US Calls for Rapid Response Labor Panel for Zacatecas Mine

The U.S. is asking that a rapid response labor mechanism panel decide whether Grupo Mexico's decision to hire replacement workers after a strike is a violation of union rights covered by the USMCA. The treaty says that the panel must be formed in three days after a request, and that the panel has 30 days to make a determination. This is the first time Mexico and the U.S. have disagreed on remediation after the U.S. filed a rapid response labor complaint, and the first time the U.S. called for a panel.

Mexico said earlier this month (see 2308020060) that it disputes the U.S. characterization (see 2306160029) that the mine is operating with scab workers who were hired "without waiting for appropriate authorization from the Mexican courts." In the Mexican recounting of the dispute, it says that a strike began in 2007, and in 2018, the Federal Conciliation and Arbitration Board ruled that the strike ended with an agreement between Grupo Mexico and some workers. However, the government noted the decision was reversed on appeal in June, and said the union that originally went out on strike in 2007 was forced into that position through the employer's actions, and that those strikers are owed back pay.

Mexico also is arguing that since the labor strife -- and the government action -- both happened before the USMCA entered into force, the mechanism does not apply. And they said there is no evidence that the mine in Zacatecas state exports to the U.S.

Liquidation of metals from this mine is suspended while the dispute continues.

“This announcement upholds the Biden-Harris Administration’s commitment to creating a more level playing field for workers to feel empowered and using every enforcement tool at our disposal to safeguard workers’ rights,” U.S. Trade Representative Katherine Tai said in a press release announcing the action on Aug. 22.

The Office of the U.S. Trade Representative noted that the treaty language does not say a factory or facility has to export to the U.S. to be covered by the mechanism, only that it "(a) produces a good or supplies a service traded between the United States and Mexico or (b) produces a good or supplies a service that competes in the territory of a Party with a good or service of the other Party."

The USTR says there is significant bilateral trade between Mexico and the U.S. in copper, one of the metals mined in Zacatecas. Most copper ore and concentrates come from Chile, another free trade agreement partner.

If the panel decides there was a denial of rights for the mine's workers, it could also provide remediation recommendations, though it doesn't have to. Remedies are to be in line with the severity of the infraction, the treaty says. It could be a fine of the company, or imposing standard duties on the product instead of the zero rate under the USMCA. The current column 1 general rate of duty for copper ores and concentrates is 1.7¢/kg on the lead content in the metal.