In the first action of its kind, the Biden administration has formally asked the Mexican government to investigate reports of "serious violations" of worker rights at a General Motors plant in central Mexico, U.S. Trade Representative Katherine Tai said.
The move marks the first use of an innovative labor rights provision in the U.S.-Mexico-Canada trade agreement, which took effect last year.
It also represents the first time the U.S. government has acted on its own to raise labor concerns under any trade agreement, though Washington has previously done so in response to complaints lodged by unions, said a senior administration official, who insisted on anonymity.
As a senior House trade attorney, Tai helped fashion the "rapid response labor mechanism" in the new North American trade deal as a way to address long-standing Democratic ire over the loss of U.S. factory jobs to low-wage Mexican competition. Promoting Mexican labor rights would ultimately raise wages south of the border, reducing the incentive for employers to move jobs there, Democrats said.
Wednesday's action showcased the administration's aim to deliver a "worker-centered trade policy," according to Tai.
At issue is whether workers at the GM facility, which exports pickups to the United States, are being denied their right to organize and to bargain collectively. Under a 2019 Mexican labor law, workers must vote to reaffirm or reject existing contracts negotiated by "white" or company-controlled unions.
"Using [the new trade agreement] to help protect freedom of association and collective-bargaining rights in Mexico helps workers both at home and in Mexico by stopping a race to the bottom," Tai said, using the initials for the trade deal.
Voting at the Silao plant began last month. But after reports that the company-controlled union was tampering with ballots, the Mexican government intervened to halt the vote. The Labor Ministry now will organize a second vote without the union's direct involvement.
The Biden administration requested a formal Mexican review after receiving a tip on a confidential hotline and monitoring the situation for "a number of months," one of the U.S. officials said.
Administration officials emphasized that Wednesday's move was intended to "complement" the Mexican government's action. Tai praised Mexican officials for suspending the Silao voting when they became aware of "voting irregularities."
Mexican officials have 10 days to respond to the U.S. request. Assuming they agree to open the review, as the Biden administration anticipates, they will then have 45 days to conclude it and deliver a verdict to the United States.
If the review finds that workers' rights have been violated, Mexico and the United States will discuss potential remedies. If the two countries fail to agree on an eventual resolution, the United States can request establishment of an independent panel to decide the matter.
Using her authority under the trade deal, Tai also directed the Treasury Department to suspend the calculation of customs duties on any GM shipments from Silao to the United States. That leaves open the threat that 25% duties could be applied retroactively to any GM vehicles that are exported while the review is conducted, U.S. officials said.
The plant opened in 1996 in Silao, which is in the central Mexican state of Guanajuato. The 26.5 million-square-foot facility produces Chevrolet Silverado and Cheyenne and GMC Sierra full-size pickups as well as propulsion systems, according to GM's website.
GM said it did not believe it was involved in any of the "alleged violations" and had retained a "third-party firm to conduct an independent and thorough review." The company said it "condemns" any actions intended to restrict collective bargaining.
The action was taken two days after a separate complaint over labor rights at another Mexican plant belonging to Tridonex, an auto parts maker in Matamoros, in northeastern Mexico, near the Texas border. The AFL-CIO, the Service Employees International Union, an independent Mexican union known and Public Citizen said Mexican workers for two years had been "harassed and fired" for trying to join the independent Mexican union.
Tridonex is a subsidiary of Cardone Industries, which is headquartered in Philadelphia.
The dust-up over Mexican labor practices was not unexpected. Robert Lighthizer, who negotiated the trade agreement during the Trump administration, warned last year that "labor enforcement in Mexico is going to be a problem."
Richard Trumka, president of the AFL-CIO, said in September that the labor federation was drawing up potential complaints.