New USMCA Labor Complaint Could Trigger Labor Panel

After filing a complaint and successfully triggering the Rapid Response Labor Mechanism (RRLM) under the USMCA against a VU manufacturing facility in Piedras Negras, Coahuila last summer, the same union filed another case in December arguing the company has actively refused to bargain in good faith. 

Five members of Congress sent a letter to U.S. Department of Labor and Trade Office to emphasize the severity of the alleged violations. Importantly, as the first case regarding a “repeat offender” under the RRLM, it will determine whether a labor panel will be established, and if additional penalties will be imposed under the RRLM.  

The Mexican Workers' Union League, or Liga, claimed their right to authentic collective bargaining has been violated by the company after winning the representation against the previous union, CTM. Liga alleged that the company has refused to negotiate with them properly and has continued to discriminate illegally in favor of CTM, the current minority union, including allowing them to harass Liga’s union members and organizers. While the case is filed, the union had a new hearing with the company on January 18^th. If an agreement can’t be reached, a strike is scheduled for February 6. 

Significantly, this case could trigger a “Labor Panel” under the USMCA, which will “assess complaints about conditions at specific facilities, and, in cases of non-compliance with key labor obligations, provide for the suspension of USMCA tariff benefits or the imposition of other penalties, such as denial of entry of goods from businesses that are repeat offenders,” according to Chapter 31 Annex A of the USMCA. The U.S. named its labor panelists in 2020.

Outlook: The new development might bring in a labor panel for the first time, which could stipulate a bargaining order and more severe economic penalties for the company.