MEC.
“If they continue in that old model of labor relations, obviously there will be complaints… We have a sector whose workers have a development of working class consciousness, that is what we can call it, that is why they are today demanding those rights. They are more informed and know the terms in which this treaty has been agreed, which guarantees them the right to freely choose the union that will represent them in collective bargaining”, he concludes.
