Mexico readies labor law overhaul

  • April 10, 2019

Mexico readies labor law overhaul, a move that could please Democrats

Mexico is finally poised to pass a major labor reform law this month, which would remove a major roadblock House Speaker Nancy Pelosi has said is preventing Congress from considering the new North American trade pact.

A top Mexican official assured U.S. lawmakers that Mexico plans to pass the legislation by the end of April. This move would check off one of Mexico’s commitments under the replacement deal for NAFTA, the U.S.-Mexico-Canada Agreement, that President Donald Trump has championed.

“Let’s knock down USMCA if Mexico doesn’t pass that legislation, because yes, we are going to pass it,” Jesús Seade, Mexico’s undersecretary for North America, declared during a press conference last week.

Pressure has heated up in recent weeks for the Mexican Congress to pass the labor reform bill, as a growing number of Democrats on Capitol Hill have indicated that they are waiting for Mexico to make the necessary labor law changes before they consider the new deal. Democrats have long criticized the 25-year-old NAFTA for being toothless on workers’ rights in Mexico.

Mexico’s proposed labor changes would completely overhaul the country’s existing union structure, which has long been criticized for failing to protect workers. The majority of unions in Mexico are not independent and have been regarded as corrupt by U.S. union leaders.

The new law sets out to protect workers’ rights to collective bargaining. Secret votes would also be required at companies when a labor pool considers whether to unionize.

Addressing Mexican labor laws isn’t the only aspect of USMCA that Democrats have complained about. Several lawmakers are also worried that the deal’s labor and environment standards are not strongly enforceable. Some also have reservations over provisions they say could lock in high prescription drug prices.

Still, Mexico’s passage of the new law would be a major step toward the deal getting a vote before Congress.

Pelosi said last week consideration of USMCA would “take some time,” adding that lawmakers need to “see the evidence of what’s happening, not only that they pass the bill [in Mexico], but that they implement the policy.”

Several other lawmakers, such as Sen. Sherrod Brown (D-Ohio), will be closely monitoring the law’s results as well.

Brown agrees with Pelosi “that both enactment and implementation of labor law reforms that comply with the standards outlined in the agreement are necessary before Congress should consider the new NAFTA,” one of his staffers told POLITICO this week.

The most recent draft has been well-received by U.S. labor leaders, who are considered a crucial group needed to get Democrats to support the deal.

“Upon first review, this new bill is an improvement and meets a key criteria of ensuring workers can vote on their collective bargaining agreements,” said Celeste Drake, trade policy specialist for the AFL-CIO.

A U.S. labor representative told POLITICO recently that the previous draft of the Mexican labor bill fell short of the requirements outlined in Annex 23 of the new USMCA language. Some of the concerns included that the text did not fully outline that Mexico must have an independent body in place to register union elections and help resolve labor disputes tied to unions, this representative said.

The country’s major union organization, Confederation of Mexican Workers, has long been accused of entering into collective bargaining agreements that were signed between companies and unions without workers’ consent.

The current labor proposal would create a mechanism for all collective bargaining agreements to be renegotiated within four years of the law’s passage.

Another issue was whether the previous draft bill ensured that labor courts in Mexico cannot “unfairly extend and delay hearings” to avoid having to weigh in on union representation issues.

Drake cautioned that AFL-CIO will continue to review the bill, “as well as the mechanisms and resources that Mexico puts in place to ensure these changes make the rights to organize and negotiate not just a promise but a reality.”

“Our standard is you hit the bar on everything in Annex 23 totally, or this process should stop dead in the water,” she told POLITICO recently.

Mexican President Andrés Manuel López Obrador and his administration have repeatedly said that Mexico would deliver on its promise to overhaul its workers rights regulations. López Obrador, a left-leaning populist who took office in December, made workers’ rights and labor justice a centerpiece of his presidential campaign.

“There’s a coincidence of opinion with López Obrador and the Democrats in U.S. on this — in the sense of wanting to strengthen the protection of workers’ rights,” Kenneth Smith Ramos, chief NAFTA negotiator under former Mexican President Enrique Peña Nieto, told POLITICO.

The labor law is important for USMCA, but “it’s also very important as a public policy piece for the López Obrador administration, so it will happen,” Smith Ramos added.

The Mexican government last week submitted a final draft of the legislation for Mexican lawmakers to review. The bill, which was first introduced in December, was “frozen for a while because of some technicalities,” Seade said.

A top Mexican lawmaker, Mario Delgado Carrillo, said Sunday that passing the law is a main priority for Mexico’s legislature, which is controlled by López Obrador’s party.

It remains to be seen how the Trump administration and lawmakers like Pelosi will view Mexico’s labor changes.

Seade said once the labor law passes, it will be important to find out how long Pelosi and other U.S. lawmakers want to monitor implementation before declaring the new law a success.

“Implementation is forever,” Seade said. “The law will be passed at the end of this month and the implementation starts immediately. There’s things that happen immediately, and there’s things that are scheduled to happen over time.”