The USMCA has the strongest and most far-reaching labor provisions of any trade agreement. The agreement contains a labor chapter that prioritizes labor obligations by including them in the core of the agreement and making them fully enforceable. This is a major change from NAFTA, which only contained a side agreement on labor, and it will dramatically benefit American workers and businesses.
Complementing the USMCA's cutting-edge labor provisions, the agreement also contains a groundbreaking enforcement provision. The Rapid Response Labor Mechanism is the first of its kind and allows the United States to take enforcement actions against individual factories if they fail to comply with domestic freedom of association and collective bargaining laws.Similarly, the USMCA includes provisions aimed at directly improving wages and bringing jobs back to the American auto industry. The deal contains novel rules of origin that require 40-45% of auto content be made by workers earning at least $16 USD per hour in order to receive USMCA tariff relief.
The USMCA implementing legislation includes $210 million to ILAB for USMCA-implementation activities: $180 million over four years for USMCA-related technical assistance projects and $30 million over eight years for the capacity of ILAB to monitor USMCA compliance, including the necessary expenses of additional full-time ILAB employees for the Interagency Committee and labor attachés in Mexico.
Among its provisions, the USMCA Labor Chapter:
- Requires the Parties to adopt and maintain in law and practice labor rights as recognized by the International Labor Organization (ILO), to effectively enforce its labor laws, and not to waive or derogate from its labor laws.
- Includes new provisions that require the Parties to take measures to prohibit the importation of goods produced by forced labor, to address violence against workers exercising their labor rights, to address sex-based discrimination in the workplace, and to ensure that migrant workers are protected under labor laws.
- Includes an Annex on Worker Representation in Collective Bargaining in Mexico, under which Mexico commits to specific legislative actions to provide for the effective recognition of the right to collective bargaining.
- Will allow for workers to engage in real collective bargaining and will require companies in Mexico to abide by the same basic labor principles that companies in the United States do.
- To fulfill this commitment, Mexico enacted historic labor reforms on May 1, 2019, and is implementing transformational changes to its labor regime, including new independent institutions for registering unions and collective bargaining agreements and new and impartial labor courts to adjudicate disputes.
Petitions under the USMCA Labor Chapter and Rapid Response Labor Mechanism
Petitions and information alleging a failure to comply with the labor obligations under the USMCA Labor Chapter or denial of rights at a covered facility, as those terms are defined in the USMCA Procedural Guidelines related to the Rapid Response Labor Mechanism of the USMCA (Annex 31–A), should be sent to Office of Trade and Labor Affairs, Bureau of International Labor Affairs, U.S. Department of Labor, 200 Constitution Avenue NW, Room S-5315, Washington, DC 20210, USMCAemail@example.com, telephone number 202-693-4649.
USMCA Web-Based Hotline
To provide confidential information regarding labor issues among USMCA countries, please visit the USMCA hotline.
ILAB has a longstanding, productive relationship with Mexico and is the U.S. government's point of contact on international labor. In that capacity, ILAB is responsible for monitoring and engaging with Mexico and Canada regarding their labor commitments, and, where necessary, works with the Office of the U.S. Trade Representative (USTR) in enforcing those commitments.
Monitoring and Enforcement
The Labor Chapter language designated the U.S. Department of Labor as the point of contact for addressing matters related to the agreement. The USMCA implementing legislation establishes an Interagency Labor Committee for Monitoring and Enforcement, co-chaired by the Department and the USTR, to coordinate U.S. efforts with respect to implementation and maintenance of the USMCA labor obligations, to monitor Mexico's historic labor reforms, and to enforce USMCA labor provision where necessary. Among the many responsibilities of the Committee, it will receive and review submissions under the USMCA Labor Chapter and Rapid Response Labor Mechanism.
As of January 2020, ILAB awarded $32 million to assist Mexico in complying with the labor commitments in the USMCA, improving working conditions, and strengthening the rule of law.
Specifically, projects supported with these funds will build government capacity in Mexico to:
- implement its labor reforms, including training and support for the new labor courts and centers that will attempt to conciliate disputes and register unions and collective bargaining agreements
- implement commitments related to collective bargaining, secret ballot voting for union representation challenges and approval of collective bargaining agreements, as well as improve government enforcement of labor laws; and
- combat child labor and forced labor, enforce labor laws and acceptable conditions of work in the agriculture sector, and promote economic empowerment of vulnerable women and girls.
An additional project will build worker capacity in Mexico to identify violations of labor law, provide legal support, and improve advocacy and administrative functions.
ILAB is working with the government of Mexico and labor stakeholders to develop technical assistance projects using the USMCA funding. We anticipate projects moving forward to build capacity of the Mexican Ministry of Labor to implement the 2019 labor reform, increase awareness of the new labor law requirements, provide training for workers and employers to improve labor relations and collective bargaining, and engage with civil society organizations to promote acceptable conditions of work. In addition, we will concentrate on worker-focused capacity building and efforts to reduce workplace discrimination, child labor, forced labor, and human trafficking.
The USMCA implementing legislation calls for the Department to post up to five attachés to the U.S. Embassy and/or consulates in Mexico. So far, ILAB has worked with the U.S. Department of State to establish three attaché positions at the Embassy in Mexico City. The attachés will monitor implementation of the USMCA labor obligations and support bilateral cooperation on labor and employment matters.
FOA-ILAB-20-01: Engaging Mexico’s Auto Sector Employers in Labor Law Reform Implementation
Open date: May 20, 2020
Close date: July 20, 2020