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Betting on Mexico in the USMCA

By Jennifer Burge - WorldWise Coaching


By Jennifer Burge | CEO - Wed, 02/17/2021 - 09:07

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The United States-Mexico-Canada Agreement (USMCA) came into effect on July 1, 2020, in the midst of the global pandemic. It entered into force when concerns about border closures across North America and sanitary and safety requirements were the most pressing issues facing both the public and private sectors. Though all three governments had been hard at work to meet the protocols spelled out in the agreement for months, it was widely expected that the myriad of complex new COVID-19 issues would take immediate precedence.

Throughout the negotiations to ratify the agreement and the necessities imposed by COVID-19, all three governments have shown exceptional ability to collaborate on a plethora of critical issues. Still, certain misalignments between the three countries showed themselves. Noting these misalignments, communicating and correcting them is crucial for the future of our region to be as prosperous as we know it can be.

USMCA has 34 Chapters. Twenty-four have been updated from NAFTA and 10 are new. With regard to the mining sector, one of the most critical changes appears in Chapter 23, pertaining to labor reform. In the US, this chapter has been called “the most ambitious labor chapter ever negotiated in a US free trade agreement.” It lays out the individual reforms and why they are so important to the industry. Freedom of association and the right of collective bargaining, the elimination of all forms of compulsory labor, the abolition of child labor, elimination of discrimination in the workplace, updates to acceptable employment conditions, compliance with Mexican labor reform by the private sector and enforcement of Mexican labor reform by the federal government are the key components of this chapter.

One of the most profound changes is the Mexican government’s obligation to address violence and threats of violence against workers, directly related to a worker’s labor rights in a manner that affects trade or investment in the North American region. A single failure is now sufficient to file a case and the previous requirement that violations be committed “through a sustained and recurring course of action or inaction” when it relates to violence against workers has been eliminated.

Participating in a recent webinar on the future of the US and Mexico relationship under USMCA, I had the opportunity to ask Mexican Ambassador to the US Martha Bárcena about the status of labor reform preparations in Mexico. She reiterated that Mexico is fully prepared to meet its obligations under the new agreement. In addition, Luisa Alcalde, Minister of Labor and Social Welfare, and Graciela Márquez, Minister of Economy, have publicly spelled out in detail the timeline, numerous protocols and committees that are in place to execute the reform and dispute settlement conditions that were agreed to in May 2019.

USMCA Annexes 31-A and 31-B explain the Rapid Response Labor Mechanism (RRLM) for US-Mexico and Canada-Mexico disputes. The RRLM is only to be used with regard to the right to collective bargaining and free association. As of January 2020, the International Labor Affairs Bureau (ILAB) had awarded US$32 million to assist Mexico in complying with USMCA labor commitments, improving working conditions and strengthening the rule of law.

In April 2020, the US created the US Interagency Labor Committee as the body that will oversee and enforce compliance for USMCA industries and companies. Mining is documented as one of eight priority subsectors for surveillance by this committee. Reading the USMCA documents alone, one would not be aware that mining is an industry of focus under the updated agreement. However, mining companies, service providers and suppliers would be wise to have had compliance strategies in place since the agreement took effect on July 1.

In a recent conversation with Glenn Williamson, the Honorary Consul of Canada to Arizona, it was made clear that the Canadian government is also strongly committed to ensuring success in labor reform. Canada has announced CAD$27.5 million over four years to support Mexico’s labor reform during the implementation of USMCA labor provisions.

“While Canada will work in concert with our partners to support labor reform and USMCA implementation, we will not hesitate to take the necessary corrective measures should we have serious concerns about cases of labor violations in Mexico,” Williamson noted in a recent government update.

What has been made clear by the global pandemic is that the solutions to our common challenges lie in true trilateral collaboration. Working together and utilizing our unique perspectives, diverse strengths and collective experience is the key to North American economic recovery and future prosperity.

Interpreting government updates and communication as an intercultural communications professional, I find it clear that the region is fully committed to successful collaboration. However, skepticism of Mexico’s ability to enact these sweeping changes exists and therein lies the opportunity for the nation to shine on this front. More scrutiny on employers, improved work environments and a commitment to individual rights should equate to lifting Mexico’s status as a global competitor and to strengthen productivity and quality in the entire region.

The three countries’ futures are inextricably linked. Time will soon tell how this story is to play out. If I were a betting woman, I would lay my bets on Mexico for success with the genuine support and collaboration of Canada and the US. These relationships have been tested and until now have passed with flying colors. This clearly illustrates the strength in intercultural partnerships, which take time to build and fortify. With a foundation as long-standing and committed as that between Mexico, the US and Canada, even the disagreements have strengthened our alliance. This, and not any new amendments or agreements, is what will ensure a secure North American future.

Photo by:   Jennifer Burge

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