Dear Clients and Friends:
Recently, a panel under the Rapid Response Mechanism (“RRM”) of the United States-Mexico-Canada Agreement (USMCA) issued a preliminary determination against a Canadian mining company in connection with events occurred at its operations in Mexico, analyzing the existence of serious violations of its weokers´ labor rights.
Beyond the specific facts -related to potential acts of union interference, pressure on workers, and an adverse environment for the exercise of collective rights- the case is particularly relevant due to the standard that is beginning to take shape under this mechanism.
Specifically, an approach is emerging under which corporate liability in these situations may extend not only to direct actions by companies, but also to omissions in the management of risks within their operations.
This implies that elements traditionally considered external -such as the security environment, the conduct of contractors or suppliers, and the manner in which labor relations are managed- may be incorporated into the compliance analysis of a mining operation. Under this framework, the absence of adequate preventive measures, effective controls, or sufficient documentary evidence of their implementation may result in the imposition of sanctions, even in the absence of direct involvement by the company.
Under this new approach, it is no longer sufficient to have formal policies or mechanisms in place; rather, it is essential to be able to demonstrate, in a clear and verifiable manner, that such controls are effectively implemented in practice.
Additionally, as this is a mechanism established under the USMCA, these types of determinations may have effects beyond Mexican territory. Companies with exposure to the United States -whether through exports, financing, corporate structure, or market access- may face additional international scrutiny, potential sanctions, trade restrictions, or reputational impacts if deficiencies in their compliance frameworks are identified.
In this context, companies operating in Mexico, particularly in sectors such as mining, must transition from a reactive to a preventive approach, in which the identification, management, and documentation of risks become central elements of their compliance strategy.
At EC Rubio, we recommend implementing proactive internal audits to assess compliance with freedom of association and collective bargaining rights, ensure union neutrality and proper management of labor processes, review relationships with contractors and third parties (including compliance with the Specialized Services Providers Registry “REPSE”), and evaluate risks associated with the operational environment.
Likewise, it is essential to establish clear response protocols and robust documentation mechanisms to demonstrate compliance in the event of potential reviews or proceedings under the RRM.
A structured and forward-looking approach not only helps mitigate risks, but also strengthens a company’s position in an increasingly demanding regulatory environment.
Our audit goes beyond merely identifying risks; it provides a clear diagnosis, practical recommendations, and a mitigation strategy aligned with the USMCA and its Rapid Response Labor Mechanism. Companies that anticipate reduce risk; those that do not remain exposed.
We will continue to closely monitor the situation and keep you updated not only about the evolution of this this emerging standard, but also about other developments with direct implications for the mining industry.
Should you have any questions or comments regarding the foregoing, please do not hesitate to call your usual contact in the Firm.
Mining
Pablo Méndez Alvídrez / pablo.mendez@ecrubio.com
Alejandro Guerra Herrera / alejandro.guerra@ecrubio.com
Jorge Alberto Hernández Ogaz / jorge.hernandez@ecrubio.com
Kevin Daniel Rico Motis / daniel.rico@ecrubio.com
Jesús Martín Miranda Barraza / martin.miranda@ecrubio.com
Alejandro Salomón Fierro / alejandro.salomon@ecrubio.com
Oscar Javier Villado Mendias / oscar.villado@ecrubio.com