UPDATED: U.S. Trade Rep calls for review of Pirelli labor dispute in Mexico

WASHINGTON — U.S. Trade Representative Katherine Tai has requested a Rapid Response Labor Mechanism dispute panel to review what the U.S. government believes is an ongoing labor dispute at a Pirelli tire manufacturing plant in Mexico.

Specifically, the request is related to a facility operated by Pirelli Neumaticos S.A. de C.V., located in the Silao de la Victories municipality in the state of Guanajuato.

"This announcement highlights the Biden-Harris administration's commitment to empowering workers and holding corporations accountable," Tai stated in a Dec. 18 release. "The RRM is a critical enforcement tool for defending workers' collective bargaining rights.

"While we remain committed to collaborating with the government of Mexico to find a resolution, our priority is the application of the sectoral agreement covering the rubber industry at Pirelli and the full protection of workers' rights to freedom of association and collective bargaining at the facility."

For its part, Pirelli told Rubber News on Dec. 20 the “latest harmonization agreement negotiated with the union was guided by the Mexican Labor Ministry and was voted and approved by 89 percent of employees.”

“Pirelli acknowledges that the U.S. and Mexican authorities have not yet reached an agreement on resolving the Rapid Response Mechanism case triggered by the Office of the U.S. Trade Representative under the (U.S. Mexico-Canada Agreement),” the company said in an email. “Mexico conducted a thorough review of Pirelli’s manufacturing facility in Silao, Guanajuato, which concluded with a report finding no denial of rights at the facility. 

“This finding was also acknowledged by USTR in its press release. Despite Mexico’s investigation finding no violations, the USTR has requested the case proceed to an arbitration panel.”

The Dec. 18 request, made under the auspices of the U.S. Mexico-Canada Agreement, follows an Aug. 23 request for a review that was sent to Mexico's Secretary of the Economy and Secretary of Work and Social Provisions, asking the Mexican government to review whether Pirelli workers were being denied the right to freedom of association and collective bargaining.

Mexico responded to the August request on Oct. 7, saying that no denial of workers' rights existed, and essentially considered the matter concluded.

"The United States disagrees with Mexico's determination and continues to have a good faith basis to believe that a denial of rights is occurring at (the Pirelli plant)," the Dec. 18 letter to Mexican officials states.

On July 23, the Interagency Labor Committee for Monitoring and Enforcement received an RRM petition from the United Steelworkers, the American Federation of Labor and Congress of Industrial Organizations, La Liga Sindical Obrera Mexicana and International Lawyers Assisting Workers Network.

The petition alleged that Pirelli was not applying a sector-wide agreement (contrato ley) covering the rubber manufacturing industry at the facility and is instead applying a singular CBA with inferior benefits.

The ILC determined there was sufficient, credible evidence of a denial of rights enabling the good faith invocation of enforcement mechanisms. As a result, the U.S. Trade Representative submitted the Aug. 23 request to Mexico for review.

Pirelli said in late August that it is having "ongoing, open and good faith dialogue with workers and the recognized union" and that the tire maker has "consistently respected the right to collective bargaining."

Mexico had 10 days to decide whether to accept the U.S. request for review and, having agreed to do so, 45 days to complete the review—which Mexico did Oct. 7, with a finding of "no denial of rights."

This, in turn, prompted the Dec. 18 request for the dispute panel.

"Instead of applying the contrato ley to determine workers' terms and conditions of employment, the (Pirelli facility) is applying a singular CBA held by a union colloquially known as the 'Miguel Trujillo Lopez' union, which is affiliated with the Confederacion de Trabajadores Mexicanos," Tai's Dec. 18 letter to Mexican officials states. "Several sections of the singular CBA provide benefits that are inferior to the benefits required by the contrato ley.

"Also, the negotiated harmonization agreements do not bring the company into compliance with the contrato ley."

Kevin Johnsen, chair of the United Steelworkers Rubber and Plastics Industry Council, said all tire manufacturers should be operating under the industry-wide contrato ley.

“All tire makers in Mexico are supposed to be operating under the ... contract law, and the USMCA provides this mechanism to ensure that the playing field is level,” Johnsen said.

The Pirelli plant, which opened the Mexico plant in 2012, has capacity to produce 8.5 million high-performance tires annually for cars, electric vehicles, SUVs and light trucks in the North American market.

In August 2023, workers at Goodyear's tire factory in San Luis Potosi, Mexico, voted to be represented by the Independent Union of Goodyear Tire Workers, a trade union affiliated with the LSOM.

The election came after months of squabbling between company management and the workers. It also followed an unfair labor complaint against Goodyear and a favorable decision from the U.S. Department of Labor.

Similar to the current Pirelli plant complaint, the LSOM participated in a complaint against Goodyear under the Rapid Response Labor Mechanism.

The U.S. Department of Labor and the U.S. Trade Representative ruled for the Goodyear workers July 19, 2023, and gave Goodyear specified mandates for moving forward with the union vote.

Tire Business contributed to this report.