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May 13, 2021

US asks Mexico to probe alleged GM labour abuse

The United States is testing powers to protect workers under the trade deal replacing NAFTA and has asked Mexico to probe alleged abuses at a General Motors, a move that may put tariffs on some of the automaker's profitable pickups, Reuters reported.

The news agency said US 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 would work with the Mexican government to try to “prevent a race to the bottom” for US and Mexican workers.

Reuters said Mexico’s leftist president welcomed the action, crediting provisions in the new US-Mexico-Canada Agreement (USMCA) trade deal that aim to strengthen Mexican unions and slow migration of US 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 had 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, Reuters reported.

The news agency said 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% US pickup truck import tariff on Silao-made trucks, a move that could add thousands of dollars to each vehicle’s cost.

GM told Reuters it would cooperate with the US and Mexican governments and that it condemned violations of labour rights including actions to restrict collective bargaining.

Reuters noted the so-called request for review marked 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 US 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, the report noted.

In a statement, Tai praised Mexico “for stepping in to suspend the vote when it became aware of voting irregularities” and said the US action “will complement Mexico’s efforts to ensure that these workers can fully exercise their collective bargaining rights”.

“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,” GM said in a statement cited by Reuters.

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