2.1 USMCA Coverage and the Reference to ILO Core Conventions

With a view to deepening the knowledge of the USMCA's regulatory design of labour protection, the first step of this paper's analysis will focus on the coverage of USMCA Chapter 23. Five main areas of labour considerations define the coverage of the USMCA provisions, as introduced in the ‘Definitions’ of Article 23.1 and reaffirmed in the commitments set forth in Article 23.3 on ‘Labor Rights’. The core areas of labour protection explicitly guaranteed are the following: (1) the protection of freedom of association and the right to collective bargaining; (2) the elimination of all forms of forced or compulsory labour; (3) the abolition of child labour, and labour protections for children and minors; (4) the elimination of discrimination in respect of employment and occupation; and (5) the protection of acceptable conditions of work with respect to minimum wages, and occupational safety and health.

In terms of areas of coverage, the USMCA does not seem to deviate from the scope of labour protection previously established in the NAFTA framework and in more recent US PTAs. First, there is a strong similarity between the labour issues explicitly covered in USMCA Chapter 23 and the list of 11 ‘Labor Principles’ as clarified in NAALC Annex 1. NAALC Annex 1 includes a specific reference to freedom of association and the protection of the right to collective bargaining, prohibition of forced labour and child labour, along with the elimination of employment discrimination on the basis of race, religion, age, sex, or other grounds, and the guarantee of equal pay for men and women.Footnote ²⁴ Second, even more evident similarities can be observed in the case of the TPP agreement. The coverage in the labour protection reached under USMCA Chapter 23 appears to be a precise transposition of the definition of the scope of TPP Chapter 19, entirely dedicated to the protection of workers’ rights. TPP Article 19.3 identifies the exact same five areas of labour rights as stated in USMCA Article 23.3 as the main content of its labour commitments.

It is interesting to note that these five core areas of labour rights included in the definition of the coverage in the USMCA (in Articles 23.1 and 23.3) and the TPP (in Articles 19.1 and 19.3) agreements refer to the fundamental principles and rights at work officially recognized in the ILO Declaration on Fundamental Principles and Rights at Work (1998).Footnote ²⁵ Both the USMCA and TPP agreements explicitly include a reference in the text to the 1998 ILO Declaration on Rights at Work.

However, the reference to international instruments of labour rights and, in particular, to the 1998 ILO Declaration on Rights at Work represent one of the major differences with the NAFTA framework and the less recent US PTAs. It was only after the signature of the 2009 US–Chile PTA that international standards of labour rights protections began to be explicitly included in US PTAs.Footnote ²⁶ Previous agreements were modelled around the commitment to ‘enforce your own domestic laws’, a cornerstone in the NAALC's labour rights commitments. The lack of any reference to international labour standards was due to the omission of the United States’ ratification of many ILO Core Conventions and other international standards of workers’ rights.Footnote ²⁷

In the USMCA text, the importance of international standards of labour rights is also reaffirmed in Article 23.2 on ‘Statement of Shared Commitments’, referring to the 2008 ILO Declaration on Social Justice for a Fair Globalization, something that represents an innovation if compared to the TPP.Footnote ²⁸ However, USMCA Article 23.3 makes it clear that the binding commitments imposed on the USMCA Parties only refer to the 1998 ILO Declaration on Rights at Work. It is interesting to note that the scope of the 2008 ILO Declaration on Social Justice is considerably broader if compared to the 1998 Declaration.Footnote ²⁹ Compared to the 1998 ILO Declaration on Rights at Work, the 2008 ILO Declaration on Social Justice embraces a wider range of ILO Core Conventions, not all ratified by the United States. The 2008 ILO Declaration on Social Justice emphasizes the importance of the following additional ILO Conventions as a governance priority for the Signatory Parties: the Labour Inspection Convention, 1947 (No. 81), the Employment Policy Convention, 1964 (No. 122), the Labour Inspection (Agriculture) Convention, 1969 (No. 129), and the Tripartite Consultation (International Labour Standards) Convention, 1976 (No. 144). Of those ILO Conventions, the US is a Signatory Party only of ILO No. 144 Convention, having yet to express the intention to ratify any of the others.Footnote ³⁰

In terms of coverage of substantive standards, the EU trade agreements also seem to generally converge their system of labour protection around the core principles included in the 1998 Declaration on Fundamental Principles and Rights at Work, and beyond the ILO Conventions covered by the Declaration.Footnote ³¹ Together with the 1998 ILO Declaration, CETA binds its Parties to the promotion of the objectives set out in the ILO Decent Work Agenda, in accordance with the 2008 ILO Declaration on Social Justice for a Fair Globalization (CETA Article 23.3). Moreover, the EU–Mexico Agreement pays particular attention to the implementation of the 2008 ILO Declaration on Social Justice for a Fair Globalization, requiring the Parties to promote its compliance (Article 3.8) and not to derogate from its fundamental principles for protectionist purposes (Article 3.7).Footnote ³² Moreover, both the agreements push their commitments to respect the ILO labour standard even further by requiring their Parties ‘to make continued and sustained efforts to ratify the fundamental ILO Conventions if they have not yet done so’ (CETA Article 23.3.4 and EU–Mexico Article 3.4). For an overview, see Figure 1.

Figure 1. Substantive coverage and the ILO declarations

Moreover, in addition to these five core areas of labour commitments, additional labour concerns are included within the scope of the USMCA, such as the guarantee of acceptable working conditions and minimum wages, the acknowledgement of the vulnerability of migrant workers (in Article 23.8), the importance of eliminating discrimination on the basis of sex, the promotion of gender equality in the workplace in Article 23.9, and the protection of migrant workers.Footnote ³³ These additional labour concerns were already included in the extensive list of ‘Labor Principles’ guaranteed in the NAALC. The only area of labour concern highlighted in the USMCA provisions but not expressly mentioned in the NAALC text appears to be violence against workers, as later reaffirmed in the USMCA commitments.

These additional labour concerns included in the USMCA's coverage were also present in the TPP context: the goal of eliminating forced and compulsory labour (in TPP Article 19.6), and the elimination of discrimination in respect of employment and occupation for migrant workers (in TPP Article 19.10). A few discrepancies, however, are noted in the coverage of the USMCA and the TPP. On the one hand, no reference is made to violence against workers under TPP Chapter 19, and the concerns over gender equality in the workplace are only briefly mentioned as an area of future cooperation between the TPP Parties (in TPP Article 19.10.6(n)(ii)). On the other hand, an increasingly important concern of labour protection included in the TPP appears to be missing from the USMCA: the reference to corporate social responsibility (CSR), as will be explained further below.

2.2 Core Substantive Commitments and the Level of Labour Protection Guaranteed in the USMCA

In terms of its substantive commitments, the text of the USMCA seems to depart from the standards of labour protection set in NAFTA and embraces the regulatory achievements of labour protection reached in the more recent US PTAs.

There are two binding provisions in the USMCA that define the core commitments of labour protection: namely USMCA Article 23.3 and Article 23.4. Article 23.3 requires that each USMCA Party not only adopts and maintains their respective national regulations of labour protection, but also ensures compliance with the 1998 ILO Declaration on Rights at Work.Footnote ³⁴ As analysed before, Article 23.3 establishes an explicit link between the USMCA and international instruments of labour rights, incorporating them into the core of the USMCA commitments.Footnote ³⁵ Together with Article 23.3, the second binding core commitment is a non-derogation obligation. Article 23.4 binds the Parties to refrain from either weakening or derogating from the enforcement of their domestic or international labour regulations within the scope of encouraging trade and investment.

Now let us compare this to the NAALC. The NAALC simply required the Parties to ‘ensure that its labor laws and regulations provide for high labor standards, consistent with high quality and productivity workplaces, and shall continue to strive to improve those standards in that light’, as stated in NAALC Article 2. The wording of the NAALC commitment did not define the meaning of ‘high labor standards’, referring only to the respect of domestic labour regulations without mentioning international conventions. As specified in Annex 1, the guiding principles included in the NAALC are ‘subject to each Party's domestic law, but do not establish common minimum standards for their domestic law’. Moreover, a non-derogation obligation was not included in the NAALC text. The wording of the core NAALC provisions confirmed its main objectives as to monitor the implementation of the domestic labour law and to prevent abuse, refraining from establishing new regulatory standards or advocating for a harmonization of the labour regulations among the Parties.Footnote ³⁶

If the two main USMCA commitments of Articles 23.3 and 23.4 represent a significant evolution when compared to the NAFTA standards, these provisions do not depart from the regulatory standards reached in recent US PTAs and they literally replicate the wording of the TPP. TPP Article 19.3 and Article 19.4 establish the exact same standards of protection with identical language. In other words, the legal innovation of these provisions is quite limited.

However, aside from the striking similarities with the most recent US PTAs, the USMCA text introduces important innovations in the regulatory standard of labour protection by providing important clarifications of these crucial commitments. More precisely, the footnotes added to Articles 23.3 and 23.4 clarify the scope and the standards needed to prove a violation of these provisions. It is interesting to note that the inclusion of these clarifications is something that has emerged only later in the USMCA negotiating history and in the Protocol of Amendment signed by the US, Canada, and Mexico on 10 December 2019, stemming from the discussion on the ratification process in the US Congress.Footnote ³⁷

More precisely, two are the most relevant clarifications introduced in the Protocol of Amendment. First, the revised USMCA text commits the Parties to not violate and to not derogate from enforcing domestic and international labour protection regulations ‘in a manner affecting trade or investment between the Parties’. Footnote 4 of Article 23.3 and footnote 8 of Article 23.4 clarify that the impact on cross-border trade and investment for failing to comply with the labour provisions can be attributed to two separate circumstances: (1) a person or industry producing goods or supplying services across USMCA Parties, together with a person and industry conducting investments in the territory of the USMCA Parties; and (2) a person or an industry that produces goods or supplies services in competition with the goods and services of another Party.

The second significant improvement consists of shifts in the burden of proof of the core labour protection provisions. According to the footnotes of Article 23.3 and Article 23.4, a violation of Articles 23.3 and 23.4 and its effects on trade and investment are always presumed unless proven otherwise by the responding Party. Moreover, the footnotes of Articles 23.3 and 23.4 should be read in conjunction with the text of USMCA Article 23.5 devoted to the ‘Enforcement of Labor Laws’, having footnotes with identical text, which further explained below in this article.

In terms of similarities in their core commitments, the respect of international instruments of workers’ rights protection and the non-derogation obligation also represent the two cornerstones of the level of labour protection in EU PTAs, particularly in those agreements concluded with USMCA countries. However, it is interesting to note the difference with the formulation of the non-derogation obligation between the EU and the US model of PTAs. While the CETA (Article 23.4) and the EU–Mexico Agreement (Article 2 XY)Footnote ³⁸ clarify that the commitment of non-derogation has three distinctive dimensions. Broader than the obligation in the USMCA which only commits the Parties to not weaken the level of labour protection, the EU agreements also require refraining from waiving or derogating from labour standards and requires that no Party shall fail to enforce labour laws ‘in order to encourage trade or investment’.

2.3 Additional Substantive Commitments and Their Clarifications in the USCMA Text

In addition to the standards of protection established in the core provisions of Articles 23.3 and 23.4, the regulatory content of the USMCA includes additional labour obligations, which have no similar reference in the EU PTAs considered.

The strongest of these additional commitments is stated in USMCA Article 23.6: it imposes a ban on the import of goods that have been wholly or partly produced using forced or compulsory labour. The provision asks the USMCA Parties to also establish mechanisms of cooperation between them to identify such goods. In its wording, USMCA Article 23.6, as revised in the December 2019 Protocol of Amendment, pushes forward the commitments already included in the TPP but framed in a much softer language.Footnote ³⁹ The Protocol of Amendment strengthens the obligation to block access to imported goods produced using forced or compulsory labour and imposes a stronger obligation of results. The revised Article 23.6 removes the original text that reads ‘through measures it considers appropriate’ as also appearing in the TPP, reducing the margin of discretion left for the Parties.

Together with the efforts to eradicate forced labour, the importance of establishing between the Parties an environment free from violence, threat, and intimidation against workers is stressed in USMCA Article 23.7. USMCA Article 23.7 appears to be a genuinely new provision requiring the Parties to address violence, together with threats of violence, against workers that could have a potentially negative impact on trade and investment. Violence against workers is not a labour concern that frequently appears in US PTAs: neither the NAALC text nor more recent US PTAs like the US–CAFTA or the TPP mention any concern about violence against workers, and the only precedent can be found in the text of the US PTAs with Colombia and Guatemala. Moreover, it is worth noting that this provision has also been modified in the Protocol of Amendment in order to strengthen its enforcement (as shown in Figure 2 below). The original language that required a Party to prove ‘a sustained or recurring’ pattern of violation has been removed and the burden of proof is also shifted, presuming that a violation of this provision always affects trade unless proven otherwise by the responding Party.

Figure 2. Key Changes Introduced in the Protocol of Amendment of December 2019

Finally, USMCA Article 23.9 includes a commitment of non-discrimination in the workplace within the USMCA regulatory framework. Article 23.9 encourages the Parties to implement specific policies to protect female workers against employment discrimination and wage discrimination ‘on the basis of sex (including with regard to sexual harassment), pregnancy, sexual orientation, gender identity, and caregiving responsibilities’.Footnote ⁴⁰ Promoting gender equality has become a core priority in most recent EU trade agreements and in Economic Partnership Agreements on the basis of the EU's commitments undertaken within the ILO framework to eradicate gender discrimination.Footnote ⁴¹ It is worth noting that the EU Commission regularly conducts sustainability impact assessments (SIA) on trade negotiations, taking into serious consideration the impact of EU PTAs on gender issues.Footnote ⁴²

However, an increasingly important additional substantive labour concern, traditionally present in the EU PTAs but lacking in the text of the USMCA, is the reference to CSR commitments. Provisions encouraging the Parties to adopt CSR initiatives aimed at strengthening the respect of labour rights by corporations (as stated in TPP Article 19.7) are not found frequently in the labour chapters of US trade agreements.Footnote ⁴³ The EU and Canada have traditionally been proponents of the inclusion of CSR clauses in their PTAs, and the reference to CSR and the sustainable management of the supply chain has been a constant of the EU model of PTAs since the 2008 EU–CARIFORUM Economic Partnership Agreement.Footnote ⁴⁴ In particular, the EU–Mexico Agreement dedicates Article 9 of its ‘Trade and Sustainable Development’ chapter to the management of responsibility in the supply chain, in order to support the promotion of international CSR instruments, such as the OECD Due Diligence Guidance. However, the US approach to the inclusion of CSR clauses has been inconsistent over time, overall preferring to include CSR obligations only in the environmental chapters of its PTAs.Footnote ⁴⁵ The text of the USMCA confirm this tendency (including a reference to CSR only in Article 24.13), marking a significant change with the TPP text.Footnote ⁴⁶

3.1 Lessons from the CAFTA Dispute and the Innovation in the USMCA Protocol of Amendment

USMCA Article 23.5 is the key provision defining the legal grounds for the judicial enforceability of the provisions in USMCA Chapter 23. USMCA Article 23.5 requires that no Party shall fail to ‘effectively enforce its labor laws through a sustained or recurring course of action or inaction in a manner affecting trade or investment between the Parties’. Overall, USMCA Article 23.5 mostly replicates the wording of TPP Article 19.5. However, the improvements reached in the Protocol of Amendment considerably increase the clarity of its wording. More precisely, three footnotes considerably improve the enforceability of Article 23.5. First, footnote 10 of Article 23.5 clarifies that a ‘sustained or recurring course of action or inaction’ is “sustained” if the course of action or inaction is consistent or ongoing, and is “recurring” if the course of action or inaction occurs periodically or repeatedly’, but it excludes isolated instances or cases. Second, footnote 11 of USMCA Article 23.5 provides much-needed guidance in the interpretation of the link between action and inaction in the enforcement of labour provisions and its impact ‘in a manner affecting trade and investment between the Parties’.Footnote ⁵⁰ Finally, footnote 12 is added to the Protocol of Amendment, shifting the burden of proof and presuming that a violation of Article 23.5 always affects trade unless proven otherwise by the responding Party.Footnote ⁵¹

So far, neither a previous US PTA nor any EU PTA has ever provided any guidance on how to determine the effect on trade of a failure to implement labour standards. The difficulties in interpreting and proving this standard have long undermined the concrete possibility of challenging violations of labour commitments and proving the negative impact on trade dynamics.Footnote ⁵² It has been argued that these genuinely innovative introductions and clarifications build on the conclusions reached in the dispute that arose between the US and Guatemala under the US–Central America (CAFTA) agreement, the only dispute thus far addressing a labour right violation under a US PTA dispute settlement mechanism.Footnote ⁵³ This confirms the theorization of the introduction of legal innovation in trade agreements that postulates that learning and innovative legal solutions can result from feedback from various mechanisms, in particular dispute rulings.Footnote ⁵⁴ The US has been described as a leading example of a country that turned learning from trade disputes into legal innovation in its PTAs, and the innovative features of the USCMA confirm that.

A crucial aspect of the US–CAFTA–DR–Guatemala dispute consisted in the interpretation of the expression ‘in a matter affecting trade between the Parties’.Footnote ⁵⁵ The Panel required a three-step analysis to prove that a violation of labour rights was ‘in a manner affecting trade’, based on the competitive relation in the market, on the effect of the non-enforcement of the rights on the relevant market, and on the competitive advantage resulting from it for a single company. Thanks to the shift in the burden of proof in footnote 12 of USMCA Article 23.5, the complainant Party is no longer required to prove that the violation of the labour provisions had an impact on the competitive conditions of the market. This radically increases the chances to effectively challenge a violation of labour rights, reducing the legal barriers to bring a claim against a government omission, as it has been convincingly argued that ‘substantiating a comparative advantage to a single foreign company on the basis of a set of highly discrete government omission is practically impossible’.Footnote ⁵⁶ However, the shift in the burden of proof simply does not eliminate the evidentiary and legal barriers implied in these types of labour claims under a trade-related dispute settlement mechanism, but rather simply imposes them on to the responding Party, rendering it difficult to build a convincing defence.

In cases of a violation of the USMCA provisions on labour protection ‘in a manner affecting trade’ in the light of Article 23.5, the Parties have recourse to the dispute settlement detailed in USMCA Chapter 31. Following the approach established in the May 10th Agreement and then included in the TPP, Chapter 23 is subject to the same dispute settlement mechanism applicable to all other commercial disputes arising from the wording of the USMCA.Footnote ⁵⁷ The May 10th Agreement was a bipartisan accord reached in 2007 between the G.W. Bush administration and Democrats in Congress that introduced influential innovation in the model of labour protection in US PTAs, and was implemented in the US PTAs with Panama, Peru, and South Korea, and culminated in TPP Chapter 19.Footnote ⁵⁸ The May 10th Agreement asks for the addition of references to ILO standards and the prohibition from lowering labour protection, and it requires the same dispute settlement mechanisms to be available for other FTA obligations regarding violations of labour provisions.Footnote ⁵⁹ Closely similar to the TPP, the USMCA provides a mix of ‘consultations at the ministerial level, national contact points for each country, and a standing council to facilitate a cooperation agenda’.Footnote ⁶⁰ In the event of the failure to hold consultations within 30 days (set forth in Article 23.17),Footnote ⁶¹ the Parties can resort to USMCA Chapter 31, which establishes a binding mechanism of state-to-state dispute settlement applicable to all disputes concerning the interpretation and application of the USMCA provisions and violations thereof. USMCA Chapter 31 includes specific provisions to address the peculiarity of disputes involving labour protection arising from Chapter 23.Footnote ⁶² According to Article 31.8 para. 3, for a dispute arising under Chapter 23 each disputing Party shall select a panellist ensuring that ‘panelists other than the chair shall have expertise or experience in labor law or practice’. The formation of the panellist roster under the USMCA has been described as an attempt to reform the judicial enforcement of labour rights in the CAFTA dispute adjudicated by a panel comprising only trade lawyers without any expertise in labour law.Footnote ⁶³

The mechanism of judicial enforcement available to penalize violations of the labour commitments in the USMCA represents a major improvement compared to the dispute settlement mechanism established in the NAALC, described in the literature as one of the weaknesses in the NAALC's architecture of labour protection.Footnote ⁶⁴ Wanted by the US Clinton Presidency but shaped by the political compromise at the time,Footnote ⁶⁵ enforcement of the NAALC relied heavily on the Parties’ responsibility to enforce their own labour laws and regulations.Footnote ⁶⁶ The original scope of the NAFTA side agreement was ‘to resolve issues in a cooperative manner; thus, it provides numerous opportunities for formal and informal cooperative consultations’,Footnote ⁶⁷ even including the possibility to trigger a NAALC dispute settlement process, requesting an Arbitration Panel, in case of the failure to hold consultations (NAALC Articles 29–41).

Moreover, the most significant achievement compared to the NAALC's design consisted of the USMCA's full enforceability under a single dispute settlement mechanism of all the labour provisions in the agreement, in line with the achievements of the May 10th Agreement and as embodied in the TPP text.

The most distinctive feature of the NAALC was the identification of different enforcement procedures for various categories of labour provisions. The NAALC's 11 labour principles were divided into three tiers: the first group (freedom of association, collective bargaining, and the right to strike) was only open for review by the National Administrative Offices and ministerial monitoring; the second group (covering forced labour, employment discrimination, and the protection of migrant workers) also allowed the review by a committee of experts, without the possibility of resorting to arbitration or penalties. Only the third group of labour principles could benefit from a dispute settlement mechanism in the form of an arbitration panel and the possibility of monetary retaliations. As a result, a formal dispute settlement subject to the application of sanctions was only allowed in the case of a Party's ‘persistent pattern of failure … to effectively enforce its occupational safety and health, child labor or minimum wage technical standards’, as stated in NAALC Article 29. The unification of all the labour commitments under one dispute settlement mechanism definitively improved clarity, consistency, and transparency in the overall enforcement of the USMCA provisions.

As emerged in the literature, the enforcement of labour rights in a formal dispute settlement is probably the most remarkable difference between the US's ‘conditional’ approach, often described as a more stringent and coercive approach,Footnote ⁶⁸ if compared to the ‘promotional’ approach followed by the EU in its preferential agreements.Footnote ⁶⁹ EU PTAs do not subject sustainable and labour commitments to any form of dispute settlement, while providing a very strong emphasis on the cooperation between the Parties to enhance labour rights and sustainable development commitments. EU trade agreements generally rely on different types of institutional cooperation mechanisms, frequently involving civil society platforms and governmental experts.Footnote ⁷⁰ The possibility of introducing a formal dispute settlement process has been discussed in the ongoing reform process of the EU model of Trade and Sustainable Development Agreements and started with the 2017 non-paper of the EU Commission.Footnote ⁷¹ The idea of including sanctions and a more coercive enforcement of these provisions was excluded in the 2018 non-paper in the absence of a consensus.Footnote ⁷² Regarding the specific dispute settlement mechanisms available, both the CETA and the EU–Mexico Agreement provide for only two types of dispute resolution mechanisms: consultations and the establishment of a panel of experts. Consultations should aim at achieving a mutually satisfactory resolution of the matter (according to CETA Article 23.9 and EU–Mexico Agreement Article 16.XY), but if this is not achieved within 90 days, both agreements allow for the possibility of establishing a panel of experts, which would issue a final report and suggest appropriate measures (according to CETA Article 23.10 and EU–Mexico Agreement Article 17.XY).

3.2 Pre-Ratification Conditionality in the USMCA of Mexico's Specific Commitments and Their Enforcement

In addition to judicial enforcement, the USMCA's labour protection design adds a conditional dimension, shaped around the TPP model of separate annexes addressing the reality of labour conditions in specific countries. One of the most distinctive features in the TPP was, in fact, the inclusion of annexes with special bilateral labour plans between the US and Vietnam, Brunei and Malaysia.Footnote ⁷³ The TPP Annexes, requiring the contracting Parties to implement domestic reform of labour protection as a condition for the US ratification of the agreement, have been praised in the literature so far as important factors for the implementation of domestic legal reforms across countries with poor labour rights records, even before the agreement's formal entry into force.Footnote ⁷⁴ Due to the significant domestic impact on the Parties involved, the US model of pre-ratification conditionality has also been taken into consideration in the reform process of the EU model of Trade and Sustainable Development Chapters.Footnote ⁷⁵

Following a similar design to the TPP, the USMCA introduces Annex (23.A), specifically focused on the requirements of a domestic reform of the implementation of the right to collective bargaining in Mexico. The political relevance of the Annex has taken centre stage in the discussion for the ratification of the USMCA in the US Congress.Footnote ⁷⁶ Setting up specific legal requirements, Annex 23.A prescribes a detailed reform of Mexican labour regulations to ensure the rights of workers to collective bargaining and the freedom of organization in labour unions (Article 2(a) Annex 23.A) in accordance with Mexico's Constitution. According to the outlined reforms, the Mexican government is required to have an efficient and transparent system for electing union leaders (Article 2(c)); the establishment of independent and impartial bodies for the election of union leaders and for the resolution of labour disputes (Article 2(b)); the revision of collective bargain agreements (Article 2(f)); and full transparency and publicity of these agreements (Article 2(g)). Moreover, this is made clear in Article 3 of Annex 23.A (b)), which provides that ‘it is further understood that entry into force of this Agreement may be delayed until such legislation becomes effective’.

To address the concerns raised in the US Congress regarding the effective enforcement of Annex 23.A,Footnote ⁷⁷ the Protocol of Amendment introduced two additional Annexes (namely 31.A and 31.B) at the end of USMCA Chapter 31 dedicated to its dispute settlement mechanism. These Annexes establish two bilateral ‘Facility-Specific Rapid Response Labor Mechanism[s]’, applicable only to the relations between Mexico and the US (in Annex 31.A) and between Mexico and Canada (in Annex 31.B). The Annexes set up a progressive series of responses and enforcement mechanisms to address a ‘Denial of Rights’ for workers employed in a ‘Covered Facility’ as defined in Article 31-A.15.Footnote ⁷⁸ According to the definitions under Articles 31-A.2 and 31-B.2, the violation of the rights of free association and to collective bargaining can qualify as a ‘Denial of Rights’, triggering this additional enforcement mechanism. For this reason, if the inclusion of the obligations in Annex 23.A can be described as setting up the pre-ratification conditionality requirements imposed on Mexico, then the Rapid Response Mechanisms in Annexes 31.A and 31.B represent the additional post-ratification enforcement systems available for these obligations imposed on Mexico.

The inclusion of these two enforcement mechanisms, designed on the basis of progressive levels of responses, represents a significant innovation in the regulatory design of US PTAs. The first step of the Rapid Response Mechanism consists of the request to the respondent Party to conduct a domestic review and an on-site verification providing sufficient information (Articles 31-A.4 and 31-B.4). If the respondent Party refuses to conduct a domestic review or if there is no agreement between the respondent and the complainant Parties on their findings or the remediation, there is the possibility of requesting the establishment of a Panel (Articles 31-A.5 and 31-B.5). After having requested and conducted a verification in the respondent Party's Covered Facility, the Panel is expected to issue a decision within 30 days, also providing a recommendation on a course of remediation, if requested (Articles 31-A.8 and 31-B.8). The third and final stage of the Rapid Response Mechanism involves the possibility to impose remedies, following the determination of a Denial of Rights by the Panel. According to Articles 31-A.10 and 31-B.10, the remedies that could be imposed are a suspension of a preferential tariff treatment and the imposition of penalties on the goods and services provided in the Covered Facility.

In addition, Annexes 31.A and 31.B provide the possibility of linking an action under the Rapid Response Mechanism with the adjudication of a violation of labour commitments under the Chapter 31 Dispute Settlement Mechanism. The two mechanisms are not mutually exclusive, and they can follow and enforce one another. According to Articles 31-A.12 and 31-B.12, there is the possibility of an ‘expansion of claims’. If one Party is found in violation of Articles 23.3 and 23.5 by a Panel established under Article 31.6, the complainant has two years to pursue the additional claims of a Denial of Rights following the procedures of the Rapid Response Mechanism, opening the possibility to broaden the challenges to labour rights violations under USMCA Chapter 23.

If the additional enforcement mechanisms introduce the possibility to effectively tackle specific violations of the labour commitments agreed in Annex 23.A, the design of the Rapid Response Mechanism is surrounded by many uncertainties. First, the verifications of the facilities that eventually could be required by the Panel under this mechanism could be described as ‘intrusive’. From a legal point of view, it is unclear whether these verifications will be subject to domestic law and if they would have subpoena powers over relevant documentation,Footnote ⁷⁹ and Mexico has already voiced its refusal to be subject to these additional labour enforcement inspectors from other USMCA countries.Footnote ⁸⁰ Very recently, Mexico has expressed serious concerns regarding the US legislation implementing the USMCA requiring five additional US Labor Department officials as attachés to the US Embassy in Mexico City, fearing that this implementation could be used for the sole purpose of activating the Rapid Response Mechanism.Footnote ⁸¹

More concerns have been raised on the clarity of the concept of ‘Denial of Rights’, in particular in light of the interpretation of the expression ‘under law necessary to fulfill the obligations of the other Party … under this Agreement … ’ as required in Article 31-A.2 and Article 31-B.2.Footnote ⁸² Finally, the definition of a ‘Covered Facility’ is even more controversial, as it leaves doubts of possible double standards applicable to the Parties of the Annexes. The application of the mechanism to the US is limited to the possibility of claims only with respect to the US facility covered by a National Labor Relations Board-enforced order, while the same limitation does not apply to Mexican facilities. This clearly creates a double standard between the Parties, providing a considerable advantage for the US as it takes between 5 and 10 years for the US National Labor Relations Board to enforce an order through a US court of appeals not having independent power of enforcement.Footnote ⁸³

Finally, it is interesting to note that the system of institutional cooperation for monitoring compliance with labour protection has been significantly simplified in the USMCA, if compared to the complex institutional architecture established under the NAALC. The institutional dimension of labour protection enforcement under the USMCA is developed around a system of Cooperative Labor Dialogue (defined in Article 23.13), a Labor Council (Article 23.14), and the central role of national contact points (Article 23.11). National contact points are responsible for evaluating written submissions from individuals, initiating the State-to-State communication of the Labor Dialogue, and assisting with the Labor Council's work. The USMCA's national contact points replace the National Administrative Offices (NAOs) at the core of the NAALC mechanisms of institutional cooperation and the implementation of labour provisions at a domestic level. However, contrary to the USMCA, which establishes a more unified system, each NAFTA Party had the autonomy to define the functions and the role of the NAOs, and this resulted in considerable differences between the functions of NAOs in Canada, the US, and Mexico.Footnote ⁸⁴ The institutional system of State-to-State cooperation established in the USMCA significantly simplifies the NAALC architectural design of the Commission of Labor Cooperation and the functions of NAOs and of the NAALC Secretariat, which is no longer envisaged in the USMCA. Moreover, according to the ‘Protocol Replacing the North American Free Trade Agreement with the Agreement Between the United States of America, the United Mexican States, and Canada’, the NAALC Secretariat will be dissolved upon the USMCA's entry into force. Article 3 of the Protocol states that the Parties agreed that ‘upon entry into force of this Protocol, the North American Agreement on Labor Cooperation, done at Mexico, Washington, and Ottawa on September 8, 9, 12, and 14, 1993 shall be terminated.