Is USMCA Good for Mexican Labor? A Preliminary Analysis of USMCA and Labor Market Outcomes in Mexico

Authors

Diego Marroquín Bitar

First Page

542

Abstract

The United States-Mexico-Canada Agreement (USMCA) introduced significant labor provisions aimed at bolstering labor rights and promoting union democracy, representing a departure from its predecessor, the North America Free Trade Agreement (NAFTA). This paper examines USMCA’s potential benefits and limitations on labor, arguing that the trade agreement’s effectiveness in improving labor conditions in Mexico may be limited. By primarily benefitting export-oriented firms, USMCA leaves a significant portion of Mexico’s workforce untouched. Moreover, USMCA's new wage requirements, intended to raise labor standards, may paradoxically increase production costs for formal firms, potentially lowering overall productivity. This paper underscores the persistent formal-informal labor divide in Mexico, suggesting that USMCA alone cannot address this issue and concludes that, despite supporting millions of jobs in Mexico, USMCA is unlikely to lead to widespread improvements in wages and economic productivity in the country without comprehensive structural reforms fostering business growth, strengthening labor regulations, and promoting broader societal engagement.

Recommended Citation

Diego Marroquín Bitar, Is USMCA Good for Mexican Labor? A Preliminary Analysis of USMCA and Labor Market Outcomes in Mexico, 49 Brook. J. Int'l L. 542 (2024).
Available at: https://brooklynworks.brooklaw.edu/bjil/vol49/iss2/5