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Why Should HR Professionals Pay Attention to the International Trade Agreements?

Why Should HR Professionals Pay Attention to the International Trade Agreements? Background Decorative Image

As you may know, the United States, Canada, and Mexico negotiated a new trade agreement in November 2018 titled the United States–Mexico–Canada Agreement (USMCA), which is intended to replace NAFTA. The Agreement alters NAFTA in one surprising way. The USMCA requires Mexico to pass new labor laws that provide rights to employees beyond those they currently enjoy. These additional worker protections largely anticipate changes the new incoming administration of López Obrador signaled it would enact. Initially, these changes were supposed to be implemented by January 1, 2019, but given that deadline has passed with no such amendments, the understanding is now that the amendments will be in place by the end of April.

The biggest change to Mexican labor law called for in the USMCA is to give workers in Mexico the ability to actually vote for the leaders of the Union and to vote in secret ballot elections on the question of which union, if any, will represent them in collective bargaining with their employer. This is a significant change for Mexico because there has often been a disconnect between unions who claim to represent the employees and the ability of the employees to have any influence on that representation.

Some of these changes to Mexico’s labor laws will provide greater clarity—but also pose additional challenges—for employers. For those HR specialists whose companies have operations in Mexico, it is important to understand what these changes may mean for their company’s operations in Mexico. There are opportunities to do so coming up at the end of March and in early April during programs sponsored by the International Law Section of the Texas Bar.

Considering the potential for future trade agreements to include similar types of labor obligations, HR specialists of international companies should pay close attention to the negotiations, and ultimate ratification, of such trade treaties.

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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.