By now, many will have heard that the first panel constituted under the USMCA Rapid Response Labor Mechanism (RRM) recently completed its determination as to whether there has been a Denial of Rights at the San Martín mine. At the moment, we are waiting for the public release of the panel’s findings.
While we wait, this post, and at least one more that will follow it, will flag some of the issues that arose in the proceedings – both on procedure and substance for those who may not be readily tracking.
As readers will recall, this panel was constituted last August, following an exchange of views between the United States and Mexico concerning the situation at the mine in Zacatecas. The United States, having received a petition in May 2023 from the AFL-CIO, the United Steelworkers, and a Mexican union, concluded that there was a Denial of Rights occurring at the mine. Mexico, however, found no Denial of Rights because, in Mexico’s view: (1) there had been a denial but it occurred prior to entry into force of the USMCA so fell outside the scope of the RRM; (2) the denial alleged by the United States did not implicate legislation that complies with Annex 23-A of the USMCA as required by the Agreement; and, (3) the San Martín mine is not a “Covered Facility” within the meaning of the Agreement.
Procedural Innovations and Difficulties
Let’s start with a procedural overview. In my last post about the panel, I noted some challenging questions that arose – given that this was the first RRM panel – in the early application of the rules and in the panel’s “confirmation” of the petition before it. After that early stage, throughout last fall, the two governments filed their written submissions.
The panel also sought “written briefs” from “non-governmental entities that are directly involved in the dispute”. It further stated that the Secretariat could “inform selected entities” of this opportunity. It appears the panel accepted submissions from the company owning the mine (IMMSA), from the AFL-CIO, from Los Mineros (the aggrieved union), and from the other group of workers in question (Los Trabajadores Coaligados). These participants line up unsurprisingly where you would expect them: IMMSA and Los Trabajadores Coaligados supporting Mexico’s position and Los Mineros and AFL-CIO supporting the United States.
(I will note here that one of the biggest challenges in following the panel’s work is the lack of available documents. For what is likely a variety of reasons, the documents on the Secretariat website for this dispute are limited to a partial selection. I will be sure to correct this post if we learn more.)
We know that the panel carried out a “verification” involving the mine in late February 2024 and held a hearing, which was livestreamed, in Mexico City on February 28-29.
Some details about the verification came out during the hearing. The panel chair stated at the hearing that the parties had told the panel that the panel had broad investigative powers for purposes of the verification. The panel members understood that they could “go out and seek information to verify what was really happening”. Comments at the hearing suggested that the panel at least interviewed several persons associated with the mine. Perhaps we will learn more about the details of the verification in the panel’s determination.
Throughout these steps, some entities have voiced concerns with the panel process. For instance, members of the legal team for IMMSA protested that they were not permitted to be present when the panel carried out its verification and spoke with their client.
Finally, the panel did not quite complete its work within the very short timeline set out in the Agreement (30 days to determination after the verification), but the panel appears to have given the parties its decision within a few weeks of that date – an extension to which the parties likely agreed.
A Multi-Layered Dispute
There are a few points that are worth making up front for clarity. This is a state-to-state dispute settlement mechanism concerning activities at a particular worksite. The panel was not asked to evaluate acts by the Mexican state or whether Mexico breached the Agreement. Rather, the panel is asked to “determine whether there has been a Denial of Rights”. A “Denial of Rights” occurs when “workers at a Covered Facility are being denied the right of free association and collective bargaining” under certain Mexican laws (leave which laws to one side for a moment). This distinction seemed to get a bit muddled in the pleadings. And this distinction has an impact on the panel’s work, especially with respect to what principles of international law may or may not apply.
I think the easiest way to understand the U.S. argument is to think of it as having two principal claims: (1) that the mine is operating during a strike and such operation denies workers the right of free association and collective bargaining under Mexican law; and (2) that the mine is bargaining with a different group of workers from the legitimately elected union and that denies workers the right of free association and collective bargaining under Mexican law.
Again, the panel’s task under the Agreement is to determine whether there has been a Denial of Rights at the mine. It could find that the United States has substantiated the facts of claim 1 and that that is a Denial under the Agreement, and the same of claim 2. The panel does not need to determine who is responsible for any Denial (unless that’s part of the legal test under Mexican law). Under the USMCA, either there has been or there has not been a Denial of Rights, or the panel cannot reach that question because of some preliminary flaw in its constitution or jurisdiction.
According to the short statement offered by Mexico, the panel found that the conduct in question fell outside the scope of its review as prescribed by the USMCA because the conduct must be after the entry into force of the Agreement and the conduct must be subject to the laws that were part of the 2019 Mexican labor reform.
This brings me to highlight now three issues that led to some interesting arguments at the February hearing. Of course, these also came up in the submissions, including in the IMMSA submission. I’ll refer to those on occasion but concentrate on what was said at the hearing.
The first interesting issue has to do with disaggregating questions of timing from other matters in the U.S. claims. We do not yet know, from Mexico’s short statement, on precisely what grounds the panel reached its decision. Was it what the parties characterized as the panel’s jurisdiction ratione temporis? That is, did the acts by the mine that the United States claimed to constitute a Denial of Rights fall within the jurisdiction of the panel given when they occurred? Or was it a question of the relevant Mexican law in place in 2023, and if so, how should one characterize such a question as a matter of international law under the Agreement? These questions in turn can be broken down into various sub-questions, but I’m reluctant to get into all their iterations if we are just days away from seeing how the panel reached its outcome. Of course, it could have been both reasons or neither.
The second interesting issue that arose was about whether the mine is a Covered Facility under the Agreement. As a reminder, the Agreement provides that Covered Facility is one that is “in a sector that produces manufactured goods, supplies services, or involves mining, and that (a) produces a good or supplies a service traded between the United States and Mexico or (b) produces a good or supplies a service that competes in the territory of a Party with a good or service of the other Party.” Much more to be said on this in a future post. It seems like maybe the panel did not reach the question based on what little we know about the determination, but as Jesse Kreier already flagged on X at the time of the hearing, the discussion among many participants in the submissions and in the hearing went down a road very similar to that traversed in the Guatemala—Labor dispute involving the “manner affecting trade” language in the CAFTA-DR.
The third interesting composite issue that got considerable attention at the hearing was about (a) the purpose of the panel, (b) the purpose of the RRM (and labor issues in a trade treaty), and (c) the relationship between the USMCA and the Mexican court system. At times, each of these three points arose separately, and at other moments, they were intertwined. A future post will elaborate on the importance of these points to the broader literature on trade agreements and labor provisions.
Questions for Future Panels?
Even before we have the panel’s decision in hand, we can anticipate some questions that its decision may precipitate. For one, given that the panel determined that there has not been a Denial of Rights, there will be no test of the remedies provision of the Agreement. Perhaps the outcome of the second RRM panel's review will create that test. As the former head of USTR’s Labor Office already noted, that question is a big one given the nature of the facility under review: a call center. What penalties would the United States seek to impose there and with what implications? And what remedy if the call center provides its services only outside the United States? We may not reach answers to those matters there either if the United States and Mexico reach a settlement in that dispute; some media have suggested they might be seeking to settle. (No information has been made available yet by the Secretariat as to the establishment of a panel [EDIT: In the hours between the completion of this post and its upload to the site, the Secretariat has now posted the names of the members of the panel] or its confirmation of the petition following the United States’ request that one be established on April 16). Note also that that second situation has a slightly different posture: Mexico found a Denial of Rights had occurred at the Atento Servicios facility in Hidalgo but it also found the facility had taken the necessary measures to remediate the Denial.
More important is what this San Martín panel’s determination means for RRM-watchers. Of course, the RRM system is not a precedential system. Still, many observers – including U.S. trading partners contemplating their own RRMs – are anxious to consider the panel’s reasoning.
