Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. asks Mexico to review GM plant labor allegations in test of new trade deal

EconomyMay 12, 2021 05:00
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By David Lawder and David Shepardson

WASHINGTON, May 12 (Reuters) - The Biden administration on Wednesday asked Mexico to examine alleged labor rights violations at a General Motors (NYSE:GM) GM.N pickup truck factory in Mexico, a move that could lead to tariffs on some of GM's most profitable vehicles under the new U.S.-Mexico-Canada Agreement (USMCA) on trade.

U.S. Trade Representative Katherine Tai said that her agency and the U.S. Department of Labor have received "information appearing to indicate serious violations" of worker rights in an April union contract vote at GM's Silao factory in central Mexico.

The request for review marks the first time any country has used the Rapid Response Labor Mechanism in USMCA, which allows countries to target labor rights violations at specific factories. Tai helped negotiate the labor enforcement mechanism on behalf of Democrats in the U.S. Congress.

Mexico's labor ministry on Tuesday said it found "serious irregularities in the union-led worker vote at the GM factory and ordered a new vote to be held within 30 days.

The Mexican ministry's decision followed pressure from U.S. lawmakers on GM GM.N after some Mexican officials had said some ballots were destroyed during the vote, which was intended for the Silao plant's 6,000 union workers to ratify their labor contract. key U.S. goal for the USMCA, negotiated by the Trump administration, was to strengthen Mexican unions to help drive up wages and slow the migration of U.S. auto production to Mexico. GM won key changes to USMCA that allowed it to continue to build hundreds of thousands of high-profit pickups in Mexico for export to the United States annually.

In a statement, Tai praised Mexico "for stepping in to suspend the vote when it became aware of voting irregularities" and said the U.S. action "will complement Mexico's efforts to ensure that these workers can fully exercise their collective bargaining rights.

Representative Bill Pascrell, a New Jersey Democrat and staunch union advocate, praised the Biden administration for swiftly acting on "reported acts of bullying" of workers at the GM plant.

"Our trade agreements aren't worth the paper they're printed on if they are not enforced to defend workers in Mexico and here in the United States," Pascrell said.

PROFIT CENTER

GM's Silao plant https://www.reuters.com/article/us-trade-nafta-autos/game-of-chicken-gm-bets-on-mexican-made-pickup-trucks-idUSKBN1F42G7 is a lynchpin of its North American truck strategy, producing more than 339,000 Chevrolet Silverado and GMC Sierra full-sized pickup trucks in 2019 -- more than a third of the company's total of 906,000 that year.

GM said it would cooperate with both the U.S. and Mexican governments in the matter and that it condemns violation of labor rights and actions to restrict collective bargaining.

"We do not believe there was any GM involvement in the alleged violations or that any government-approved inspectors were denied access to the facility, and have retained a third-party firm to conduct an independent and thorough review," the company said in a statement.

USTR's request comes days before U.S. President Joe Biden travels to Dearborn, Michigan to tour a Ford Motor (NYSE:F) Co F.N electric vehicle plant to highlight his push for $174 billion in government funding to expand electric vehicle production and charging infrastructure.

Ford builds all of its U.S. full-size pickup trucks in the United States but both GM and Ford are investing in electric vehicle production in Mexico, prompting the United Auto Workers union to call for tax incentives to apply only to U.S.-assembled EVs. House spokeswoman Jen Psaki declined to say Tuesday if Biden supported limiting EV subsidies.

The USMCA trade deal was rewritten to require that effectively 40% of the value of all Mexican-made vehicles be made in the United States or Canada.

WARNING SHOT

Tai's request warns all automakers -- including Ford, Volkswagen VOWG_p.DE and Chrysler parent Stellantis STLA.MI that the Biden administration won't tolerate past Mexican labor practices that critics say kept wages depressed.

"In requesting this review, the United States clearly sends the message that worker rights must be respected," U.S. Labor Secretary Marty Walsh said in a statement.

If the United States and Mexico cannot reach an agreement to resolve the matter, Tai can request a dispute settlement panel to review the matter, with the entire process meant to take about 90 days from the initial request.

Labor remedies under USMCA include revoking tariff-free access for the violating factory's goods. In GM's case, that could mean applying the normal 25% U.S. pickup truck import tariff on Silao-made trucks, a painful move that could add thousands of dollars to the cost of each vehicle.

Tai has requested that the U.S. Treasury immediately suspend final settlement of customs accounts for U.S. border entry of GM's Silao trucks, a move that preserves the option to apply tariffs to them later.

U.S. asks Mexico to review GM plant labor allegations in test of new trade deal
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email