June 30, 2020
USTR Spells Out USMCA Labour Enforcement Procedures
With NAFTA soon to be history after 26.5 years on the books, USTR is publishing a Federal Register notice today explaining its proposed procedure for groups or individuals to file labour complaints under the new U.S.-Mexico-Canada Agreement, which takes effect Wednesday. Interested parties have until Aug. 15 to comment.
The notice details the steps for an interested party to file a “rapid response petition” asking for an independent panel to investigate allegations of labour rights violations — such as denying the ability to engage in collective bargaining — at individual facilities in Mexico. That new mechanism was included at the insistence of House Democrats and carries the potential for penalties and for blocking imports from the plants.
USMCA allows U.S. and Mexican observers to accompany the panel on any visit it makes to the facility to verify claims in the petition. And, “if Mexico refuses an on-site verification, the panel can take this into account in making its determination” of whether a violation has occurred, the law firm Hogan Lovells wrote in a brief on the enforcement tool.
In theory, a Mexican group or individual can also file a complaint against a “covered facility” in the United States. But it can only take that step against a U.S. facility that is subject to a National Labor Relations Board enforced order, which is a much smaller universe of companies than can be targeted in Mexico.
Updated Rules for Automakers
The Labor Department on Wednesday will also publish a Federal Register notice specifying how it plans to calculate whether a vehicle is meeting USMCA’s “labour value content” provision, which requires 40 percent to 45 percent of the content of a vehicle to be made by workers earning at least $16 per hour.
The interim final rule takes effect right away, but interested parties will have 60 days to outline any changes they would like to see. Automakers must meet the labor value content provision, as well as other tough new “rules of origin” requirements, in order for trucks made in Mexico and Canada to qualify for U.S. duty-free treatment.