Matt Katz: I'm Matt Katz in for Tanzina Vega, and you're listening to The Takeaway. Last week, the AFL-CIO, the SEIU, and an Independent Mexican Labor Union submitted a complaint to the United States Trade Representative under the United States, Mexico, and Canada Trade Agreements called the USMCA.
The complaint alleges that Mexican workers in the Northern City of Matamoros are facing aggressive union-busting in violation of the trade agreements. Well, the USMCA has provisions that allow countries to investigate shady activity at specific factories and take action, a significant difference from other trade agreements. This includes activity infringing on unionization efforts. Here to help us understand what may happen is Alex Lawson, editor-at-large at Law360. Alex, thanks for joining us.
Alex Lawson: Matt, thanks so much for having me. Good to be on the show.
Matt Katz: Oh, it's our pleasure. Let's first start with what's happening in the city of Matamoros in Mexico. What are we seeing taking place there?
Alex Lawson: There's been a union drive at a Mexican manufacturer called Tridonex. They make auto parts there. They are actually owned by a US company that's called I believe Cardone. There has been for a long time allegations that there's basically a very aggressive union-busting effort going on there by management and by the local government, that basically amounts to hundreds of workers being fired in retaliation for trying to organize there.
Most notably, there was a Mexican labor lawyer who is helping the union drive, her name is Susana Prieto. She was actually thrown in jail over what the union says are trumped-up charges for aiding the workers' union drive. The AFL-CIO has been talking about this for well over a year, basically, ever since the USMCA came into force last year, and they finally took action on it last week, making use of this new enforcement mechanism.
Matt Katz: Would they do, in terms of taking action? What does that mean?
Alex Lawson: As you alluded to in the intro there, the USMCA has a specific enforcement provision that is a dispute settlement provision that is only focused on labor issues. Basically, it allows any interested person, it would most often be a union to file a petition saying, "We believe that there has been a denial of collective bargaining rights or unionization rights at this specific factory in Mexico." They can ask the government to investigate it.
From there, there is a very wonky flowchart situation about what may or may not happen, but the point is, it can result, I'm not saying that this is imminent, but it can result in specific trade sanctions against this facility, which is a big difference from the way that this type of stuff has been done in older agreements.
Before you could only retaliate against Mexican exports, generally, and this made the system a little bit unworkable, people were hesitant to use it, they thought it was a little too blunt. This is much more targeted, it's supposed to move along a quicker timeline, and the AFL-CIO and those other unions took the first step in that long process last week with the filing of a petition basically alleging all of these things that I have laid out what's going on in the Tridonex factory.
Matt Katz: The AFL-CIO is involved in this, why? Is that just because they're a major labor union in the United States? What is their standing to file this complaint?
Alex Lawson: It wasn't just them. As you said, there was AFL-CIO, SEIU, and a Mexican union, all of it filed collectively. They have taken the lead on it because-- They have advocated for an improvement in Mexican labor conditions for many years. There's two reasons for that, really. One is just on a moral level.
They are the world's largest union, and unions are all about solidarity, obviously, it's in their interest to promote union use worldwide, writ large, but this longer-term goal of improving labor conditions in Mexico is also if they're being quite candid, is to not have US workers at a disadvantage by having workers in a neighboring country getting paid meager wages with no union protections at all. That leads to companies moving facilities there taking jobs away from here. They come at it from both a moral and an economic place, I would say.
Matt Katz: Alex, the AFL-CIO, the SEIU, an Independent Mexican union submitted this complaint to the US Trade Representative. What happens now? They filed this complaint alleging unfair labor practices. Now, what happens?
Alex Lawson: There's an interagency committee that's led by USTR, the US Trade Representative and they have 30 days to investigate the complaint and see if it has merit. Now, most people that you talk to agree that they will. This is a very strong case that the AFL-CIO has brought. It's the first one that tests these new rules in USMCA. Most people believe it will pass that initial review here in the coming weeks.
From there, the US will then ask Mexico to conduct its own review of the allegations. Mexico can either honor that request, or it can not. If it becomes adversarial, it gets kicked to a panel of arbitrators. It's a three-person panel, a basic international arbitration set up and that could set the stage for punishment sanctions, whether it's tariffs or some other measures against the products made by this factory.
Now, I will say, most people agree that the more ideal outcome is not to be so punitive with it. They hope that they can remediate this through negotiation, allow a union effort to actually take place rather than have to punish them. That's seen as a last resort, but that is the status. That's where the petition lies right now.
Matt Katz: What kind of damning allegations are they making in the complaint, do they have particular evidence of specific violations?
Alex Lawson: Haven't actually seen the complaint yet, which is certainly a point of some intrigue here. They've released just what reads as basically a bulleted list of things that they allege are going on there, most notably, the firing of about 600 workers in retaliation for unionizing and as I said, throwing this lawyer who is leading the drive in jail, which is obviously, if true, fairly egregious anti-union activity that passes the smell test here of a denial of labor rights.
I think it's also important to note that in the long arc of US history, having labor protections and trade agreements is relatively new. It came in vogue last three decades, but critics always said they never worked how they were supposed to. Part of the reason that the USMCA passed with bipartisan support, including from the AFL-CIO, who just as a cheat sheet here, unions never support trade agreements ever. It was a huge, huge deal that they supported this one. The addition of this new labor mechanism that we're talking about, this new enforcement mechanism was a huge reason for that. There's a lot of eyeballs on this to see if the system is going to work the way its supporters said that it would.
Matt Katz: Right, to see if it has some teeth in any way, even if it just pushes the parties to settle and to allow some degree of labor organizing in this factory.
Alex Lawson: Yes. Most people agree it's a very strong case. They wouldn't bring a "loser" for the vanguard case of this new enforcement mechanism. We'll see how it goes. There's a lot of eyeballs on Mexico as well for them to accept this call for an investigation in good faith, but a lot of intrigue around this one to be sure.
Matt Katz: Under the USMCA, can Mexico or Canada look into labor issues at American companies?
Alex Lawson: It's funny, you should say that. There is a big movement in the labor community among labor academics. It is technically possible for a complaint to be brought against a US factory, but without getting too weedy, the scope of facilities that can be investigated is very small. It's subject to an enforced NLRB order. Any facility that's subject to an enforced NLRB order, and that's just a long way of saying that almost never really happens.
That's a very small percentage of factories that are subject to orders like that so there has been some cries of hypocrisy by labor activists, labor academics that say it's basically a lot easier to investigate labor impropriety in Mexico than it is in the United States by these other countries. This is the only document we got on the book now so that's where a lot of the attention is, how it's going to work.
Matt Katz: Sure. Since the USMCA was signed, have there been any other cases taking place in which the US government was paying attention to certain conditions with Mexican facilities?
Alex Lawson: This one we're talking about now, that was filed by the AFL-CIO was the first actual labor-- the first complaint filed using this new labor enforcement system. Two days after they did that, the US brought its own case. This was to investigate irregularities at a union vote at actually a General Motors plant in the northern Mexican city of Silao. That obviously raised a lot of eyebrows because this is a US company and it obviously has an operation in Mexico. They have asked Mexico to review what's going on with this union vote, but there was this new thing, nothing had been filed under these rules, and then there were two complaints in the span of three days. It will definitely be interesting to see how quickly the ball gets rolling down the hill here.
Matt Katz: How was the Mexican government reacting to this? On paper, they signed this agreement, it must feel to them a little bit like meddling.
Alex Lawson: I wouldn't go so far as to say that. These are rules that they signed up for and there were-- All signs in these early cases, they'll point to them, at least, cooperating with the early phases. Now we'll see if it gets more contentious later on and sets up the possibility of sanctions, but just because there's been such a bright spotlight on this pair of labor disputes, it would be pretty bad optics to have them dig in their heels and say, "No, we can house all the union-busting that we want here."
I should note that in that second case that I just talked about, at the General Motors facility, the Mexican Labor Ministry, on its own, even before the US filed its case, did suspend that vote. They also saw irregularities. They are moving in lockstep with the US on that one already and the US brought the case, I think, just to keep a light on it, but so far, Mexico is generally playing ball on this.
Matt Katz: Alex Lawson is an editor-at-large at Law360. Alex, thanks a lot for explaining all of this to us. Appreciate it.
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