Over the last few months, US employers doing business in Mexico have felt the effects of the enforcement mechanisms of the US-Mexico-Canada Agreement (USMCA), SHRM reports
It might seem counterintuitive to many employers that the USMCA would result in labour enforcement actions against US companies under Mexican law but it does.
Those with an interest; especially in Texas, whose largest trade partner is Mexico, will be aware that the USMCA:
* Went into effect on July 1, 2020.
* Is the result of President Donald Trump's renegotiation of the North American Free Trade Agreement.
* Has a goal of enforcing the stronger labour laws that Mexico was required to enact as part of the USMCA.
While the historically more lax enforcement of labour laws in Mexico might lead some US companies operating there to assume the same level of enforcement in the future, the USMCA also established an Interagency Labor Committee, which has the power to refer complaints of denials of labour rights in Mexican facilities to the US trade representative, who, in turn, may take enforcement action.
The first two such enforcement actions have reportedly been related to US companies. Which may seem unsurprising; it makes sense that the US trade representative has particularly good enforcement mechanisms with respect to US companies that have facilities in Mexico.
As a result of the first petition under the USMCA's "Rapid Response Labor Mechanism," General Motors entered into a comprehensive plan to address labour practices at its Silao, Mexico, facility in July.
In August, the Mexican-based subsidiary of an American company, Cardone Industries, with operations in Matamoros, Mexico, entered into an action plan and agreed to pay damages, including back pay, to Mexican workers. The action plan was the result of a petition filed by the AFL-CIO and other unions.
These action plans are agreements with the US government and give the US government power to enforce them. In effect, a US government agency can now enforce Mexican labour law against the companies in these agreements. These first instances of success unions have had under the Rapid Response Labor Mechanism of the USMCA mean it is likely there will be more of these types of actions.
Not only is it important for US companies to note the greater enforcement of Mexican labour laws, but also, as companies with cross-border operations develop environmental, social and governance (ESG) programs, they need to be cognisant of how USMCA actions can impact the "S," or social aspect, of their ESG disclosures. Due to the focus on ESG by investors and the Securities and Exchange Commission, now is the time for companies to evaluate compliance with Mexican labour standards, with respect to both their subsidiaries in Mexico and the companies in their supply chains.
Source: SHRM
(Links via original reporting)
Over the last few months, US employers doing business in Mexico have felt the effects of the enforcement mechanisms of the US-Mexico-Canada Agreement (USMCA), SHRM reports
It might seem counterintuitive to many employers that the USMCA would result in labour enforcement actions against US companies under Mexican law but it does.
Those with an interest; especially in Texas, whose largest trade partner is Mexico, will be aware that the USMCA:
* Went into effect on July 1, 2020.
* Is the result of President Donald Trump's renegotiation of the North American Free Trade Agreement.
* Has a goal of enforcing the stronger labour laws that Mexico was required to enact as part of the USMCA.
While the historically more lax enforcement of labour laws in Mexico might lead some US companies operating there to assume the same level of enforcement in the future, the USMCA also established an Interagency Labor Committee, which has the power to refer complaints of denials of labour rights in Mexican facilities to the US trade representative, who, in turn, may take enforcement action.
The first two such enforcement actions have reportedly been related to US companies. Which may seem unsurprising; it makes sense that the US trade representative has particularly good enforcement mechanisms with respect to US companies that have facilities in Mexico.
As a result of the first petition under the USMCA's "Rapid Response Labor Mechanism," General Motors entered into a comprehensive plan to address labour practices at its Silao, Mexico, facility in July.
In August, the Mexican-based subsidiary of an American company, Cardone Industries, with operations in Matamoros, Mexico, entered into an action plan and agreed to pay damages, including back pay, to Mexican workers. The action plan was the result of a petition filed by the AFL-CIO and other unions.
These action plans are agreements with the US government and give the US government power to enforce them. In effect, a US government agency can now enforce Mexican labour law against the companies in these agreements. These first instances of success unions have had under the Rapid Response Labor Mechanism of the USMCA mean it is likely there will be more of these types of actions.
Not only is it important for US companies to note the greater enforcement of Mexican labour laws, but also, as companies with cross-border operations develop environmental, social and governance (ESG) programs, they need to be cognisant of how USMCA actions can impact the "S," or social aspect, of their ESG disclosures. Due to the focus on ESG by investors and the Securities and Exchange Commission, now is the time for companies to evaluate compliance with Mexican labour standards, with respect to both their subsidiaries in Mexico and the companies in their supply chains.
Source: SHRM
(Links via original reporting)