Revised NAFTA & Workers’ Rights

Decades of trade agreements have promoted the outsourcing of jobs to countries where wages are low and workers have no rights. The North American Free Trade Agreement (NAFTA) and its many clones include foreign investor rights that make it safe and easy to relocate jobs, but no enforceable labor or environmental conditions on the products that then get sent back for sale here duty-free. In 2020, Congress voted to update NAFTA with better labor standards and enforcement. Now we need to test whether those new terms can make a difference for workers here and in Mexico.

USMCA Created a New Baseline for U.S. Trade Pacts.

For decades, the 1994 NAFTA helped corporations shut down factories in the United States and relocate production to Mexico, where workers make less per day than U.S. workers make per hour. The Mexican government conspired with industry to establish policies that undermined workers’ interests and offered artificially low wages to attract foreign investment. The U.S. government has certified more than one million U.S. jobs lost to NAFTA just under one narrow program that undercounts the damage. This race-to-the-bottom was one reason Democrats and Republicans alike supported a revised NAFTA deal in 2020.

Sometimes called the United States-Mexico-Canada Agreement (USMCA), it requires countries to ensure their domestic labor laws provide the rights guaranteed in the International Labor Organization’s core Conventions. And, to enforce these protections, the revised NAFTA includes an innovative facility-specific enforcement mechanism.

The RRM Is the First Tool in a Trade Agreement to Hold Individual Corporations Accountable for their Labor Abuses.

The revised NAFTA’s Rapid Response Mechanism (RRM) is a labor rights enforcement system to sanction and deter companies when workers are being denied their right to organize. Unlike previous trade-pact labor rules, where sanctions for labor rights violations were paid by a government, individual companies face the consequences of the RRM system. Penalties include fines paid by the violating corporations and eventually denial of access to the U.S. market for goods made in their facilities. The RRM system allows stakeholders — unions, workers — to file petitions for governments to use the RRM.

Since its entry into force in July 2020, four cases, three of them based on stakeholders’ petitions, have been brought forward by the United States against facilities located in Mexico, where companies and antidemocratic “protection” unions colluded against workers. These cases have bolstered Mexican workers’ fight for better wages, decent working conditions and true union representation.

Rethink Trade provides support and technical assistance to Mexican independent unions and workers who want to use the mechanism. Additionally, we conduct analyses of the implementation status of Mexico’s USMCA commitments to reform its labor laws and institutions.