On July 1, 2020, the Canada-United States-Mexico Agreement (CUSMA) will be coming into force. This agreement will effectively replace the North American Free Trade Agreement (NAFTA). Unlike NAFTA’s provisions on labour, which were included in a side letter, CUSMA includes a comprehensive chapter—Chapter 23—on labour within its body, which has the effect of subjecting the labour provisions to the CUSMA dispute resolution procedure.
The labour chapter builds on the international labour rights set out in the 1998 International Labour Organization (ILO)’s Declaration on Fundamental Principles and Rights at Work. The chapter includes commitments to ensure that national laws and policies provide protection of the fundamental principles and rights at work, including the right to freedom of association and collective bargaining and the elimination of child labour, forced or compulsory labour and discrimination in respect of employment occupation. The chapter also includes provisions which prohibit the importation of goods produced by forced labour, discrimination, including discrimination based upon sex, sexual orientation, pregnancy, gender identity, gender-based wage discrimination and sexual harassment. CUSMA also ensures that migrant workers are protected under applicable labour laws, and that acceptable conditions of work with respect to minimum wages, hours of work and occupational health and safety are observed. The amendments also provide the parties with increased flexibility to pursue labour violations.
The chapter encourages cooperation on labour matters and establishes a mechanism to monitor compliance with the commitments agreed to. Having a common understanding on fundamental labour principles is key in communicating and furthering the relationship between countries. In order to implement this goal, CUSMA establishes that a labour council, comprised of trade and labour ministers, will meet one year after CUSMA comes into effect, and every two years thereafter, to discuss any matter within the scope of Chapter 23.
The labour obligations set out in CUSMA will be primarily implemented through each party’s existing legislative framework. The CUSMA also includes a non-derogation clause that prevents parties from relaxing their domestic labour laws in order to encourage trade or investment.
FOCUS ON MEXICO
CUSMA includes an Annex on Worker Representation in Collective Bargaining in Mexico, under which Mexico commits to make the necessary legal reform that would allow workers to organize and bargain collectively, and to address the problems of violence in the workplace, as well as forced labour. To enforce Mexico’s compliance with CUSMA, and to ensure that it does not violate labour rights, the dispute settlement chapter outlines a “Rapid Response Mechanism,” which creates a bilateral agreement between Canada and Mexico, as well as the U.S. and Mexico. If needed, this mechanism acts to deploy a three-member panel of labour experts to the impugned facility to ensure that the national labour law is being abided by. If it is found that the labour laws have been violated, sanctions will be imposed. These changes purport to not only have the effect of enforcing stronger labour laws in Mexico, but to also allow North American companies and workers to compete by marginally driving up wages and the cost of production in Mexico.
CUSMA’s comprehensive chapter on labour provisions indicate the large emphasis that the agreement will have on labour in North America going forward. Blakes lawyers will continue to monitor the affects of CUSMA on labour after its coming into force on July 1, 2020.
For further information, please contact:
Anna Abbott 416-863-4277
or any other member of our Employment & Labour group.
Please visit our Navigating CUSMA: Key Changes for Businesses hub to learn more about how CUSMA may impact your business.
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