Upholding commitments to workers’ rights

As we approach the 2026 U.S.- Mexico-Canada Agreement (USMCA) joint review, it is vital to take stock on whether the agreement is living up to its promise to promote workers’ rights and fair competition in the North American marketplace. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) supported USMCA because it was a clear improvement for workers over NAFTA, but our continued support will depend on the ability of all three parties to fully implement the agreement’s strong labor provisions and begin to close the 10:1 wage gap between manufacturing workers in the U.S. and Mexico by raising the real wages of Mexican workers.

The USMCA contains unprecedented labor commitments whose implementation is essential if the agreement is to deliver decent work and broad-based economic growth to the region.

As a precondition to signing the deal, the U.S. and Canada insisted that Mexico adopt a sweeping set of constitutional and legislative reforms to protect the right of workers to organize trade unions and bargain collectively. In a nutshell, these reforms seek to address Mexico’s corrupt system of “protection contracts,” where employers sign bogus collective bargaining agreements with illegitimate, undemocratic trade unions that do not represent workers’ interests. The protection contract system—and Mexico’s weak labor justice institutions—have played a fundamental role in keeping Mexican workers’ wages artificially low, encouraging offshoring, and lowering wages and standards across North America.

Three and a half years into the USMCA, Mexico’s implementation of its labor law reforms has shown mixed results. The López-Obrador administration deserves credit for standing up new labor justice institutions at the federal level and working constructively with the Biden administration to investigate and resolve most of the complaints filed under the agreement’s Rapid Response Labor Mechanism. However, a number of Mexican states have been dragging their feet on setting up the state and local labor courts that are critical to enforcing the new labor laws. In practice, most Mexican workers are still waiting for the labor reforms to change the reality that supporting an independent union is likely to get them fired.

Moving forward, it is clear that the timetable for full implementation of Mexico’s labor law reform will stretch well beyond 2026 and require sustained political and financial support from all three parties to the agreement. Uprooting Mexico’s deeply entrenched protection contract system and fostering the growth of mature industrial relations and rule of law is a project that will take decades, not years.

A notable bright spot is the strong performance of the USMCA’s novel rapid response labor mechanism (RRM). Of the 18 RRM cases filed by the U.S. to date, the vast majority have been cooperatively settled in a timely manner by the U.S. and Mexican authorities, leading to concrete wins for Mexican workers in the form of authentic union representation with higher wages, benefits, and the reinstatement of illegally fired union supporters. The RRM has had a notable impact in Mexico’s auto sector, paving the way for the first independent trade unions at facilities employing thousands of workers for major international companies like General Motors and Panasonic. While the cases directly addressed by the RRM only represent a fraction of the workplaces in Mexico, it has proven to be an indispensable tool to spot check Mexico’s implementation of its labor law reforms.

A clear area of concern is the lack of concrete progress towards achieving USMCA’s commitment to stop the import of goods produced with forced labor. Products at a high risk of being made with Chinese forced labor continue to enter the North American marketplace, especially through suppliers to factories in Mexico. While all three countries have passed laws or adopted regulations banning the importation of forced labor goods, Canada and Mexico have done little to enforce the ban in practice. This is unacceptable and all three parties must deepen their cooperation and dedicate sufficient resources to enforcing the ban on forced labor goods.

The parties also must increase cooperation on meeting the challenge of the economic and security threats posed by nonmarket economies like China. Duty free access to the U.S. market has made Mexico an attractive location for Chinese companies looking to sidestep U.S. tariffs imposed to address pervasive state subsidies, dumping, intellectual property theft, and other unfair trade practices. The USMCA cannot be a backdoor for the circumvention of our trade remedy laws.

A related challenge involves the recent surge of steel imports from Mexico in violation of the 2019 Joint Agreement on Steel and Aluminum. In recent years, steel imports from Mexico have surged by 141% over historic levels, with some subcategories of imports tripling and quadrupling.¹ The Biden Administration must elevate this issue and bring Mexico back into compliance.

Looking ahead to the six-year review, the AFL-CIO’s support for extending the USMCA cannot be taken for granted. Much depends on the political will and ability of the parties to fully implement the labor commitments that underpinned our support for the agreement. We look forward to the challenge ahead to make this agreement deliver dignity and fair competition for workers across North America.