U.S., Mexico target possible GM labour violations
• The United States is testing powers to protect workers under the trade deal replacing NAFTA and asked Mexico on Wednesday to probe alleged abuses at a General Motors Co. factory, a move that may put tariffs on some of the firm’s profitable pickups.
U.S. Trade Representative Katherine Tai said her office and the Department of Labor received “information appearing to indicate serious violations” of worker rights in an April union contract vote at GM’S Silao factory in central Mexico.
Tai said she will partner with the Mexican government to try to “prevent a race to the bottom” for U.S. and Mexican workers.
Mexico’s leftist president welcomed the action, crediting provisions in the new U.s.-mexico-canada Agreement (USMCA) trade deal that aim to strengthen Mexican unions and slow migration of U.S. auto production south of the border.
“It’s a good thing. Before, the trade deal did not look at the labour situation,” President Andres Manuel Lopez Obrador said at a regular news conference.
Mexico’s labour ministry has already said it found “serious irregularities” in the union-led vote by the GM Silao plant’s 6,000 union workers to ratify a labour contract and ordered a new vote within 30 days. Officials have said some ballots were destroyed.
Labour remedies under USMCA include revoking tariff-free access for the violating factory’s goods. In GM’S case, that could mean applying a 25 per cent U.S. pickup truck import tariff on Silao-made trucks, a move that could add thousands of dollars to each vehicle’s cost.
GM said it will cooperate with the U.S. and Mexican governments and that it condemned violations of labour rights including actions to restrict collective bargaining.
The so-called request for review marks the first use of the Rapid Response Labor Mechanism in USMCA, which allows countries to target labour rights violations at specific factories. Tai helped negotiate the labour enforcement mechanism on behalf of Democrats in the U.S. Congress.
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.”
Under NAFTA, Mexican factory wages stagnated for more than two decades, as a union system made it hard for workers to organize freely. Mexico’s minimum wage of less than a US$1 an hour is the lowest among the OECD group of industrial economies.
Despite the new USMCA powers, a domestic labour reform, and government hikes to minimum wages, Mexican workers are expected to earn far less than U.S. peers for the foreseeable future.
GM’S Silao plant is a linchpin of its North American truck strategy, producing more than 339,000 Chevrolet Silverado and GMC Sierra full-sized pickup trucks in 2019.
That was more than a third of the company’s total of 906,000 that year.