U.S. unions lodge first Mexico labor grievance under new NAFTA

Trucks wait in a queue for border customs control at the Zaragoza-Ysleta border crossing bridge in Ciudad Juarez
Trucks wait in a queue for border customs control, to cross into the U.S., at the Zaragoza-Ysleta border crossing bridge in Ciudad Juarez, Mexico December 12, 2019. REUTERS/Jose Luis Gonzalez

MEXICO CITY, May 10 (Reuters) - U.S. unions on Monday filed the first labor rights petition against Mexico under a new regional trade pact, vying to bring a complaint against an auto parts company on the border that they say has denied workers the right to independent representation.

The petition - filed by the biggest U.S. labor federation, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) - states that workers at Tridonex in Matamoros, across from Texas, were blocked from electing a union of their choice.

The United States-Mexico-Canada Agreement (USMCA) that replaced NAFTA last year, enshrines that right as part of its aim to give more power to workers to demand better salaries. It was also meant to prevent low labor costs from leeching more U.S. jobs.

Since the 1994 NAFTA, which had few enforcement tools for labor rules, wages in Mexico have stagnated and now rank as the lowest in the Organisation for Economic Cooperation and Development (OECD), a club of 37 industrialized nations.

Reuters reported last week that hundreds of workers had sought to be represented by a new union led by activist-attorney Susana Prieto since 2019, yet state labor officials never scheduled an election. Prieto said 600 of her supporters at Tridonex last year were fired, in what some workers described as retaliation for their efforts to switch unions. read more

Tridonex's parent is Philadelphia-based Cardone Industries, which is controlled by Canadian company Brookfield Asset Management (BAMa.TO).

Cardone said it did not agree with the AFL-CIO's assertions, but would address any concerns that could arise in the complaint process.

"We do not believe that the allegations in the complaint are accurate and welcome a full inquiry so that the facts can be disclosed," the company said in a statement, without detailing which elements it disputed.

The current union at Tridonex, SITPME, also rejected the AFL-CIO's allegations.

"It's all wrong," said union leader Jesus Mendoza. "The majority of workers at Tridonex are 100% with SITPME."

Under USMCA's "Rapid Response Mechanism," firms in Mexico and the United States can face tariffs and other penalties for failing to ensure worker rights, such as freedom of association.

The AFL-CIO's petition marks the first time the trade deal's labor enforcement is being put to use, and will be closely watched by companies and labor activists.

"This is precedent-setting," said Cathy Feingold, director of the international department of the AFL-CIO, which lobbied for better worker-rights provisions in the USMCA. "It's going to be a test for this new system."

The AFL-CIO will send its petition to the U.S. Office of Trade and Labor Affairs, which has 30 days to review the claim and determine whether to bring the case to the Mexican government for further review.

Mexican labor officials would then work with U.S. counterparts to agree on terms of remediation. The entire process, including a final stage to determine potential sanctions and penalty fees, must be resolved within five months.

A U.S. official said President Joe Biden's administration would analyze cases that fall under the USMCA's labor provisions.

"We will carefully review Rapid Response complaints filed for any denial of rights," the person said.

Neither the Mexican labor ministry nor the state government of Tamaulipas, where Matamoros is located, replied to requests for comment.

"Most of this could get fixed pretty quickly if the political will is there," said Benjamin Davis, director of international affairs for the United Steelworkers, part of the AFL-CIO.

Mexican President Andres Manuel Lopez Obrador, who signed a labor reform into law in 2019, has vowed to do away with Mexico's ubiquitous protection contracts that critics say put company interests over worker rights. Stamping out protection contracts is also a goal of the USMCA.

Yet the new law is being gradually rolled out throughout Mexico and changes will not start to reach Tamaulipas state until 2022.

Davis said Mexico still has an obligation to guarantee the reform is playing out on the ground.

"The rights start right away, even if institutions aren't in place yet," he said.

The petition was also backed by the Service Employees International Union, which represents Cardone employees in the United States, along with U.S. nonprofit Public Citizen's Global Trade Watch, and Prieto's union, called SNITIS.

Prieto said she hoped the efforts of Tridonex employees to shed light on their situation could encourage other workers to speak out.

"This is something that could be a boomerang in Mexico," she said.

Reporting by Daina Beth Solomon; Editing by Leslie Adler

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