USMCA: Labor Provisions
Updated January 12, 2023
USMCA: Labor Provisions
The U.S.-Mexico-Canada Agreement (USMCA) entered
USMCA Provisions
into force on July 1, 2020, replacing the 1994 North
USMCA includes components of more recent U.S. FTAs
American Free Trade Agreement (NAFTA). USMCA
that strengthen NAFTA provisions and provide recourse to
establishes new and updated provisions on the protection of
the same dispute settlement mechanism as other parts of the
worker rights and enforcement of labor commitments.
agreement. It requires parties to
Congress approved implementing legislation for USMCA
Adopt and maintain in statutes and regulation, and
(H.R. 5430) on December 19, 2019. President Trump
practices, worker rights as stated in the 1998 ILO
signed the legislation into law on January 29, 2020 (P.L.
Declaration on Fundamental Principles and Rights at
116-113).
Work, in addition to acceptable conditions of work with
respect to minimum wages, hours of work, and
The protection of worker rights and the enforceability of
occupational safety and health.
labor provisions were a major congressional concern
Not waive or otherwise derogate from its statues or
throughout the USMCA negotiations and remained an issue
regulations.
after the three countries concluded the agreement in
Not fail to effectively enforce labor laws through a
September 2018. In response, the U.S. Trade
sustained or recurring course of action or inaction in a
Representative (USTR) and some Members of the House of
manner affecting trade or investment between parties.
Representatives negotiated changes to USMCA; most of the
Promote compliance with labor laws through
changes modified the labor provisions. USTR then
appropriate government action, such as appointing and
negotiated the proposed amendments with Canada and
training inspectors or monitoring compliance and
Mexico. USMCA’s new labor provisions, compared to
investigating suspected violations.
recent U.S. free trade agreements (FTAs), may be
considered for inclusion in future FTAs.
For the first time in a U.S. FTA, the USMCA prohibits
imports of goods made by forced labor, and adds new
Historically, U.S. labor advocates have expressed concern
commitments related to violence against workers, migrant
over FTAs with developing countries, due to those
worker protections, and workplace discrimination. It
countries’ relatively lower wages and labor standards, and
maintains standard U.S. FTA language that each party
have sought more enforceable labor provisions in U.S.
retains the right to “exercise reasonable enforcement
FTAs. Proponents of FTAs such as NAFTA and USMCA
discretion and to make bona fide decisions” on the
argue that they help improve standards, build capacity to
allocation of enforcement resources. Additionally, it
support worker rights in developing countries, and enhance
specifies that the labor chapter shall not be construed to
economic development and growth. In the long run, FTAs
empower another party to undertake labor law enforcement
help reallocate resources to more efficient industries,
in the territory of another party.
support higher-paying U.S. jobs in some sectors, and,
USMCA Protocol of Amendment: Key Labor Changes
according to most economists, have a net positive effect on
Some Members of Congress criticized the original text of the
the U.S. economy. At the same time, trade liberalization
USMCA chapters on labor and dispute settlement (DS) and
can have adjustment costs and job losses in other industries
negotiated the fol owing key changes to the initial agreement:
and regions of the country. The U.S. International Trade
Commission estimated that, if fully implemented, Mexico’s
Prevention of panel blocking in dispute settlement.
USMCA labor commitments would increase Mexican union
Ensures the formation of a panel in dispute cases where a
wages and help reduce wage disparity.
party refuses to participate in the selection of panelists.
“In a Manner Affecting Trade and Investment.” Shifts the
NAFTA
burden of proof by stating that an alleged violation of
NAFTA’s labor provisions were in a side agreement called
labor obligations affects trade and investment, unless
the North American Agreement on Labor Cooperation
otherwise demonstrated.
(NAALC), which contained 11 “guiding principles”
Rapid Response Mechanism. Adds a new rapid response
pertaining to worker rights and provisions on technical
mechanism to provide for an independent panel
assistance, capacity building, and separate dispute
investigation of denial of certain labor rights at “covered
procedures. A goal of the agreement was to resolve issues
facilities,” as opposed to a government inspection.
in a cooperative manner through ministerial consultations in
numerous areas, including freedom of association and
Mexico’s Labor Reform Monitoring. USMCA
implementing legislation creates a new interagency
collective bargaining. Full dispute resolution procedures
committee, labor attachés, and reporting requirements to
applied to a country’s “persistent pattern of failure” in
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
report includes recommendations on how the United States
After several years of domestic debate and constitutional
can help bolster worker rights in Mexico. However, it also
reforms, on May 1, 2019, Mexico’s president signed into
includes a separate statement with dissenting views of some
law a labor reform bill aimed at enhancing Mexican worker
board members who, although they agree with the main
rights by ensuring that workers can vote for union
report conclusions, state that the Board does not have the
representatives by secret ballot, establishing the right to join
legal authority to make wide-ranging recommendations.
unions of choice, and creating an independent labor court to
resolve disputes between union workers and employers.
USMCA Implementation
The reform also mandates the creation of Conciliation and
Some U.S. policymakers and labor advocates raise a
Labor Registration Centers, which are responsible for
number of issues over implementation of USMCA labor
carrying out conciliation services in labor conflicts and the
provisions. The first USMCA labor petition was filed by
registration of collective bargaining agreements. The new
Mexican migrant worker women and civil society
law will fully enter into effect by May 2023.
organizations against the United States. Five others were
filed by the United States against facilities in Mexico under
USMCA Annex 23-A in the labor chapter commits Mexico
USMCA’s rapid-response mechanism. Remediation
to enact new labor laws, such as those in the May 2019
agreements were reached on all U.S. complaints, while the
reforms, including
Mexican complaint appears to remain in the consultation
Eliminate all forms of forced or compulsory labor.
stage. A new U.S. petition filed in January 2023 targets a
Protect the right of workers to organize, form, and join
facility in Mexico that was subject to a prior complaint.
the union of their choice.
Prohibit employer interference in union activities,
USMCA implementing legislation included $210 million to
discrimination, or coercion against workers.
go to the Department of Labor’s Bureau of International
Provide for the exercise of a personal, free, and secret
Labor Affairs (ILAB) for USMCA-implementation
vote of workers for union elections and agreements.
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
the Interagency Committee and labor attachés in Mexico.
Then-USTR Robert Lighthizer described Mexico’s reforms
as a win for labor advocates, claiming that the new laws
Issues for Congress
“are exactly what labor leaders in the United States and
The debate over USMCA labor provisions revisited similar
Mexico have sought for decades.” Some policymakers
issues raised during other FTA debates. While U.S. labor
remain concerned about Mexico’s ability and commitment
unions endorsed the final agreement, some question how
to fully implement and enforce its laws.
the new dispute mechanism is operating in practice. Some
Members, concerned about Mexico’s ability to carry out its
Mexico’s Federal Labor Law: Key Articles
obligations, view U.S. commitment to capacity building as
Article 47.2: Protects workers from any form of
key to strengthening enforcement. Congress may consider
violence or forced labor.
Mexico’s enforcement ability and labor reform.
Article 133: Prohibits any form of retaliation or
harassment by the government, union leadership, or
Reforms in Mexico have potential to be transformative,
companies of workers exercising their rights.
but face challenges. To what extent can the Mexican
government overcome internal challenges?
Article 386: Protects workers’ rights to vote for
independent unions through a secret ballot process,
Resources. Some stakeholders point to limited capacity
allowing workers to form their own unions and pick their
in Mexico as an issue for full implementation of
own representatives.
USMCA labor provisions and reforms. To what extent
should the United States continue to assist Mexico with
Article 387: Imposes legal obligations on firms to
recognize workers’ right to strike.
resources to implement labor reforms? How effective
are related U.S. technical assistance programs?
Article 604: Replaces existing Conciliation and
Arbitration Labor Boards that dealt with employment law
Dispute settlement. Amendments to USMCA aimed to
altercations with independent labor courts to resolve
resolve key procedural shortcomings of DS. How
disputes and register contracts.
effective are DS provisions in resolving labor disputes?
Independent Labor Board Monitoring
Rapid Response Mechanism. Several complaints have
been initiated and resolved under the new mechanism
To monitor and assess Mexico’s labor reform efforts,
that provides for independent panel investigations at
USMCA implementing legislation established an
covered facilities. What are the lessons learned? How
Independent Mexico Labor Expert Board of 12 U.S. trade
can USMCA parties ensure the mechanism’s continued
and labor policy experts. The Board has issued two reports
effectiveness? Is the mechanism a model for prospective
to Congress and the Interagency Labor Committee, one on
U.S. trade deals?
December 15, 2020 and the second on July 7, 2021. In both
reports, the Board acknowledged that Mexico had made
M. Angeles Villarreal, Specialist in International Trade
significant progress in implementing the labor reform
and Finance
measures, especially when taking into account the impact of
Cathleen D. Cimino-Isaacs, Analyst in International Trade
the Coronavirus Disease 2019 (COVID-19) pandemic, but
and Finance
that more changes remained to be implemented. The 2021
https://crsreports.congress.gov
USMCA: Labor Provisions
IF11308
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https://crsreports.congress.gov | IF11308 · VERSION 10 · UPDATED