The United States-Mexico-Canada Agreement (USMCA) came into force on July 1, 2020. Included in the USMCA are stronger labor provisions Congressional Democrats demanded, with the support of the Trump Administration, that were approved on a bipartisan basis during consideration of the USMCA implementing legislation in late 2019. The stronger labor provisions helped secure the support
Labor Provisions of the USMCA: What Multinational Employers Should Know
The new United States Mexico Canada Agreement (USMCA), which replaced the 1994 North American Free Trade Agreement (NAFTA), became effective on July 1, 2020. Historically, free trade agreements like the NAFTA have been criticized for their lack of strong labor provisions to address low wages and inadequate labor standards that advocates argue support worker rights and improve economic growth in developing countries. The USMCA seeks to address those concerns. In fact, as a precondition to the passage of the USMCA, the U.S. Congress reopened the negotiations at the end of 2019 and amended the agreement to bolster Mexican workers’ rights and to include stronger enforcement provisions like the Rapid Response Mechanism to hold companies in Mexico accountable for violating the rights of free association and collective bargaining.
What is the Rapid Response Mechanism?
The Rapid Response Mechanism is perhaps the most novel aspect of the labor provisions of the USMCA. It applies between the U.S. and Mexico, and between Canada and Mexico, but not between the U.S. and Canada. Within the U.S., the Rapid Response Mechanism can be triggered when any person in the U.S. files a petition claiming the “denial of rights” at a “covered facility” in a “priority sector” in Mexico to the Interagency Labor Committee for Monitoring and Enforcement (“Interagency Labor Committee”), co-chaired by the U.S. Trade Representative and the Secretary of Labor. The Interagency Labor Committee can request that Mexico conduct a review to determine whether there is indeed a denial of rights, or. If Mexico does not agree to conduct a review, the Interagency Labor Committee may request a panel to be convened to conduct its own verification under the USMCA.…
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