Labor Challenges and the Importance of Judicial Reform in the USMCA
Former negotiators of the labor chapter and experts on the subject warn that the 2026 restructuring of the trade agreement will depend on the momentum Mexico gives to its labor justice system, how inspections are conducted in a truly bilateral manner, and a strategy that unites labor issues with its industrial policy. Additionally, Mexico will need to demonstrate that labor reconciliation mechanisms will continue to operate under the Judicial Reform.
Forced labor: a critical issue or a matter of lesser importance? What will our neighbors to the north, the United States and Canada, seek? To ensure that the terms of the agreement are upheld despite the Judicial Reform.
Since its approval in 2018, the United States-Mexico-Canada Agreement ( USMCA ) has introduced a labor chapter that has led to various reforms in favor of workers in all three countries. For former Mexican negotiators, advancements in labor rights in Mexico, including increases in the minimum wage, are closely tied to this agreement. With just a few months until the formal review in 2026, both former negotiators and specialists agree that although Mexico has made progress in implementing structural reforms, it still faces new challenges. Ricardo Aranda, who led the labor and environmental negotiations for the agreement, asserts that worker empowerment was the central focus of the labor redesign, reflected in the reform of the justice system and respect for the right to unionize. Meanwhile, Juan Carlos Baker, former Deputy Secretary of Foreign Trade, highlights that Chapter 23 of the USMCA has made it so that non-compliance on labor issues has real trade repercussions. Only a small number of cases have reached a tribunal out of more than 30 requests, indicating that Mexico has been responsive to complaints, he emphasized.
An issue that could gain more importance in the review is the fight against forced labor. While Mexico implemented a measure in 2023 to restrict imports related to this practice, Aranda believes there is a need to improve the identification and detention of products linked to labor violations. In contrast, Baker points out that even though no formal cases have been documented in Mexico, “the rules are already established in the Agreement” and could exert pressure if the U.S. perceives that there is non-compliance. Both agree that international cooperation will be crucial to strengthening Mexico’s institutional capacity. Aranda emphasizes that dialogue with agencies from the United States and Canada could facilitate technical learning and coordinated action. U.S. labor unions, key to the agreement’s approval in Congress, will play an important role once again. According to Baker, it is likely that U.S. unions will push to expand the list of priority industries subject to the rapid response mechanism and eliminate bureaucratic requirements that limit its applicability. This pressure could result in increased U.S. labor oversight in Mexico. In this context, Aranda anticipates a possible tightening of the rules of origin and an increase in labor content requirements, which could transform the USMCA into a more regulated trade regime.
Óscar Ocampo, Director of Economic Development at IMCO, stated that the key for Mexico will be to convince the United States that it has complied with labor reform. He also emphasized that the reconciliation centers and the new labor courts must operate independently and efficiently despite the Judicial Reform that will allow citizens to choose judges in the upcoming June elections. The credibility of the reform will depend on this, he warns. Let’s remember that, in 2019, Mexico eliminated the Conciliation and Arbitration Boards at both federal and local levels, creating Labor Courts that are managed by judges from the Judicial Branch. Ocampo also proposed institutionalizing the rapid response mechanism to transform it into a bilateral and predictable system, similar to the investor dispute resolution mechanisms. Additionally, he suggests that Mexico should link labor obligations with industrial policy incentives to attract investments in sectors that meet high labor standards. Beyond the labor chapter, the 2026 review will also address other strategic issues. Ocampo mentions that the automotive industry and permits for importing biotech products will be sensitive issues due to their political repercussions. Furthermore, Mexico will need to address concerns regarding intellectual property, piracy, customs regulations, and sanitary and phytosanitary measures—issues that have already been raised by the current administration under President Donald Trump.
In conclusion, it is crucial for Mexico to maintain a proactive approach to implementing labor reforms and its relationship with the USMCA. How these processes are managed will not only affect trade relations but also influence the country’s economic development. A solid and reliable labor framework will help attract investments and improve working conditions, which, in turn, will benefit the entire Mexican economy.
