The USMCA and the Rapid Response Enforcement Mechanism - Enforcing Compliance with Labor Laws through Free Trade Agreements?

The United States Mexico Canada Agreement (USMCA) free trade agreement went into force in July of 2020. Under that agreement, Mexico committed to a comprehensive reform of its laws governing labor unions and collective bargaining. Mexico's labor laws as they relate to unions have historically been criticized as encouraging employers and established labor unions to enter into agreements to serve as a protection against independent labor unions. Often the workers who are represented know nothing of the unions or the agreements. Some believe this system has led to suppression of wages in Mexico and that, in turn, has created an unfair competitive advantage against U.S. business. As part of an effort to ensure labor law reform, the USMCA created a mechanism that allows enforcement against individual facilities for failure to comply with the reformed laws, called a Rapid Response dispute resolution process. Under that process, claims for failure to comply can be brought directly against facilities in Mexico. Following investigation and adjudication, these cases can result in a loss of the preferential tariffs accorded under the USMCA for goods or services coming from that facility, creating the first-ever international process that holds an individual business accountable for its failure to comply with the labor laws of another country. Will mechanisms like this be incorporated into other free trade agreements in the future?

Featuring:
-- Lewis Karesh, Assistant U.S. Trade Representative for Labor
-- Matthew Levin, Director, Office of Trade and Labor Affairs, U.S. Department of Labor
-- Stefan J. Marculewicz, Shareholder and Co-Chair, Business and Human Rights Practice Group, Littler Mendelson P.C.
-- Philip A. Miscimarra, Partner, Morgan & Lewis