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CUSMA's labour mechanisms a testing ground for protecting North American workers

Will the Canada-U.S.-Mexico trade agreement usher in a new era for labour protections in North America?

July 19, 2021

12-minute read

In many ways, the signing of the Canada–United States–Mexico Agreement (CUSMA) in 2018 represented continuity more than change in North American economic governance.

Except for some unique rule changes in the trade of vehicles and component parts, many aspects of its predecessor, the North American Free Trade Agreement (NAFTA), were maintained in the renegotiated deal. In some areas, neoliberal disciplines were deepened. Canada made one-sided concessions to further open up its dairy industry, for example, while agreeing to a first-of-its-kind chapter on “good regulatory practice” that limits government’s ability to enact more protective or precautionary public interest regulation.

In one respect, however, CUSMA, which took effect in July 2020, represents a victory for workers.

The new NAFTA includes a labour chapter that expands the scope of government obligations and attaches sanctions to the violation of fundamental labour rights. Those rights and obligations are currently being tested in three early disputes related to unfair working conditions in Mexico and the U.S., which we describe below.

If the cases succeed, it could significantly shift the balance of power between workers and employers in North America—a relation that was badly skewed in the latter’s favour by NAFTA.

To many workers and their representatives, a major problem with NAFTA was the incentive it provided companies to relocate production to low-wage and rights-deprived jurisdictions on the continent. In Mexico, for example, workers’ wages were already artificially depressed by the corrupt and undemocratic system of labour control in place in that country. NAFTA legitimized and facilitated the exploitation of these North American wage and rights discrepancies by multinational capital.

In addition to a more worker-centred labour chapter, CUSMA includes two bilateral Facility-specific Rapid Response Labour Mechanisms (RRLMs)—one between the U.S. and Mexico and the other between Canada and Mexico. These mechanisms, novel in the world of trade and human rights policy, provide additional support to recent Mexican labour reform efforts targeting violations of workers’ right to organize and to collectively bargain.

Both the CUSMA labour chapter and these rapid-response mechanisms, on their own, do not guarantee an improvement in how workers are represented. It is still up to governments to file complaints and to unions and workers’ advocates to put pressure on them to do so. The effective arbitration of those claims and the enforcement of successful cases will likewise depend on the good faith of governments.

The outcomes of the three labour disputes—on gender discrimination against migrant workers, labour violations against auto parts workers, and efforts to undermine Mexcican labour reforms—will provide a good indication of whether the new continental accord can effectively contribute to long-lasting change that favours workers of the three countries.

The NAFTA labour side accord: recipe for inaction

When NAFTA was negotiated in the early 1990s, advocates in all three countries claimed the agreement would raise living conditions across the continent and promote higher wages and democracy in Mexico. Opponents of the deal called this wishful thinking, arguing it would help big multinational companies take advantage of the weakness of organized labour in Mexico. A combination of repressive domestic labour laws in Mexico and NAFTA’s liberalizing pressures proved the naysayers right.

There is no denying that new and novel labour protections in CUSMA are shining a brighter light on labour abuses, at least in the early days of the agreement.

The Institutional Revolutionary Party (PRI) that had governed Mexico since the end of the Mexican Revolution maintained control in large part through a system of corporatism, in which labour unions were granted certain concessions in exchange for their political support. Some 90 per cent of organized workers in Mexico are covered by “employer protection unions” that negotiate contracts with employers before any workers are hired. The most prominent such union, the Confederation of Mexican Workers (CTM), dominated under this system and has consistently stood in the way of labour reforms that would benefit its members.

Workers in Mexico represented by protection unions have no say in who represents them or what kinds of wages, working conditions and benefits they can access. They often don’t even know who their union or union leaders are, while democratic and independent labour unions are routinely marginalized or repressed.

Given these conditions, it is hardly surprising that inflation-adjusted wages in Mexico were almost the same in 2014 as they were when NAFTA came into force in 1994, rising by only 4.1 per cent over 20 years. North American integration also contributed to wage growth suppression in Canada and the U.S., where employers could threaten to move factories to Mexico if workers made excessive demands.

Widespread public opposition to NAFTA in the U.S. led then-President Bill Clinton to negotiate labour and environmental side accords outside of, but related to, the main agreement. The North American Agreement on Labour Cooperation (NAALC) was supposed to improve labour rights by requiring member countries to enforce their own domestic labour laws and creating a process for one NAFTA party to challenge non-enforcement of labour laws by another party.

In practice, however, the impact of the side agreement was limited. Most labour rights violations weren’t eligible for sanctions, including violations against core rights to freedom of association and the right to collective bargaining, which were systematically violated in Mexico. The labour side accord was basically toothless.

CUSMA: stronger mechanisms for labour rights protection?

In May 2017, U.S. President Donald Trump announced his intention to renegotiate NAFTA. Labour unions and other advocates for pro-labour trade reforms saw an opportunity to press for a better deal for workers. The pressure worked. In a notable shift from NAFTA, governments in both the U.S. and Canada identified severe gaps in labour protections and integrated these concerns into their negotiating positions.

CUSMA disputes related to labour are now subject to formal dispute resolution under Chapter 31 like most other treaty violations (e.g., the current U.S. challenge to Canada’s dairy tariff-rate quota allocation, or Canada’s promised challenge to U.S. solar tariffs). The new labour chapter also covers issues like discrimination based on sex or gender, and violence against workers, that were not included in the NAALC.

Unlike the NAFTA side agreement, which was only concerned with countries’ enforcement of their own labour laws, CUSMA requires states to adopt and maintain the basic guarantees of the International Labour Organization’s 1998 Declaration on Fundamental Principles and Rights at Work. These include the right to freedom of association (including the right to strike) and the elimination of forced or compulsory labour. Unfortunately, CUSMA refers only to the ILO Declaration and not to the eight ILO core conventions, which Unifor and other labour unions lobbied to include.

In 2017, Mexico passed a constitutional reform to modernize its labour law system—a requirement of the country’s full participation in another trade deal, the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Subsequent implementing legislation in 2019 established independent labour courts and monitors and authorized the recertification of hundreds of thousands of collective agreements between companies and their employees. Secret votes were also mandated by the reforms.

However, progress on achieving freedom of association was slow and held up by missed deadlines and limited resources. After decades of repression, independent unions lacked the capacity to effectively challenge the powerful corporatist unions.

After the CUSMA was negotiated, in response to pressure from American labour unions, U.S. Democrats bargained further changes to the deal’s labour and intellectual property rights chapters in exchange for their support for the deal in Congress. This process resulted in the creation of the RRLMs, which place pressure directly on employers rather than governments to resolve claims around labour rights violations.

The RRLMs establish processes to verify claims that workers’ rights are being denied at a specific workplace. If such a claim is upheld, trade sanctions can be applied against exported goods made at that facility. There were hopes that these mechanisms would provide a much stronger and, as the name suggests, more expeditious form of pressure on Mexico to democratize its system of labour relations and open up freedom of association and collective bargaining rights.

The first three CUSMA labour challenges

At the time of writing, three unique cases of alleged labour violations are wending their way through different dispute resolution channels of the CUSMA. The first will test CUSMA’s beefed up general labour provisions while the latter two involve the rapid-response mechanisms described above.

Mexico–U.S. – Migrant workers’ rights and gender discrimination

The first and perhaps most interesting of the early cases involves a group of Mexican women migrants to the U.S. who allege, in a petition to Mexican authorities, that by failing to enforce gender discrimination laws in temporary labour programs (like the H-2A visa) the U.S. is violating the terms of the CUSMA labour chapter.

The petition, filed on March 23 by the Centro de Derechos de los Migrantes (CDM), a binational NGO that promotes migrant labour rights, claims that women frequently encounter sexual harassment and gender-based violence at work and are subject to systemic discrimination in hiring and employment conditions. The issue is similar to complaints filed under the NAALC side accord around migrant workers’ rights in both the U.S. and Mexico during the last years of NAFTA, which did not result in satisfactory outcomes.

The Mexican government, now led by left-populist President Andrés Manuel López Obrador (commonly known as AMLO), has so far responded positively to the dispute. For example, the AMLO government has asked the U.S. to co-operate on issues related to both the situation of farmworkers and workers in protein processing plants, the industries where the two Mexican petitioners work.

The CDM was encouraged by this response from the Mexican government, as it went beyond the issues raised in the complaint to ask the U.S. government to address harmful health and safety practices affecting all workers, including undocumented workers and men in those industries.

U.S.-Tridonex – Violations targeting auto parts workers in Mexico

The second case involves a rapid-response mechanism in support of workers at a large auto parts facility in the northern Mexican border city of Matamoros. Workers at the plant allege that both the company and the employer protection union are denying their fundamental rights, including their right to freedom of association.

Matamoros, a heavily industrialized, export-driven area in the state of Tamaulipas, is representative of the damaging conditions imposed on Mexican workers through the establishment of maquiladoras—assembly plants located in trade-dependent industrial zones mostly along the Mexican-U.S. border.

In 2019, the city witnessed an outburst of worker-led labour protests, including strikes, demanding higher wages and trade union independence. The Tridonex parts facility, a massive 4,000-worker operation, became a flashpoint in the struggle when lead organizer Susana Prieto was jailed for trade union activity that challenged the protection union model.

On May 10 this year, a coalition of U.S. labour advocacy groups including the AFL-CIO and Mexico’s grassroots independent workers’ movement, the Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios Movimiento 20/32 (SNITIS), filed a petition with the U.S. government, urging the state to invoke the RRLM with respect to the treatment of workers at Tridonex.

The petitioners claimed that the CTM, acting as an agent of Tridonex (a subsidiary of U.S.-based Cardone Industries, which is effectively controlled by Canadian-based Brookfield Asset Management), denied workers access to the collective bargaining process, including access to the agreements themselves, along with a series of other egregious violations.

The U.S. government responded favourably to the petition. On June 9, the government filed an official RRLM complaint with Mexico, triggering a 45-day period wherein parties must attempt to remediate a solution prior to establishing a dispute panel. At the time of writing, this process is still underway.

U.S.–General Motors – Undermining Mexican labour reforms

The third labour rights case to surface in the first year of CUSMA’s implementation involves workers at a General Motors (GM) auto assembly plant in Silao. In this case, the workers allege voting fraud and manipulation by the CTM-affiliated union during a collective agreement authentication vote held in April this year.

The facility in question is emblematic of the economic reality heralded by NAFTA itself. Opened in 1996, the GM plant was one of the first assembly facilities established in Mexico following the signing of NAFTA. Its presence, and the extra assembly capacity it added, eventually led to the closure of GM’s truck plant in Oshawa, Ontario in May 2009. Today, the Silao plant employs approximately 6,500 workers covered by an employer protection contract with the CTM.

On May 12, the U.S. initiated a complaint under the CUSMA rapid-response mechanism following damning reports and worker accounts of irregularities in a scheduled authentication vote at the facility. These included the alleged destruction of ballots, voting restrictions, the withholding of contracts from workers prior to voting, threats to workers, and the CTM’s failure to comply with requests from Mexican authorities.

Responses by both Mexican government and GM officials to queries about the situation, including from Unifor, indicated that all parties understood the severity of the allegations and were willing to resolve the matter. At the time of writing, a new authentication vote is scheduled to take place at the Silao plant on August 20, under heavy Mexican and U.S. government scrutiny—commitments incorporated into the U.S.–Mexico remediation plan released on July 8.

As part of the course of remediation, Mexico agrees to ensure that a new legitimization vote is held on the pre-determined date. Federal inspectors from the Secretariat of Labor and Social Welfare (STPS) are to be present at the facility, along with observers from the ILO and domestic autonomous unions, to prevent and address any intimidation and coercion of workers.

The Mexican government further agrees to distribute accurate workers’ rights information at the facility, investigate and, as appropriate, sanction anyone responsible for the conduct that led to the suspension of the April vote and any other violation of law related to that vote. The government will also monitor a dedicated email address and provide a hotline number to receive and respond to complaints from workers about the voting process. Ideally, this process will help prevent future labour rights violations.

Will CUSMA labour provisions deliver results for workers?

We are in a unique conjuncture in North America, where relatively progressive leaders currently govern in all three countries.

In Mexico, AMLO’s Morena party has long-standing ties with the independent labour movement and supports labour reform, while U.S. President Joe Biden has appointed progressive officials as Secretary of Labor and in senior positions in the office of the U.S. Trade Representative. There may never be a better moment to use the recently established CUSMA labour mechanisms to push for faster labour reform in Mexico and North American region as a whole.

There is no denying that new and novel labour protections in CUSMA are shining a brighter light on labour abuses, at least in the early days of the agreement. The far stricter and punitive measures in place certainly suggest that. Unlike with NAFTA, there are real consequences for non-compliance—both at the state and employer level. The significant attention paid to the cases highlighted above, by worker advocates, state actors, employer representatives and mainstream news media, are proof of this.

Public scrutiny over human rights violations is a precondition for achieving real change. The ability to prosecute and penalize violators can certainly expedite the process.

However, it is far too early to tell if and to what extent early CUSMA complaints represent the beginnings of a deep, structural and sustained campaign to advance workers’ rights in North America. None of the cases listed above has advanced far enough through their respective enforcement mechanisms to enable a thorough and rigorous analysis. This work still needs to be done.

It is also the case that, as innovative as the CUSMA sanctions-based labour protections and dispute resolution systems are, it is state actors—not unions or worker advocacy groups—who must activate them. The unique political alignment between moderately progressive Mexican, Canadian and U.S. administrations can partially explain the quick and almost unreserved uptake in cases. But inevitably, this political alignment will not last.

It is important to remember that despite its major advances, CUSMA’s labour protections still reside within a deeply neoliberal governing platform for North America.

Future governments with more entrenched conservative views will one day serve as gatekeepers to this labour rights enforcement structure. Without codified and non-partisan engagement protocols, procedures and evidentiary standards for trade unions and worker advocates, labour enforcement under CUSMA may simply blow with the political winds. The U.S. is taking steps to advance this guidance. Canada has taken steps, too, but has not yet filed a labour complaint.

Lastly, it is important to remember that despite its major advances, CUSMA’s labour protections still reside within a deeply neoliberal governing platform for North America. The rules in treaties such as CUSMA intentionally demobilize and delegitimize the role of democratic governments in economic decision-making.

Innovative but non-market-based economic development models, such as Canada’s supply management system, are chipped away at and eventually replaced by free trade’s strict free-market disciplines that have fuelled growing inequality and environmental degradation over NAFTA’s lifespan. To what extent can we expect human and labour rights to flourish under such a repressive model?

Monitoring the next stages of these and future CUSMA complaints will be essential if they are to deliver durable and structural change. Novel dispute settlement must couple with authentic and democratic worker organizing on the ground to achieve meaningful advances in workers’ rights. This requires an emboldening of independent and authentic trade union voices in Mexico. Tens of millions of dollars already earmarked by both U.S. and Canadian governments for technical worker assistance programs in Mexico can help raise worker awareness and organizing capacity in key sectors.

At the most practical level, the question is whether and how trade unions and worker advocates can take advantage of the new tools at their disposal to champion labour rights and resuscitate cross-border activism and worker solidarity. CUSMA, at the very least, has kick-started this conversation.

Topics addressed in this article

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