USMCA: Labor Provisions



M. Angeles Villarreal, Cathleen D. Cimino-Isaacs, and Katarina De la Rosa | Congressional Research Service

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 Andrés Manuel López 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.


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