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Cogesoa Resarc Sev1
September 12, 2019
USMCA: Labor Provisions
Over view
The proposed U.S.-Mexico-Canada Agreement (USMCA),
signed in late 2018, requires implementing legislation that
must be approved by both Houses of Congress before it can
enter into force. Labor issues are one of the major policy
issues of interest for some Members of Congress as they
consider the final agreement.
The USMCA would revise and strengthen labor provisions
of the 1994 North American Free Trade Agreement
(NAFTA), and require Mexico to enact certain changes to
its domestic labor laws. Scrutiny over Mexico's labor
practices during the negotiations put increased pressure on
Mexico to advance ongoing reform efforts. After several
years of domestic debate and constitutional reforms in
2017, on May 1, 2019, Mexican President Andr6s Manuel
L6pez Obrador signed into law a labor reform bill aimed at
enhancing Mexican worker rights by ensuring that workers
can vote for union representatives by secret ballot,
establishing the right to join unions of choice, and creating
an independent labor court to resolve disputes between
union workers and employers and register contracts, among
other measures. Similar issues are addressed in an annex of
the USMCA.
Historically, U.S. labor advocates have expressed concern
over free trade agreements (FTAs) with developing
countries, due to those countries' relatively lower wages
and labor standards, and have sought stronger labor
provisions in U.S. FTAs. In the view of some observers,
U.S. FTAs can help improve standards, build capacity to
support worker rights in developing countries, and enhance
economic development and growth. At the same time, trade
liberalization can adversely impact domestic labor markets
in certain industries and regions of the country. In the long
run, FTAs help reallocate resources to more efficient
industries, support higher-paying U.S. jobs, and, according
to most economists, have a net positive effect on the U.S.
economy. The U.S. International Trade Commission
estimates that if implemented, the collective bargaining
commitments made by Mexico in USMCA, would increase
Mexican union wages and help reduce wage disparity.
NAFTA
NAFTA's labor provisions are in a side agreement
containing 11 guiding principles pertaining to worker
rights. Other provisions involve technical assistance,
capacity building, and separate dispute procedures, along
with a labor cooperation mechanism. Full dispute resolution
procedures apply only to a country's persistent pattern of
failure in trade-related cases to enforce its own laws
regarding child labor, minimum wage, and occupational
safety and health. Issues such as freedom of association and
the right to organize are limited to ministerial consultations.
USMCA
The proposed USMCA includes components of more recent
U.S. FTAs that strengthen labor provisions and provide
recourse to the same dispute settlement mechanism as other
parts of the agreement. Unlike NAFTA, it requires parties
not only to enforce their own laws, but also adopt and
maintain specific laws on core worker rights related to the
International Labor Organization (ILO) Declaration on
Fundamental Principles and Rights at Work. The USMCA
also commits parties to:
* not waive or otherwise derogate from labor statutes or
regulations to promote trade and investment;
* not fail to effectively enforce labor laws through a
sustained [consistent or ongoing] or recurring
[periodically or repeatedly] course of action or inaction
in a manner affecting trade or investment between
parties; and
* promote compliance with labor laws through
appropriate government action, such as appointing and
training inspectors or monitoring compliance and
investigating suspected violations.
USMCA also builds on U.S. FTA practice by prohibiting
imports of goods made by forced labor, and adding new
commitments related to violence against workers, migrant
worker protections, and workplace discrimination. It
maintains standard U.S. FTA language that each party
would retain the right to exercise reasonable enforcement
discretion and to make bona fide decisions on the
allocation of enforcement resources. Additionally, it
specifies that the labor chapter shall not be construed to
empower another party to undertake labor law enforcement
in the territory of another party.
NAFTA and USMCA labor provisions are often discussed
in the context of Mexico's record on worker rights. Some
stakeholders and Members of Congress advocated that the
United States negotiate a labor plan with Mexico, both
during past Trans-Pacific Partnership (TPP) talks and again
during the negotiations to revise NAFTA. In the proposed
TPP, for example, the United States had negotiated separate
bilateral labor consistency plans with Vietnam, Malaysia,
and Brunei, which included commitments for specific legal
reforms and other measures. Mexico resisted such a plan.
Instead, USMCA includes a separate annex addressing
labor practices of most concern.
Mexican Labor Reforms
In the USMCA, Mexico agreed to develop and implement
reforms to strengthen its labor laws to protect collective
bargaining and to reform its system for administering labor
justice. Annex 23-A in USMCA's labor chapter (Chapter
23) commits Mexico to enact specific legislative action in
regard to its labor laws; specifying that absent such action a
delay in USMCA's entry into force could be possible. The
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