Mexican President Makes Budget Promises on Labor Reform

Mexican officials presented a letter from President Andres Manuel Lopez Obrador to House Ways & Means Chairman Richard Neal Oct. 17 that he is asking the national legislature and state legislatures to increase what they are spending on labor reform in the coming year, including an additional $18.8 million for federal labor courts, $18 million for local conciliation center, $13.5 million for local labor courts and $10 million for training, public education and verification related to the new contracts. The federal government will provide a property worth $23 million to the new labor center, he said,

Democrats had said that cuts to the labor department's budget were giving them pause about whether Mexico was truly committed to labor reform. Undersecretary for North America Jesus Seade, speaking at a press conference that same day, said Neal "loved" the letter, and the conversation was very positive. "I think he would be very keen to move forward."

In the letter, Lopez Obrador agreed with the Democrats' and American labor unions' view that the original NAFTA was built on low wages and weak unions in Mexico. He said the effects of those decisions "is something that I have personally criticized for many years." With regard to lawsuits challenging the labor reforms -- something working group member Rep. Rosa DeLauro has cited as a hurdle, the letter said, "As might be expected, there is always resistance to transformation. To date, these changes to the law have given rise to 425 lawsuits filed by unions that in the past have benefited from the old system. However, 224 of these have already been dismissed as unwarranted."

Seade said later that he had the impression that Democrats were shooting for a vote before Thanksgiving, but they had not said so in so many words, and certainly no promises were made on timing. He said he respected that House Speaker Nancy Pelosi wants to build broader support within Democratic ranks before bringing the new NAFTA.

He said before meeting with Neal, he had a more than two-hour meeting with U.S. Trade Representative Robert Lighthizer, and that Lighthizer was optimistic that the Democratic working group and the USTR getting close to a conclusion. The two sides are discussing the new NAFTA's labor chapter -- which addresses these Mexican reforms -- environment chapter, biologics provisions and enforcement. "Enforcement is a little elusive," Seade said in Spanish.

He said that Lighthizer is not at the point of bringing changes to the text to Mexico, to see if Mexico can accept them. He said if the changes the U.S. is seeking are good for Mexico, of course they can revise the text. But if the changes don't make sense operationally, that will be something else. He said any enforcement mechanisms have to respect Mexican law, constitution and sovereignty.

He said when it gets to the point where Lighthizer presents Mexico with a list of changes, it may only take ten minutes, as he says "perfect" to some ideas or "that's a bit complicated" to others.

After the press conference, Seade said it's hard to describe exactly what kinds of enforcement would be within bounds, and which would violate sovereignty. He said a process of consultations that lead to a decision to send in experts, "it's normal." He then added, speaking in English, "But to agree there's a complaint, and then the other party comes in, inspects to see what's going on, that's not part of the deal. They will have to come up with something that Canada and Mexico can accept."