US alleges car parts factory in Mexico violates North America trade pact

WASHINGTON (Reuters) – The U.S. has alleged workers at a French-owned auto parts plant in Mexico were denied the right to collective bargaining in violation of a North America trade agreement and asked Mexico to investigate.

The U.S. Trade Representative said on Friday it filed a petition under a rapid response labor provision of the U.S.-Mexico-Canada Agreement on trade over the Akwel Juarez Mexico factory, which makes auto parts.

The petition alleged the factory refused to negotiate a collective bargaining agreement and dismissed workers based on their union affiliations, USTR said.

WHY IT’S IMPORTANT

The trade deal sought to improve wages and working conditions in Mexico and keep U.S. auto manufacturing from moving south of the border.

But President-elect Donald Trump, who signed the trade deal into law, has complained about auto imports from Mexico and threatened tariffs of 200% or more on Mexican-made vehicles.

A USMCA “sunset” clause will give Trump an opportunity to renegotiate or quit the trade deal in 2026.

BY THE NUMBERS

Mexico has 10 days to agree to conduct a review of the U.S. petition and 45 days to complete the review.

The U.S. has had good cooperation from the Mexican government on enforcing the trade pact. Many of the 30 previous cases have led to new Mexican contracts with higher wages, including an 8.5% raise at General Motors (NYSE:GM)’ pickup truck plant in Silao, Mexico.

If a review panel agrees with the U.S. petition and no remedial action is taken, the U.S. can block imports from the Akwel facility. The company did not immediately respond to an email requesting comment.

KEY QUOTE

“With over 40,000 workers who have directly benefited from this tool, today’s action signals to the workers at Akwel that they are not alone in the face of employer interference,” U.S. Trade Representative Katherine Tai said, referring to the labor mechanism.