(Bloomberg) -- Workers at a General Motors Co. truck plant in Mexico voted to cancel their union contract after the U.S. initiated a dispute against conditions at the factory, a historic victory for the North American free trade agreement.
Employees at the huge GM plant in Silao, Guanajuato, voted 3,214 for, and 2,623 against, terminating their contract, allowing them to choose a new union. In Mexico, giant labor confederations have struck deals for decades with companies that have kept worker pay low, angering Mexico's North American partners.
The vote emerged as an important test case for new labor provisions under the revamped North America trade deal, known as USMCA, which the U.S. cited to file its labor dispute. And as one of the three GM plants that produce highly profitable pickup trucks, the plant is critical to the company's balance sheet.
Read More: U.S. Asks Mexico to Probe Labor Rights at GM Truck Plant
As part of the USMCA, President Andres Manuel Lopez Obrador's administration pushed through a law in 2019 that requires unions to hold votes by secret ballot to validate their labor contracts. This is meant to drive out the unions that don't legitimately represent workers. Of 1,504 elections at plants across the country, only six have ended in contracts being terminated.
A previous vote at the GM plant in April was thrown out after Mexico found irregularities in the election held by the union, a chapter of Mexico's largest syndicate known as CTM.
That led U.S. trade chief Katherine Tai to ask Mexico to probe labor issues at the GM truck plant in Silao, amid concerns that workers' rights were being denied, opening a thorny bilateral issue. It was the first time the strategy had been used in the trade deal between the nations and Canada.
Read More: GM's Mexico Labor Battle Spurred by Workers' Safety Concerns
“GM reiterates that it respects the result of this process,” the car maker said in a statement. “Workers' benefits will remain valid. GM Silao will continue its operations under the current conditions of the collective contract while a new one is negotiated and approved by a majority.”
Representatives for Mexico's Labor Ministry, the Electoral Institute and the International Labor Organization were on site to oversee the vote, which took place Tuesday and Wednesday.
Generando Movimiento, a group of current and former workers that opposed the CTM union, said at a press conference on Thursday that employees would now have the opportunity for democratic and transparent representation under a new contract.
“This is a watershed moment for other companies to see what can really be done if we are united, if we are organized, and if we fight,” said Sergio Contreras Ortega, one of the group's members. “The most important point is that people have the ability and the right to seek their own benefits, to decide what's best for them.”
The Labor Ministry said in a statement on Thursday that there were no incidents in the 34-hour vote. It said that the proceedings would contribute to “the development of future democratic union processes in the country.”
The plant has more than 6,000 unionized workers and is located about 215 miles (350 km) northwest of Mexico City.
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