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Mexico: Rapid Response Mechanism to Expedite Dispute Resolution

Companies in Mexico have been facing an expedited dispute resolution procedure known as Rapid Response Mechanism. The purpose of the procedure is to reinforce compliance with the labour commitments assumed within the USMCA (United States, Mexico and Canada Agreement). The two key elements for a Rapid Response Mechanism to be invoked are violation of collective bargaining and/or freedom of association.

The Rapid Response Mechanism differs from any other dispute resolution mechanism as trade sanctions will be directly imposed on the companies and not on the productive sector nor the country. It is expected to take approximately four months for the dispute to be resolved with the Rapid Response Mechanism.

The Rapid Response Mechanism procedure is as follows:

  • Canada and the United States have created specific procedures to receive claims and determine if there has been a violation of freedom of association and/or collective bargaining. Both countries have a 30-day deadline to determine if the claim is admissible and if so, inform the Mexican government to review the claim.
  • Once the Mexican government received the claim, it will have a 45-day period to determine whether there is a denial of rights and, if so, propose a remedial plan.
  • The Labour and Social Welfare Ministry will create an integral analysis and reparation measures team to provide an opportunity for the parties to gather further evidence to document the case for an advisory opinion.
  • Finally, if there is a denial of rights, a reparation plan should be proposed and State-State consultation process will be opened during the following 10 days.

After the procedure for the Rapid Response Mechanism takes place, labour panels may be created in order to resolve disputes that may arise under the terms and conditions of the Rapid Response Mechanism. If a panel is formed, the three independent and impartial arbitrators on the panel may request a site visit to the disputed workplace to provide further evidence to resolve the dispute.

The Rapid Response Mechanism sanctions can range from tariff imposition to import blocking, affecting not only the work centre but the company and in most cases, the industry.

Currently, there have been 14 Rapid Response Mechanism cases in Mexico. De la Vega & Martinez Rojas has been involved in the representation of at least four companies from the 14 cases.

If you have further questions, don’t hesitate to contact us.