Mexico says trade deal does not apply in Grupo Mexico mine labor dispute

By Daina Beth Solomon

MEXICO CITY (Reuters) -A labor dispute at Grupo Mexico’s San Martin mine in Mexico’s Zacatecas state, where the U.S. raised concerns over alleged worker rights abuses, does not meet the criteria for review under a regional trade deal, Mexico said on Tuesday.

Mexico’s rejection of the U.S. complaint filed in June is one of the few times since the U.S.-Mexico-Canada Agreement (USMCA) went into effect in 2020 that it has deemed a case ineligible for review under the pact, which has tougher rules than its NAFTA predecessor.

The issues flagged by the U.S., following a petition from the AFL-CIO labor organization and a Mexican union known as The Miners, are being addressed in Mexico’s court system with a final outcome expected soon, Mexican officials said.

The Miners urged the Mexican government to reconsider, saying the rejection favored Grupo Mexico’s version of events and that the U.S. scrutiny had helped protect worker rights while legal processes unfolded in Mexican courts.

The U.S. Trade Representative’s office and Grupo Mexico declined to comment.

The U.S. government on June 16 had asked Mexico to review the matter, citing arguments from The Miners that Grupo Mexico’s operations at San Martin violate a strike begun in 2007, and that the company bargained with employees who did not have the right to formally represent the workforce.

Grupo Mexico countered that its San Martin mine, which contains lead, , zinc and silver, legally resumed operations with workers’ approval in 2018.

Mexican officials said both these events pre-date the USMCA, putting them beyond the scope of the trade deal’s “Rapid Response Mechanism,” which can be used to sanction companies that fail to swiftly resolve labor complaints.

The U.S. has invoked the mechanism 10 other times, including at General Motors (NYSE:) and Goodyear, and its use is closely watched by companies operating in Mexico.

A Mexican court ruled in favor of The Miners in June, ordering Grupo Mexico to pay back wages and benefits, the Mexican officials noted.

“It will be resolved in the Mexican judicial system,” Mexico’s economy and labor ministries said in a joint statement.

The U.S. government has until Aug. 13 to decide whether to contest Mexico’s decision and request a dispute settlement panel, a mechanism that has not yet been used for a USMCA labor matter.

In response to Mexico’s decision, The Miners said Grupo Mexico’s operations at the San Martin mine violate its members’ rights “moment by moment,” and alleged the company had negotiated with an unauthorized group of workers in 2021.