First Rapid Response USMCA Complaint Filed; Lawyers Consider Potential Mexico Reaction

The first complaint under a new rapid response mechanism under USMCA, which targets a particular workplace, could take months to resolve, but even if the complaint is found valid, there will be no direct impact on exports from the auto parts factory this year.

That is because even a case wherein officials find that employees were denied their labor rights, on the first offense, the solution is a course of remediation, like rehiring workers who were fired for union activism, or allowing a vote for union representation. It's only if a violation is found a second time at the same company that CBP can take action against its exports at the border.

The first complaint, announced May 10 by the AFL-CIO, Service Employees International Union (SEIU), the Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios Movimiento 20/32 (SNITIS) and Public Citizen, is against Tridonex, an auto parts factory in Matamoros, directly across the border from Brownsville, Texas. Tridonex, the U.S. and Mexican unions allege, fired 600 workers who support SNITIS. The unions also say that the company ignored workers' request to stop paying union dues to the union that now represents them. The AFL-CIO says that's a protection union, or a union that is in the pocket of the company, rather than an independent voice for workers.

Those fired workers are represented by attorney Susana Prieto, who was jailed for a month during this dispute, and released on orders that she quit pushing for higher pay for workers in that region (see 2009290040). “USMCA requires Mexico to end the reign of protection unions and their corrupt deals with employers,” AFL-CIO President Richard Trumka said.

Akin Gump partner Stephen Kho said lawyers' expectation was that the first rapid response case the U.S. pursued "would have to be a slam dunk. It would have to be one that is above reproach and that has all the evidence in place. And it would establish the bona fides of this new mechanism that had never been used before. We haven’t seen the complaint and all we have is a bunch of articles and a press release that talks about how bad things are, but we haven’t seen anything that backs that up."

Kho added in a May 11 phone interview with International Trade Today: "I hope that the process becomes a bit more transparent."

Although Trumka referred to the process of Mexican labor reform, the rapid response mechanism is not designed to challenge Mexico's progress in disrupting its captive union system. Instead, it is only designed to protect workers' right to collectively bargain and to freedom of association.

Mexico began the process of passing its labor reform before NAFTA was renegotiated, but the USMCA Labor Chapter does reinforce the Mexican timeline. Under that timeline, protection union contracts can only stay if at least 30% of workers represented vote that they want to keep it, but it's a gradual process that lasts until May 1, 2023. The state where Matamoros is located is in the last stage of the reform.

Tridonex is a subsidiary of Cardone Industries, headquartered in Philadelphia. A spokeswoman for Cardone didn't comment, but told others that company officials do not believe the allegations in the complaint are accurate, and they are welcoming the inquiry. "We fully support our Tridonex workers being represented by a union and are committed to compliance with all applicable labor laws and regulations. We will be transparent in addressing requests for information and proactive in addressing any concerns identified through the process."

In the press release, the unions said the "case will test whether Mexico’s labor reforms and USMCA’s Rapid Response Mechanism can deliver for Mexican workers denied their fundamental right to organize and bargain for better wages and working conditions."

Democrats in Congress hailed the complaint. House Ways and Means Committee Chairman Richard Neal, D-Mass., and Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said in a joint statement that they expected this complaint "will be the first of many."

"Public reports have highlighted that Tridonex workers suffered mass firings, forced resignations, intimidation, and a worker leader even faced criminal charges from local authorities," they said. "These kinds of egregious practices weaken our economies and fly in the face of basic labor rights and human dignity."

Senate Finance Committee Chairman Ron Wyden, D-Ore., said this case is exactly the type he and Sen. Sherrod Brown, D-Ohio, had in mind when they pushed for the rapid response mechanism. "This thorough and compelling petition details exactly the type of labor violations that have long been a concern in Mexico and a detriment to workers everywhere," he said.

Akin Gump partner Brian Glenn Patterson said that if workers were fired because of their support of a union, that firing could be a violation of freedom of association. But he said none of the facts are known yet.

"Certainly there could be other reasons workers were terminated," he said in a phone interview. "Were workers terminated at all?" Patterson represented the Guatemalan government in a case brought by the U.S. under CAFTA-DR about labor violations; Guatemala won the case, and it took 10 years to resolve. Democrats said this rapid response mechanism was created because of how disappointed they were in state-to-state resolution under CAFTA.

The first step of the complaint will be for an Interagency Labor Committee for Monitoring and Enforcement to examine the complaint, and if it finds that it has substance, it will instruct the Office of the U.S. Trade Representative to ask Mexico to review the conditions for workers at Tridonex in Matamoros.

Patterson said, "If a positive determination is made, I would expect them to provide the reasoning behind it. Certainly with it being the first case, I’d be surprised if they didn’t."

Mexico would then have 45 days to decide if the workers' rights to collectively bargain or join a union were denied, and if so, Mexico and the U.S. have just 10 days to decide what appropriate remediation measures would be, and how quickly that remediation would need to be done.

Patterson said he'll be interested to see how Mexico responds, if the USTR supports the complaint. "From where I sit, that’s the biggest unknown," he said.

If Mexico and the U.S. do not agree that there was a violation, or they don't agree on the appropriate remedy, the U.S. can ask for a panel. The panel has 30 days to verify the conditions at Tridonex, and make recommendations on whether there was a denial, and how serious it was.