Independent Board Reports Mexico Failing USMCA Labor Commitments

Independent Board Cites Non-Compliance

A recently released report by the Independent Mexico Labor Expert Board (IMLEB) has found that Mexico is not in compliance with its labor obligations under the United States-Mexico-Canada Agreement (USMCA). This marks the first instance that the board, established by the U.S. Congress to monitor Mexico's labor reforms, has issued such a finding of non-compliance. The report, submitted to Congress in October 2025, suggests that if success is measured by a reduction in the wage gap between Mexican workers and their North American counterparts, the USMCA has been a 'failure'.

USMCA's Ambitious Labor Framework

The USMCA, which replaced NAFTA on July 1, 2020, includes a comprehensive labor chapter (Chapter 23) designed to strengthen worker rights and promote union democracy. Key commitments under the agreement require signatory parties, including Mexico, to:

• Adopt and maintain labor rights recognized by the International Labor Organization (ILO).
• Ensure freedom of association and collective bargaining, including the right to strike.
• Provide for secret ballot union elections.
• Establish independent and impartial bodies to register unions and collective bargaining agreements.
• Create independent labor courts to resolve disputes.

In anticipation of the USMCA, Mexico enacted significant labor reforms in May 2019, aiming to transform its labor justice system and strengthen worker protections.

Enforcement Mechanisms and Mixed Results

A central component of the USMCA's labor provisions is the Rapid Response Labor Mechanism (RRM), an innovative and binding tool designed for expedited enforcement actions against individual facilities. The RRM allows the U.S. and Canadian governments to raise concerns about compliance and can lead to sanctions such as the suspension of preferential tariff treatment or denial of imports. As of November 2023, 18 complaints had been filed through this mechanism, with 14 successfully concluded. Notably, in August 2025, an RRM panel found a denial of rights at Atento Servicios in Hidalgo, Mexico, marking the first successful labor case under the dispute mechanism of any trade agreement.

Despite these individual successes and Mexico's own reported progress in areas like increased formal employment and real wages, the IMLEB's recent overarching finding indicates that systemic issues persist. The board's previous reports had acknowledged progress but consistently highlighted that many promised changes still needed to be implemented.

Implications for Future Trade Relations

The IMLEB's report underscores ongoing challenges in fully realizing the USMCA's labor objectives. The findings are particularly significant as the USMCA agreement is scheduled for review in 2026. Labor organizations, such as the UAW, have applauded the IMLEB's conclusions and are calling for a comprehensive overhaul of the trade system, advocating for new trade deals that prioritize workers' rights and aim to raise labor standards across borders.