Commentary:
When the North American Free Trade Agreement was converted into the U.S.-Mexico-Canada Agreement (USMCA), a unique element called the Rapid-Response Labor Mechanism (referred to as RRM) was added. The RRM is a mechanism by which to enforce labor-related issues outlined in the USMCA that guarantees workers the right to organize and collective bargaining. The RRM, the first mechanism of its kind in a trade agreement, is applied at the facility or plant level.
Generally, the way the RRM works is that workers of a plant will petition their government, or in many cases the government of one of the USMCA partners, that a labor right under the USMCA is being violated. For example, a petition may be submitted by the workers of a plant in Mexico to the U.S. Trade Representative’s (USTR) office that they are being prevented from forming a union in the plant. The USTR will then notify the Mexican government that a potential violation is being committed and request that Mexico’s government investigate. If Mexico finds that this is the case, it will require the company to rectify the situation or face penalties. Mexico’s response to the company will include specific actions that it must take to be in compliance. If the governments of Mexico and the U.S. cannot agree that a violation is being committed or a resolution to the issue, the matter is referred to the Rapid-Response Labor Mechanism Dispute Settlement Panel for settlement.
Although, the RRM can be applied to firms in any of the three USMCA countries, the bulk of the claims have been filed against companies in Mexico. Since the USMCA came into effect in July 2020, the U.S. government has sought Mexico’s review under the RRM twenty-nine times. The use of the RRM has increased every year since its creation. In 2021, there were only two cases filed. In 2024 alone, the U.S. has sought Mexico’s review under the RRM ten times, for a total of 28 times that it has been used.
Since the USMCA’s inception, Canada has sought Mexico’s review under the RRM one time. To date, the U.S. has only had to refer an issue to the Rapid-Response Labor Mechanism Dispute Panel two times. In the first case, the panel ruled in favor of Mexico. The second case was filed by the USTR in April 2024 and is still being reviewed.
Originally, the RRM focused on what it considered to be priority sectors, which included mining, manufactured goods, and the supplying of services. However, in Mexico, the vast majority of claims filed under the RRM were focused on that country’s automotive sector. In fact, up until last year all the claims filed by the U.S. and Canada under the RRM were in that sector. During the past year, claims under the RRM by the U.S. and Canada have included the manufacturing, mining, value-added agriculture, steel production, and telecommunications industries.
Most recently, on September 16, the USTR announced that the U.S. has asked Mexico to review whether workers at the Bader de Mexico facility in Leon, Guanajuato, Mexico, are being denied the right of freedom of association and collective bargaining. Bader de Mexico manufactures textiles for the automotive industry. On September 17, the USTR announced that it had successfully resolved a claim filed under the RRM involving Impro Mexico in San Luis Potosi, Mexico, which produces components for the automotive, medical, energy, and agricultural sectors.
Under the RRM resolution, the Mexican government will require Impro Mexico to reinstate and provide backpay to an employee who had been fired in retaliation for their union activity; allow freedom of association and collective bargaining at the company’s plant; advise Impro Mexico’s employees about the terms of the settlement; and provide training to workers and management at the company pertaining to freedom of association and collective bargaining.
The RRM was put into the USMCA for two major reasons. The first was to appease labor rights groups concerned about working conditions and worker rights in other countries, whose support was needed to pass the USMCA. The second was because the three countries didn’t want their companies to be competing against foreign production plants that were intentionally paying their workers less and having them work in depressed or dangerous conditions. The whole point of NAFTA, and its successor the USMCA, was to ensure a level playing field for trade among the three North American nations that are members. The RRM helps achieve this.
Jerry Pacheco is President of the Border Industrial Association. Jerry Pacheco's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.