Mexico Bans Importation of Goods Produced with Forced Labor

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On March 17, Mexico published new provisions to ban the importation of goods into the country produced by forced labor, including child labor. The new provisions will enter into force on May 18, 2023, 90 days after its publication in the Federal Gazette. Through this new set of rules, Mexico aims to implement Article 23.6 of the United States-Mexico-Canada Agreement (“USMCA”), which provides that the three countries (“Parties”) must prohibit “the importation of goods into (their territories) from other sources produced in whole or in part by forced or compulsory labor.”

The United States already has a decades-old regulation banning the importation of goods produced with forced labor under Section 307 of the U.S. Tariff Act. Soon after the implementation of the USMCA, the country enacted the Uyghur Forced Labor Prevention Act in 2022, which provided further prohibitions on importing certain goods made with forced labor from China’s Xinjiang Uyghur Autonomous Region. Canada also implemented a similar prohibition in compliance with USMCA Article 23.6 when the agreement entered into force on July 1, 2020. With Mexico’s new rules, there is finally an alignment of anti-forced labor regulations across North America. However, how effective the implementation of Mexico’s new rules is a question yet to be answered.

In general, the new rules provide a blanket prohibition on imports into Mexico of goods produced, in whole or part, with forced labor. Specifically, the rules state that all goods found by the Ministry of Labor and Social Welfare (“MLSW”) to be produced with forced labor will be included on a finding list that will be published on the MLSW’s website (not yet available), thus, making the importation of such goods explicitly prohibited from entering into Mexico. If a good is not included on the finding list, it is deemed by MLSW to comply with the rules.

Initiation of an investigation

MLSW is responsible for conducting a forced labor investigation. It can be self-initiated by the MLSW or a petition filed by any person or a Mexican company. The petition must comply with the following requirements:

1. Petitioner’s name and address, and in the case of a company, the company’s legal representative,
2. Full description of the reasons supporting the petition and the evidence in support of it,
3. Information about merchandise allegedly made with forced labor, including tariff line, technical specifications, uses, components used, and any other relevant information,
4. Name and address of the manufacturer allegedly producing merchandise with forced labor,
5. Region, country, or countries of origin where the merchandise was produced, and
6. The petitioner’s signature.

If the petition does not conform with the requirements above, MLSW may request the petitioner to amend it within 20 days after its submission. If MLSW determines insufficient grounds and evidence to initiate an investigation, the agency will notify the petitioner, and no investigation will be initiated.

Investigation and findings

If MLSW determines that the petition provides enough grounds and evidence to initiate an investigation, MLSW will investigate according to the following:

• Stage 1 – Provided that an interagency agreement (i.e., agreements entered by a Mexican agency with another country’s agency) on forced labor exists, MLSW will request from the relevant country authorities (or countries) to verify whether the goods are being produced with forced labor. The MLSW will adopt whatever finding the foreign authority reaches. If the foreign authority determines that the good was made by forced labor, MLSW will include the merchandise in its finding list.
• Stage 2 – Absent an applicable interagency agreement, MLSW will notify the importer of the goods about the initiation of the investigation. The importer must respond within 20 days after receiving the notice of initiation. MLSW must issue its findings within 180 days from the petition date, but it could be extended for an equivalent period. If MLSW finds that the good subject to the investigation was made using forced labor, it will publish a finding and include it in its finding list.

MLSW may remove a good from the finding list, provided that a petition is filed furnishing evidence showing that the good is no longer being produced by forced labor or, in cases where the finding on forced labor was made by the authorities of the country where the good was produced, showing that that authority has revoked its resolution.

One relevant feature of the new regulation is the deference to whatever resolution the authority of the country where the good was made issues on the subject good (Stage 1). This feature differs from the equivalent regulations underway in the U.S. and Canada because the appointed agency in those countries must independently conduct the investigation and issue a determination based on its own findings.

It is too early to assess the practical impact of the new regulations because, apparently, no interagency agreements on conducting forced labor investigations have been signed so far.

Finally, it is relevant to mention that the USMCA provides that the three Parties must “establish cooperation for the identification and movement of goods produced by forced labor” (Article 23.6(1)). Thus, it is yet to be seen how the USMCA Parties will continue aligning their actions against forced labor.

Clark Hill’s International Trade Team is ready to assist companies in ensuring compliance with forced labor regulations.