The actual production of electric cars also presents a concerning issue. Recently,
Reutersreported about labor violations inside a GM plant involving skewing the results of a union vote. To combat this, the U.S. and Mexico are testing their new trade deal powers to protect auto manufacturing workers.
The labor violations and GM's response
According to Reuters, the Department of labor and the U.S. Trade Representative’s (USTR) office received information about labor violations at a GM plant in Silao, Mexico. Mexico’s labor ministry found serious issues surrounding a union-led vote to consent to a labor contract, and officials said that some ballots were destroyed.
The union is part of the Confederation of Mexican Workers, and
Reutersreported that GM officials had removed independent inspectors from the voting site. They also used other intimidation tactics that targeted workers. The ministry has ordered a new vote within 30 days.
This vote tampering violates the rules laid out by the United States-Mexico-Canada Agreement (USMCA) and local labor laws. Workers were prevented from exercising their collective bargaining rights.
In a statement, GM said that, "We do not believe there was any GM involvement in the alleged violations or that any government-approved inspectors were denied access to the facility, and have retained a third-party firm to conduct an independent and thorough review."
The company also said they will cooperate with the U.S. and Mexican governments and condemns labor rights violations.
How does the trade deal work to protect labor rights?
The USMCA didn't look into labor rights originally, but trade representatives want to put more protections in place for workers. Under the North American Free Trade Agreement (NAFTA), Mexico's wages were kept low for over two decades.
Katherine Tai, U.S. Trade Representative, says the Biden administration will not tolerate past labor practices. If the U.S. and Mexico cannot resolve the labor violation issue, Tai can request a dispute settlement panel to review it. The USMCA allows countries to target specific factories that violate labor rights.
Under the Rapid Response Labor Mechanism in USMCA, the Silao plant would no longer have tariff-free access for the factory’s goods. This could also mean a 25% import tariff that would add thousands of dollars to the cost of GM’s pickup trucks.
Incentives on EVs produced in the U.S.
The United Auto Workers union wants tax incentives for EVs to only apply for cars manufactured in the U.S. Currently, GM and Ford are investing in EV production in Mexico. Even though the USMCA can help with labor reform, Mexican workers are still expected to earn less than U.S. workers in the near future.
Government involvement to incentivize EV production and discourage abusive labor practices will play a big role in shaping an ethical future for
green vehicles. For the consumer, this will affect how easy it is to switch to EVs and how much it’ll cost.
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