The Trudeau government is taking a mixed approach to Mexico charting its own path to economic growth, as a desire for more trade and better labour rights bumps up against mining reform and agriculture regulations that have riled Canadian firms.
Ahead of a visit this week of senior Mexican officials, Labour Minister Seamus O’Regan was in Mexico this month taking stock of the country’s growing movement to unionize, which has been undergoing major reforms with some Canadian help.
“What the Mexican government is doing is incredible,” O’Regan said in a recent interview. “I can’t imagine a society moving faster than they are.”
The changes stem from the replacement for NAFTA, officially known as the Canada United States Mexico Agreement, or CUSMA, which was signed during the Trump administration in 2018.
CUSMA calls for Mexico to improve the rights of labour unions and collective bargaining, in part to counteract pressure to keep U.S. salaries low to compete with America’s southern neighbour.
Those provisions have been enthusiastically taken up by the administration of Mexico’s populist centre-left president, Andrés Manuel López Obrador, often known as AMLO. The country has inked thousands of new agreements governed by scores of brand-new labour tribunals.
The Mexican government said it’s revised or signed 20,000 contracts, with 15,000 more under consultation. The changes have boosted compensation by an average of 20 per cent, the government said.
“They have ripped up just about every collective bargaining agreement in Mexico, because they were all employer-heavy and some of them were absolutely corrupt. And they are now encouraging new unions,” O’Regan said.
The Canadian Labour Congress and unions such as Unifor and the United Steelworkers have been helping their Mexican counterparts negotiate language in these agreements, and advised Mexico on its new labour tribunals. Charities like World Vision have also helped monitor the country’s efforts to eradicate forced labour from Mexico’s supply chains.
O’Regan’s department has also stationed two envoys in the country to monitor progress on the reforms, which he said is the first time Canadian labour attachés have been posted abroad.
Mexico is Canada’s third-largest trading partner after the U.S. and China, representing nearly $50 billion in two-way trade last year. O’Regan said the relationship isn’t just about trade, but shared values around adequate labour standards, which the Liberals have made a focus in trade-deal negotiations.
“All levels of government are under incredible stress and strain; expectations are high,” he said of Mexico. “They have a long way to go but they’re making tremendous progress.”
The Business Council of Canada is hoping for similar collaboration between big business in both countries. Along with its Mexican equivalent, the council has been asking the governments of both countries to craft a strategy to boost competitiveness of the manufacturing sectors, ramp up investments in priority sectors and have provinces work more with Mexican states.
Those items will likely be raised this week when senior officials from both countries will meet to take stock of trade, investment and skilled labour, under what’s officially called a high-level economic dialogue.
But those talks could face some headwinds as AMLO’s government reforms the mining sector.
Mexico is the world’s top provider of silver, which is a key metal for electric vehicles and solar power. Like many Latin American countries, it is trying to improve the benefits to communities by providing these metals to companies based in countries that are trying to become less reliant on China.
In late May, Trade Minister Mary Ng noted in a press release that Canada has “continued concerns” with the mining reform, which would boost corporate requirements for local compensation and transparency while aiming to limit speculation in the sector.
Canada is a global hub for mining companies, many of which focus on exploring for minerals and buying the rights to an extraction area, known as a concession, which can be held and eventually sold to another company. The reform lowers the maximum length of time for these concessions, and allows some to be cancelled if no mining is undertaken within two years.
Canadian companies have warned that the reforms might violate CUSMA as well as a Pacific Rim trade deal that counts both countries as members. Tamino Minerals pulled out of Mexico in April citing “political instability,” and others have threatened to follow suit, particularly after Mexico nationalized lithium reserves last year.
In a statement, the Mexican Embassy in Canada said changes in the mining sector seek to “reduce the impact on the environment, ensure the conservation of water for human consumption, and to protect local and Indigenous communities — issues that are part of the shared priorities between Mexico and Canada.”
The embassy also praised “crucial” efforts by big business to seek closer ties between the two countries.
“Traditionally the dialogue among businesses has taken place in the trilateral context. However, to harness the full potential of both countries’ engagement, we need a direct dialogue that takes into account the benefits of a stronger partnership,” the embassy wrote in a statement.
The embassy said that can help with supply chains and innovation, but also sustainability and economic growth for under-represented groups such as women and Indigenous Peoples.
Last Friday, Canada joined an American challenge under CUSMA of Mexican laws that ban the use of genetically-modified corn in tortillas and dough, a change the Canada Grains Council argues is not grounded in science.
Mexico has also been calling on Ottawa to resist a call by Washington this spring to consider reinstating a visa requirement for visiting Mexican citizens, which ended in 2016. U.S. Homeland Security Secretary Alejandro Mayorkas suggested to media that requiring visas may help stem illegal migration.