GM Mexico Puts USMCA Labor Provisions to Test

In 2020 the USMCA (United States-Mexico-Canada Agreement) replaced the aging NAFTA and introduced a wholly new concept into US trade agreements - labor value content. For the first time, provisions were included in the trade agreement aimed at helping foreign workers unionize and lessening wage disparity between foreign and domestic workers.

Now, the first major independent union in Mexico to emerge after USMCA's enactment is demanding a 19.2% wage increase at GM Mexico's largest assembly plant. The ongoing negotiations will likely prove a test case of the USMCA labor provisions, though a dispute last year at the same assembly plant led to the first USMCA labor complaint to be filed by US officials. In the end, we could see additional tariffs imposed on these GM vehicles if the US believes workers' rights are not being adequately protected.