Under the Agreement between the United Mexican States, the United States of America and Canada (hereinafter, the USMCA), there is a possibility that Mexican manufacturing companies or service providers that deny their workers the enjoyment of certain collective labor rights may be sanctioned. The sanctions may consist of the elimination of preferential tariff treatment for the goods they export, fines and even the denial of access of the goods to that
The workers' collective labor rights protected under the USMCA, the denial of which by employers gives rise to sanctions, are: (i) freedom of association and (ii) the effective recognition of the right to collective bargaining. In this regard, the Mexican companies that may be audited are the so-called “Covered Facilities,” provided they are part of a “Priority Sector.” Under the USMCA, a “Covered Facility” is a workplace within Mexican territory that: • Produces a good or supplies a service traded between the Parties (between Mexico and the United States or between Mexico and Canada) or that has an investment in the territory of a Party that has failed to comply; or • Produces a good or supplies a service that competes in the territory of a Party with a good or service of another Party. A “Priority Sector” is considered to be the area of economic activity that produces manufactured goods, supplies services or that has an investment in the territory of a Party related to, among others, aerospace products or components, autos and auto parts, cosmetic products, industrial baked goods, steel, aluminum, glass, ceramics, plastics, forgings and cement, as well as those involving mining. The imposition of sanctions will always derive from a labor dispute settlement mechanism called the “Facility-Specific Rapid Response Labor Mechanism,” through which Mexican companies may be audited to determine the possible existence of a denial of collective labor rights. In light of all the foregoing, we recommend that all workplaces within the priority sectors carry out a self-assessment to validate compliance with the obligations referred to herein and, where applicable, make the necessary adjustments such as: (i) legitimizing their collective bargaining agreements; (ii) verifying the democratization of their union's bylaws; (iii) eliminating the entry or exclusion clauses for separation from the union in their collective bargaining agreements; and (iv) eliminating any practice that promotes the company's interference in union life. We are at your service should you require additional information or support in the self-assessment to validate compliance with these obligations. For further information, please contact our experts: Rodolfo Trampe, Partner: +52 (55) 5258 1054 | rtrampe@vwys.com.mx Luis Miguel Jimenez, Partner: +52 (55) 5258 1058 | lmjimenez@vwys.com.mx Alix Trimmer, Associate: +52 (55) 5258 1054 | atrimmer@vwys.com.mx Alejandro Pérez, Associate: +52 (55) 5258 1054 | alperez@vwys.com.mx
