In more detail
The Forced Labor Regulation, which will become effective on 18 May 2023, implements the obligation included in the USMCA to prohibit the importation of goods produced in whole or in part by forced or compulsory labor, including forced or compulsory child labor. The full text of the publication can be found here, and the relevant announcement made by the United States Trade Representative can be found here. This is a significant development that marks the Mexican government's first step to implementing the forced labor import ban under the USMCA.
The Forced Labor Regulation provides that the Ministry of Labor and Social Welfare (MLSW) may initiate, ex officio or at the request of a private party, a procedure where it will determine if forced labor was used in the production of goods. To the extent MLSW, following its procedure, determines that certain goods were made with forced labor, such findings (called "resolutions") will be published on MSLW's website, pursuant to the Forced Labor Regulation, and goods covered by such resolutions will be prohibited from entering into Mexico. We expect further clarifications and guidance to be issued by the MLSW and the Ministry of Economy in the following weeks, which should assist Mexican importers to meet the relevant requirements.
Takeaways
Once the Forced Labor Regulation becomes effective on 18 May 2023, Mexican importers will need to maintain in their files information and documents that duly demonstrate that the goods they import are not covered by the lists on the MLSW website. This means companies should ensure proper implementation of robust and effective due diligence practices, including adopting adequate systems, controls and training in line with best practices; enhanced traceability and transparency in supply chains; and plans to meet regulator expectations. Mexico's implementation of the Forced Labor Regulation may mirror certain aspects of similar, recent developments in the United States and/or Canada (see our previous blogs summarizing such developments here, here, and here). Companies are encouraged to take a holistic approach in their forced labor compliance programs within the USMCA region and coordinate relevant expertise within their organizations.
