USMCA rapid response mechanism rolls out

The United States-Mexico-Canada Agreement (USMCA) is the successor agreement to NAFTA negotiated by the Trump administration. The USMCA requires Mexico to adopt and maintain labor laws protecting labor rights, including the rights to collective bargaining and freedom of association. It also establishes a new labor agreement that creates a new dispute mechanism—the Rapid Response Labor Mechanism (RRLM)—which provides for monitoring and expedited enforcement of labor rights in Mexico and can lead to punitive actions against a facility, ranging from fees to export restrictions.

Labor reform

After the USMCA took effect July 1, 2020, Mexico adopted a labor reform bill to meet the agreement’s requirements. Although the country has four years to implement the new laws, it is already facing complaints under the new RRLM process. The RRLM allows labor complaints to be filed by one country against another. The complainant party must believe, on a good-faith basis, that workers in a covered facility have been denied the right of free association and collective bargaining. The RRLM allows the two nations to resolve the complaint by either a mutually agreed to remediation or a remediation assigned by a jointly appointed panel. Currently, the agreement is between the United States and Mexico and between Mexico and Canada, but not between the United States and Canada.