USMCA Labor Board Reports on Mexico Compliance

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Dec. 21, 2020

On December 15, 2020, the Independent Mexico Labor Expert Board (“the Board”) issued its first report to Congress on the status of Mexico’s labor obligations under the U.S.-Mexico Canada Agreement (“USMCA”). The USMCA’s labor protection rules are one of the more novel aspects to the agreement and were a sticking point for House Democrats in ratifying the trade deal.

The USMCA Implementation Act established the Board to monitor and assess Mexico’s labor reform efforts, and it is appointed by congressional leaders and the Labor Advisory Committee of the Office of the United States Trade Representative. The Labor Advisory Committee – as the committee that monitors compliance with USMCA labor provisions – also received a copy of the Board’s interim report. Within the annual report, the Board is entitled to issue a finding that Mexico is not in compliance with its labor obligations.

In the report, the Board declined to find that Mexico was noncompliant with the USMCA labor provisions. However, the Board did observe that “many of the changes promised to improve the lives of workers, in terms of union democracy, freedom of association and collective bargaining, remain to be implemented.” The report recognized that Mexico’s new labor institutions have been in operation for less than a month. The report also acknowledged the implementation struggles that result due to the ongoing coronavirus pandemic. The Board advanced several recommendations to Congress and the Labor Advisory Committee for how the U.S. can support Mexico in fulfilling its labor obligations under the agreement. Specifically, the Board recommended that Congress and the Committee do the following:

- Encourage some Mexican states to move up their implementation dates (Mexican labor reform efforts were set up in different implementation stages.)

-          Work with Mexico to build “a robust and ongoing program” for labor inspection as such efforts would signal to companies producing goods and services for the U.S. market in Mexico that there won’t be as much flexibility where workers’ rights to organize and bargain are concerned.

-          Direct a minimum of $100 million of “unallocated” USMCA funding to “building worker capacity for organizing and bargaining, including legal and research support.”

The report comes amidst increasing pressure from congressional Democrats on the USTR’s Labor Advisory Committee to take enforcement action by addressing Mexico’s “persistent” violations of its labor reform obligations. Since the USMCA entered into force on July 1, 2020, there have been three petitions filed under the agreement’s labor chapter though the details of the petitions are not public. The USTR has issued statements that the U.S. plans to bring labor enforcement cases under the USMCA frequently however insiders say that COVID-19 has slowed the process for building comprehensive cases. All the same, House Ways & Means Committee Democrats have voiced the concern that the USMCA tools for enforcing labor provisions are not being used. The report and its findings are sure to keep the conversation on the need for increased enforcement actions going.

If you have any questions regarding the labor provisions of the USMCA or any other aspect of the USMCA, do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.