The U.S. government is testing new provisions in the USMCA trade deal as it is asking Mexico to look into alleged abuses at GM’s Silao plant.
Trade representative Katherine Tai said she and the Department of Labor received “information appearing to indicate serious violations” of worker rights at the plant, reports Reuters.
Mexico’s labor ministry said it found “serious irregularities” in a union-led vote by workers at GM’s Silao plant to ratify a labor contract. Officials said some ballots were destroyed and ordered a new vote within 30 days.
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Now the U.S. will investigate and could opt to apply a proviso included in the U.S.-Mexico-Canada trade agreement. If it finds that labor rights were not respected, it could remove the tariff-free access for vehicles coming out of the plant into the U.S.
The facility produces about a third of all Chevrolet Silverados and GMC Sierras, two of GM’s money-makers. If the U.S. revokes the free-trade status for the plant, that would mean a 25% tariff would be applied to the trucks, raising their price by thousands of dollars.
Tai has already requested that the U.S. Treasury suspend the final settlement of customs accounts for trucks coming from GM Silao. That move preserves the government’s ability to apply tariffs to the trucks at a later date if it is determined that labor rights weren’t respected.
Mexico’s president, Andres Manuel Lopez Obrador, has welcomed the U.S. government’s actions.
“It’s a good thing. Before, the trade deal did not look at the labor situation,” he said at a news conference.
Lopez Obrador is referring to the North American Free Trade Agreement (NAFTA), which opened up borders to trade, but under which Mexican workers’ salaries stagnated for years. The new ability to remove tariff protections was negotiated into the new USMCA by Tai (among others) on behalf of Democrats, with a view to improving Mexico’s working conditions to prevent a “race to the bottom.”
GM, meanwhile, said it is cooperating with the U.S. and Mexican governments and condemned violations of labor rights, including actions to restrict collective bargaining.