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\u27s 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
