The new trade agreement between Mexico, United States and Canada (USMCA) was signed on 30 November 2018 and entered into force on 1 July 2020.
The agreement, replacing the North American Free Trade Agreement (NAFTA), has important implications for Mexican companies not only on trade but also on labour and environmental issues. The Chapter on labour fixed the objective to trade-only commodities produced in compliance.
Therefore, it is of the outmost importance for business to align with the requirements of this new agreement.
The Business Coordination Council (Consejo Coordinador Empresarial CCE) established in 1976 to present a united business voice and regrouping employers and business organisations (among them COPARMEX and CONCAMIN, both IOE members), led the process of change from the business side.
This new agreement contains quite stringent labour requirements, since Chapter 23 obliges all parties to implement the key principles referred to in the 1998 ILO Declaration on Fundamental Principles and Rights at Work, namely the principle of freedom of association and the effective recognition of the right of collective bargaining and the abolishment of forced labour and child labour. The agreement refers also to minimum wage standards, as well as health and safety and working time.
The latter was recently reformed in Mexico, especially on collective bargaining rights and trade unions establishment. It is of key importance for employers since the 2019 Mexican labour reform aims at guaranteeing the respect for the obligations agreed within the framework of USMCA.
The importance of Chapter 23 for companies lies also in the established “Facility-Specific Rapid Response Labor Mechanism” (Mecanismo Laboral de Respuesta Rápida (MLRR) that will allow both the United States and Mexico, or Canada and Mexico (but not the US and Canada) to take action against companies in case of failure to respect Chapter 23 of the trade agreement.
Such a complaint system can be very problematic for Mexican companies since it can restrict trade of certain commodities “affected by labour violations” or other penalties.
To help employers respect these principles, CCE launched different tools, ranging from a questionnaire to a series of presentations explaining how to respect international standards as well as national legislation.