Updated January 20, 2022
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 for inclusion in 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 and USMCA argue
retains the right to “exercise reasonable enforcement
that they help improve standards, build capacity to support
discretion and to make bona fide decisions” on the
worker rights in developing countries, and enhance
allocation of enforcement resources. Additionally, it
economic development and growth. In the long run, FTAs
specifies that the labor chapter shall not be construed to
help reallocate resources to more efficient industries,
empower another party to undertake labor law enforcement
support higher-paying U.S. jobs in some sectors, and,
in the territory of another party.
according to most economists, have a net positive effect on
the U.S. economy. At the same time, trade liberalization
USMCA Protocol of Amendment: Key Labor Changes
can have adjustment costs and job losses in other industries
Some Members of Congress criticized the original text of the
and regions of the country. The U.S. International Trade
USMCA chapters on labor and dispute settlement (DS) and
Commission estimated that, if fully implemented, Mexico’s
negotiated the fol owing key changes to the agreement:
USMCA labor commitments would increase Mexican union
Prevention of panel blocking in dispute settlement.
wages and help reduce wage 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
burden of proof by stating that an alleged violation affects
the North American Agreement on Labor Cooperation
(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
the Coronavirus Disease 2019 (COVID-19) pandemic, but
After several years of domestic debate and constitutional
that more changes remained to be implemented. The 2021
reforms in 2017, on May 1, 2019, Mexican President López
report includes recommendations on how the United States
Obrador signed into law a labor reform bill aimed at
can help bolster worker rights in Mexico. However, it also
enhancing Mexican worker rights by ensuring that workers
includes a separate statement with dissenting views of some
can vote for union representatives by secret ballot,
board members who, although they agree with the main
establishing the right to join unions of choice, and creating
report conclusions, state that the Board does not have the
an independent labor court to resolve disputes between
legal authority to make wide-ranging recommendations.
union workers and employers. The reform also mandates
the creation of Conciliation and Labor Registration Centers,
USMCA Implementation
which are responsible for carrying out conciliation services
Implementation of USMCA labor provisions has raised a
in labor conflicts and the registration of collective
number of issues for U.S. policymakers and labor
bargaining agreements.
advocates. Three labor complaints have been filed under
USMCA. The first was filed by Mexican migrant worker
USMCA Annex 23-A in the labor chapter commits Mexico
women and civil society organizations against the United
to enact new labor laws, such as those in the May 2019
States. The other two were filed by the United States
reforms, including the following:
against facilities in Mexico under USMCA’s novel rapid-
Eliminate all forms of forced or compulsory labor.
response mechanism. Remediation agreements were
Protect the right of workers to organize, form, and join
reached on both U.S. complaints, while the Mexican
the union of their choice.
complaint appears to remain in the consultation stage.
Prohibit employer interference in union activities,
discrimination, or coercion against workers.
USMCA implementing legislation included $210 million to
go to the Department of Labor’s Bureau of International
Provide for the exercise of a personal, free, and secret
vote of workers for union elections and agreements.
Labor Affairs (ILAB) for USMCA-implementation
activities. Out of this amount, $180 million would be used
Establish and maintain independent and impartial bodies
over four years for USMCA-related technical assistance
to register union elections and resolve disputes relating
projects and $30 million over eight years for the capacity of
to collective bargaining agreements.
ILAB to monitor USMCA compliance, including the
Establish independent labor courts.
necessary expenses of additional full-time employees for
Then-USTR Robert Lighthizer described Mexico’s reforms
the Interagency Committee and labor attachés in Mexico.
as a win for labor advocates, claiming that the new laws
“are exactly what labor leaders in the United States and
Issues for Congress
Mexico have sought for decades.” While Mexico has
The debate over USMCA labor provisions revisited similar
enacted these labor law reforms, policymakers remain
issues raised during other FTA debates. While major U.S.
concerned about Mexico’s ability and commitment to fully
labor unions endorsed the final agreement, other
implement and enforce its laws.
stakeholders question how the new enforcement mechanism
will operate in practice. Some Members, concerned about
Mexico’s Federal Labor Law: Key Articles
Mexico’s ability to carry out its obligations, view the U.S.
Article 47.2: Protects workers from any form of
commitment to capacity building as key to strengthening
violence or forced labor.
enforcement. In moving forward, Congress may consider:
Article 133: Prohibits any form of retaliation or
harassment by the government, union leadership, or
Mexico’s enforcement ability and labor reform:
companies of workers exercising their rights.
Reforms in Mexico have potential to be transformative,
but face challenges. To what extent can the Mexican
Article 386: Protects workers’ rights to vote for
independent unions through a secret ballot process,
government overcome internal challenges?
allowing workers to form their own unions and pick their
Resources: Some stakeholders point to limited capacity
own representatives.
in Mexico as an issue for full implementation of
Article 387: Imposes legal obligations on firms to
USMCA provisions and labor reforms. To what extent
recognize workers’ right to strike.
should the United States continue to assist Mexico with
Article 604: Replaces existing Conciliation and
resources to implement labor reforms?
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?
Independent Labor Board Monitoring
Rapid Response Mechanism: This new mechanism
To monitor and assess Mexico’s labor reform efforts, the
provides for independent panel investigations at covered
USMCA implementing legislation established an
facilities. How can USMCA parties ensure the
mechanism’s
Independent Mexico Labor Expert Board of 12 U.S. trade
effectiveness?
and labor policy experts. The Board has issued two reports
M. Angeles Villarreal, Specialist in International Trade
to Congress and the Interagency Labor Committee, one on
and Finance
December 15, 2020 and the second on July 7, 2021. In both
reports, the Board acknowledged that Mexico had made
Cathleen D. Cimino-Isaacs, Analyst in International Trade
significant progress in implementing the labor reform
and Finance
measures, especially when taking into account the impact of
https://crsreports.congress.gov
USMCA: Labor Provisions
IF11308
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https://crsreports.congress.gov | IF11308 · VERSION 7 · UPDATED