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Proposed Outsourcing Changes Could Affect USMCA Passage


Mexican Senator Napoleón Gómez Urrutia. Photo: Pulso

By RICARDO CASTILLO 

At a time when the United States-Mexico-Canada Agreement (USMCA) is almost a done deal, in Mexico the debate continues.

On the one hand, union leader and Senator Napoleón Gómez Urrutia turned in an initiative to modify outsourcing-related clauses within the Federal Labor Law in order to bring further benefits to what he sees as downtrodden low-wage Mexican workers.

The proposal – not even close to becoming a law – was quickly deemed “unconstitutional” by the Business Coordinating Council (CCE), whose current president, Gustavo de Hoyos, has turned it from what it is, a business representation, into what is tantamount to a new political party.

The problem in Mexico nowadays is that there are many ways of “outsourcing” both manufacturing and services and what Gómez Urrutia would like to do is give more protection to workers under the law.

The senator called outsourcing, or subcontracting, also known in Mexico as “tercería,” or appealing to third-party services, illegal. He did so on the grounds that there is a multiplicity of “outsourcing” in which one outsourcing company hires another one for specific duties. In this case, the worker is left outside the Labor Law in the sense that the  labor ends up as piecework production, without providing any rights a normal worker would have if he were working for an established manufacturing company. In short, it put piecework outsourcing near slavery status, which will have no place under any trade treaty.

In any case, there are opposing views since the CCE considers that the revamping of the Federal Labor Law as proposed by Gómez Urrutia will imperil the approval of the USMCA because it will interfere with Chapter 19 of the treaty, which is specifically about outsourcing.

The fact  is that there are thousands of outsourcing companies currently operating in Mexico, with literally millions of workers being affected by piecework wages. This also leads, the proposed changes state, to massive tax evasion in Mexico.

Gómez Urrutia knows that his introduction of changes to the law on Oct. 23 is not a banner that his own National Regeneration Movement (Morena) political party is taking up lightly. His peers in the Senate have doubts about introducing the changes and will discuss it further with the entrepreneurial organizations, which have concerns about the benefits it may bring to the already-finished USMCA negotiations.

The fact is, Mexico in its negotiations with the United States and Canada, has no commitment to change outsourcing regulations already agreed upon since it is a common hiring practice in the United States and Canada.

What is worrying business organizations such as the CCE and the National Industrialists’ Confederation (Concamin) is that the proposed changes may “induce variants” into several of the established regulations. It is of particular concern for the Democrats, who have insisted on the certainty of having a solid Labor Law in Mexico. Changes at this point may just – they fear – bring either delays or an outright rejection of the USMCA. Labor law specialists believe that reopening the labor subject may lead to a no-ratification decision, again, particularly by the Democrats. both in the U.S. House of Representatives and the U.S. Senate.

A different organization, the National Employers Confederation (Coparmex) has claimed that the changes in the law would deem outsourcing “illegal,” making it clear that the amendments proposed by Gómez Urrutia would criminalize many activities that are now common trade practices in Mexico.

Just how far Gómez Urrutia’s proposals will go in Congress, particularly in the Senate, remains to be seen, but another fact of life in Mexican politics is that President Andrés Manuel López Obrador (AMLO) wants the USMCA passed badly and the union leader’s proposal may bring about unforeseen problems.

In short, the business organizations’ message to Gómez Urritia now is, with the USMCA being as they are: Don’t rock the boat!

 

 

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Categories: Mexico, Opinion, Politics, UncategorizedTags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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