U.S. Asks Mexico to Investigate Labor Issues at G.M. Facility
The Biden administration on Wednesday asked Mexico to examine alleged labor rights violations at a General Motors pickup truck factory in Mexico, a move that could lead to tariffs on some of GM’s most profitable vehicles under the new U.S.-Mexico-Canada Agreement (USMCA) on trade.
U.S. Trade Representative Katherine Tai said that her agency
and the U.S. Department of Labor have received “information appearing to
indicate serious violations” of worker rights in an April union contract vote
at GM’s Silao factory in central Mexico.
The request for review marks the first time any country has
used the Rapid Response Labor Mechanism in USMCA, which allows countries to
target labor rights violations at specific factories. Tai helped negotiate the
labor enforcement mechanism on behalf of Democrats in the U.S. Congress.
Mexico’s labor ministry on Tuesday said it found “serious
irregularities in the union-led worker vote at the GM factory and ordered a new
vote to be held within 30 days.
The Mexican ministry’s decision followed pressure from U.S.
lawmakers on GM after some Mexican officials had said some ballots were
destroyed during the vote, which was intended for the Silao plant’s 6,000 union
workers to ratify their labor contract.
A key U.S. goal for the USMCA, negotiated by the Trump
administration, was to strengthen Mexican unions to help drive up wages and
slow the migration of U.S. auto production to Mexico. GM won key changes to
USMCA that allowed it to continue to build hundreds of thousands of high-profit
pickups in Mexico for export to the United States annually.
In a statement, Tai praised Mexico “for stepping in to
suspend the vote when it became aware of voting irregularities” and said the
U.S. action “will complement Mexico’s efforts to ensure that these workers can
fully exercise their collective bargaining rights.
Representative Bill Pascrell, a New Jersey Democrat and
staunch union advocate, praised the Biden administration for swiftly acting on
“reported acts of bullying” of workers at the GM plant.
“Our trade agreements aren’t worth the paper they’re printed
on if they are not enforced to defend workers in Mexico and here in the United
States,” Pascrell said.
PROFIT CENTER
GM’s Silao plant https://www.reuters.com/article/us-trade-nafta-autos/game-of-chicken-gm-bets-on-mexican-made-pickup-trucks-idUSKBN1F42G7
is a lynchpin of its North American truck strategy, producing more than 339,000
Chevrolet Silverado and GMC Sierra full-sized pickup trucks in 2019 — more than
a third of the company’s total of 906,000 that year.
GM said it would cooperate with both the U.S. and Mexican
governments in the matter and that it condemns violation of labor rights and
actions to restrict collective bargaining.
“We do not believe there was any GM involvement in the
alleged violations or that any government-approved inspectors were denied
access to the facility, and have retained a third-party firm to conduct an
independent and thorough review,” the company said in a statement.
USTR’s request comes days before U.S. President Joe Biden
travels to Dearborn, Michigan to tour a Ford Motor Co electric vehicle plant to
highlight his push for $174 billion in government funding to expand electric
vehicle production and charging infrastructure.
Ford builds all of its U.S. full-size pickup trucks in the
United States but both GM and Ford are investing in electric vehicle production
in Mexico, prompting the United Auto Workers union to call for tax incentives
to apply only to U.S.-assembled EVs.
White House spokeswoman Jen Psaki declined to say Tuesday if
Biden supported limiting EV subsidies.
The USMCA trade deal was rewritten to require that
effectively 40% of the value of all Mexican-made vehicles be made in the United
States or Canada.
WARNING SHOT
Tai’s request warns all automakers — including Ford,
Volkswagen and Chrysler parent Stellantis that the Biden administration won’t
tolerate past Mexican labor practices that critics say kept wages depressed.
“In requesting this review, the United States clearly sends
the message that worker rights must be respected,” U.S. Labor Secretary Marty
Walsh said in a statement.
If the United States and Mexico cannot reach an agreement to
resolve the matter, Tai can request a dispute settlement panel to review the
matter, with the entire process meant to take about 90 days from the initial
request.
Labor remedies under USMCA include revoking tariff-free
access for the violating factory’s goods. In GM’s case, that could mean
applying the normal 25% U.S. pickup truck import tariff on Silao-made trucks, a
painful move that could add thousands of dollars to the cost of each vehicle.
Tai has requested that the U.S. Treasury immediately suspend
final settlement of customs accounts for U.S. border entry of GM’s Silao
trucks, a move that preserves the option to apply tariffs to them later.
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