Updated January 8, 2021
USMCA: Labor Provisions
The U.S.-Mexico-Canada Agreement (USMCA) entered
USMCA Provisions
into force on July 1, 2020, replacing the North American
USMCA includes components of more recent U.S. FTAs
Free Trade Agreement (NAFTA). USMCA establishes new
that strengthen NAFTA provisions and provide recourse to
and updated provisions on the protection of worker rights
the same dispute settlement mechanism as other parts of the
and enforcement of labor commitments. Congress approved
agreement. It requires parties to:
implementing legislation for USMCA (H.R. 5430) on
Adopt and maintain in statutes and regulation, and
December 19, 2019. President Trump signed the legislation
practices, worker rights as stated in the 1998 ILO
into law on January 29, 2020 (P.L. 116-113).
Declaration on Fundamental Principles and Rights at
Work, in addition to acceptable conditions of work with
The protection of worker rights and the enforceability of
respect to minimum wages, hours of work, and
labor provisions were a major congressional concern
occupational safety and health.
throughout the USMCA negotiations and remained an issue
after the three countries concluded the agreement in
Not waive or otherwise derogate from its statues or
September 2018. In response, the U.S. Trade
regulations.
Representative (USTR) and some Members of the House of
Not fail to effectively enforce labor laws through a
Representatives negotiated changes to USMCA; most of the
sustained or recurring course of action or inaction in a
changes modified the labor provisions. USTR then
manner affecting trade or investment between parties.
negotiated the proposed amendments with Canada and
Promote compliance with labor laws through
Mexico. USMCA’s new labor provisions, compared to
appropriate government action, such as appointing and
recent U.S. free trade agreements (FTAs), may be
training inspectors or monitoring compliance and
considered as a template for future FTAs.
investigating suspected violations.
For the first time in a U.S. FTA, the USMCA prohibits
Historically, U.S. labor advocates have expressed concern
imports of goods made by forced labor, and adds new
over FTAs with developing countries, due to those
commitments related to violence against workers, migrant
countries’ relatively lower wages and labor standards, and
worker protections, and workplace discrimination. It
have sought stronger labor provisions in U.S. FTAs.
maintains standard U.S. FTA language that each party
Proponents of FTAs such as NAFTA argue that they help
retains the right to “exercise reasonable enforcement
improve standards, build capacity to support worker rights
discretion and to make bona fide decisions” on the
in developing countries, and enhance economic
allocation of enforcement resources. Additionally, it
development and growth. In the long run, FTAs help
specifies that the labor chapter shall not be construed to
reallocate resources to more efficient industries, support
empower another party to undertake labor law enforcement
higher-paying U.S. jobs in some sectors, and, according to
in the territory of another party.
most economists, have a net positive effect on the U.S.
economy. At the same time, trade liberalization can have
USMCA Protocol of Amendment: Key Labor Changes
adjustment costs and job losses in other industries and
Some Members of Congress criticized the original text of the
regions of the country. The U.S. International Trade
USMCA chapters on labor and dispute settlement (DS) and
Commission estimates that, if implemented, the collective
negotiated with the Administration to amend the agreement.
bargaining commitments made by Mexico in USMCA
Key changes include the fol owing:
would increase Mexican union wages and help reduce wage
Prevention of panel blocking in dispute settlement.
disparity.
Ensures the formation of a panel in dispute cases where a
NAFTA
party refuses to participate in the selection of panelists.
NAFTA’
s labor provisions were in a side agreement called
“In a Manner Affecting Trade and Investment.” Shifts the
the North American Agreement on Labor Cooperation
burden of proof by stating that an alleged violation affects
(NAALC), which contained 11 “guiding principles”
trade and investment, unless otherwise demonstrated.
pertaining to worker rights and provisions on technical
Rapid Response Mechanism. Adds a new rapid response
assistance, capacity building, and separate dispute
mechanism to provide for an independent panel
procedures. A goal of the agreement was to resolve issues
investigation of denial of certain labor rights at “covered
in a cooperative manner through ministerial consultations in
facilities,” as opposed to a government inspection.
numerous areas, including freedom of association and
Mexico’s Labor Reform Monitoring. USMCA
collective bargaining. Full dispute resolution procedures
implementing legislation creates a new interagency
applied to a country’s “persistent pattern of failure” in
committee, labor attachés, and reporting requirements to
trade-related cases to enforce its own laws regarding child
Congress on Mexico’s implementation of labor reforms.
labor, minimum wage, and occupational safety and health.
New or amended provisions on Rules of Procedure for
DS, forced labor, and violence against workers.
https://crsreports.congress.gov
USMCA: Labor Provisions
Mexican Labor Reforms
system within USMCA to ensure stronger enforcement. The
After several years of domestic debate and constitutional
rapid response mechanism in the amended USMCA thus
reforms in 2017, on May 1, 2019, Mexican President López
provides for an independent panel investigation at “covered
Obrador signed into law a labor reform bill aimed at
facilities” for the suspected denial of the right of free
enhancing Mexican worker rights by ensuring that workers
association and collective bargaining, with the potential for
can vote for union representatives by secret ballot,
penalties and blocking of imports from the entities.
establishing the right to join unions of choice, and creating
To monitor and assess Mexico’s labor reform efforts, the
an independent labor court to resolve disputes between
USMCA implementing legislation established an
union workers and employers and register contracts, among
Independent Mexico Labor Expert Board that calls for the
other measures.
appointment of 12 U.S. trade and labor policy experts. On
USMCA Annex 23-A in the labor chapter commits Mexico
December 15, 2020, the board issued its first interim report
to enact new labor laws, such as those in the May 2019
to Congress in which it acknowledges that Mexico has
reforms. Under these reforms, Mexico commits to:
made significant progress in implementing the labor reform
measures, especially when taking into account the impact of
Eliminate all forms of forced or compulsory labor.
the Coronavirus Disease 2019 (COVID-19) pandemic.
Protect the right of workers to organize, form, and join
However, the report also acknowledges that many of the
the union of their choice.
changes promised to improve the lives of workers and
Prohibit employer interference in union activities,
ensure freedom of association and collective bargaining
discrimination, or coercion against workers.
remain to be implemented. The board offered
Provide for the exercise of a personal, free, and secret
recommendations on how the United States can help bolster
vote of workers for union elections and agreements.
worker rights in Mexico.
Establish and maintain independent and impartial bodies Issues for Congress
to register union elections and resolve disputes relating
to collective bargaining agreements.
The debate over USMCA labor provisions revisited similar
issues raised during other FTA debates. Some policymakers
Establish independent labor courts.
contend that FTAs help raise labor standards and wages in
Then-USTR Robert Lighthizer described Mexico’s reforms
lower income countries; others are concerned about worker
as a win for labor advocates, claiming that the new laws
rights protection. Numerous Members welcomed the
“will greatly improve Mexico’s system of labor justice and
amended agreement, which, they argue, includes stronger
are exactly what labor leaders in the United States and
and more enforceable labor provisions. While major U.S.
Mexico have sought for decades.” While Mexico has
labor unions endorsed the revised agreement, other
enacted these labor law reforms, and undertook
stakeholders question how the new enforcement mechanism
constitutional reforms in the past, policymakers remain
will operate in practice. Some Members, concerned about
concerned about Mexico’s ability to fully implement and
Mexico’s ability to carry out its obligations, view the U.S.
enforce its laws.
commitment to capacity building as key to strengthening
Mexico’s Federal Labor Law: Key Articles
enforcement. In moving forward, Congress may consider:
Article 47.2: Protects workers from any form of
Mexico’s enforcement ability and labor reform:
violence or forced labor.
Reforms in Mexico have potential to be transformative,
Article 133: Prohibits any form of retaliation or
but face challenges. Do Mexico’s recent actions
harassment by the government, union leadership, or
demonstrate enough political will to overcome internal
companies of workers exercising their rights.
challenges? How can the United States assist?
Article 386: Protects workers’ rights to vote for
Resources: Some stakeholders point to limited capacity
independent unions through a secret ballot process,
in Mexico, especially at the subnational level, as an
al owing workers to form their own unions and pick their
issue. USMCA implementing legislation designates
own representatives.
funding for the Department of Labor to support reform
Article 387: Imposes legal obligations on firms to
efforts in Mexico and worker-focused capacity building.
recognize workers’ right to strike.
To what extent should the United States assist Mexico
Article 604: Replaces existing Conciliation and
with resources to implement the new labor standards?
Arbitration Labor Boards that dealt with employment law
Dispute settlement: Amendments to the USMCA’s
altercations with independent labor courts to resolve
original DS procedures prevent a disputing party from
disputes and register contracts.
blocking formation of a panel. How effective will
USMCA’s DS provisions be in resolving labor disputes?
Mexico’s Implementation Plan
Rapid Response Mechanism: This new mechanism
Mexico has outlined an ambitious roadmap with annual
provides for independent panel investigations at covered
benchmarks to implement reforms over four years. Mexican
facilities, and stakeholders have indicated plans to file
officials contend that replacing the conciliation and
complaints. How can USMCA parties ensure the
arbitration board with independent labor tribunals and
mechanism’s effectiveness?
courts run by the judicial branch over the next three years
will ensure effective enforcement. After Mexico’s president
M. Angeles Villarreal, Specialist in International Trade
submitted budget proposals to Mexico’s Congress on
and Finance
September 1, 2019, critics questioned whether the 2020
Cathleen D. Cimino-Isaacs, Analyst in International Trade
budget and plan would be sufficient. Subsequently, some
and Finance
Members of Congress proposed adding a labor inspection
https://crsreports.congress.gov
USMCA: Labor Provisions
IF11308
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https://crsreports.congress.gov | IF11308 · VERSION 5 · UPDATED