Potential Changes Ahead for USMCA Rapid Response Mechanism
Key Points
- The United States won its first successful arbitration under the United States-Mexico-Canada Agreement’s (USMCA) Rapid Response Labor Mechanism (RRM). A call center in Mexico was found to have denied its workers’ rights, a landmark labor decision under a trade deal.
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The Trump Administration opened a public comment period to consider modifications to the USMCA, including the RRM. Comments are due November 3 and a public hearing is scheduled for November 17.
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RRM enforcement is progressing at a fast pace, with bipartisan support. Since 2021, 39 RRM cases have been initiated across multiple industries. Enforcement activity has directly impacted over 36,000 workers and awarded nearly $6 million as of September 2024.
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Future enforcement could be more aggressive. The milestone panel ruling in July 2025 found the employer liable, signaling a shift toward more robust enforcement. The RRM remains untested in many areas, and the upcoming 2026 USMCA review may bring further changes. Employers should prepare now.
In a major decision issued July 4, 2025, the United States prevailed in the first successful labor litigation under any trade agreement. The United States proved that a call center in Mexico denied workers’ rights, according to an arbitration panel established by the United States-Mexico-Canada Agreement (USMCA) Facility-Specific Rapid Response Labor Mechanism (RRM).
On the heels of the panel’s decision, on September 16, the Trump Administration solicited public comments related to potential changes that should be made to the USMCA, including the RRM. The comments are due November 3.
Employers should pay close attention to the RRM — a unique, potentially evolving legal regime, which could have significant consequences for their business.
Groundbreaking trade tool
The RRM is an innovative trade dispute mechanism negotiated by the first Trump Administration and Mexico as part of the USMCA. It provides for the expedited enforcement of workers’ rights to freedom of association and collective bargaining with respect to individual facilities in Mexico that have a trade nexus with the United States.
The legal protections are similar to those provided by the National Labor Relations Act (NLRA). Allegations could include the facility discharging workers for engaging in union organizing activity or refusing to bargain with a union.
Facilities that deny their workers’ rights may be subject to customs and trade sanctions (such as suspension of USMCA tariff benefits), traditional labor and employment remedies (such as reinstatement and back pay), and other damages. There could be reputational harm, too, given that the U.S. government issues a press release naming the company that the government believes denied workers’ rights.
One theory the RRM supports, which has earned a measure of bipartisan support, is that respecting workers’ rights to organize in Mexico creates a more level playing field for businesses in America that respect similar rights provided in the NLRA.
How ‘rapid’?
Typically, an RRM case begins when someone, often a worker or union, files a petition alleging a denial of rights with an interagency government committee led by the Office of the U.S. Trade Representative (USTR) and the Department of Labor (DOL).[1] DOL monitors telephone and web-based hotlines to receive information about alleged denials of rights.
After a petition is filed, the committee has 30 days to determine whether there is sufficient, credible evidence of a denial of rights. If the committee makes an affirmative determination, USTR asks Mexico to conduct an investigation, which Mexico has 45 days to complete. Following Mexico’s investigation, the two governments often resolve the case shortly thereafter by agreeing on remedial steps. If they fail to do so, USTR can ask an RRM panel to resolve the dispute.
Panel decisions have taken much longer — the two decisions published to date were issued, on average, more than 12 months after the RRM petition was filed. Panels are composed of an individual from Mexico’s list of panelists, one from the United States’ list, and one from a list agreed to by each country. Panel decisions are generally final, with no right of appeal.
Company and union officials and workers may be asked for information during the investigations conducted by the United States and Mexico. DOL attachés stationed in the U.S. Embassy or Consulate in Mexico assist with the United States’ RRM monitoring and enforcement activities.
The foregoing describes RRM claims the United States has brought with respect to facilities located in Mexico. Mexico, for its part, can bring a claim with respect to a facility in the United States, but in a narrower set of circumstances. Mexico may do so only with respect to a denial of rights owed to workers at a facility under an enforced order of the National Labor Relations Board (NLRB). To date, there have been no publicly reported cases related to facilities in America.
39 cases so far, and probably a lot more to come
Since 2021, USTR has pursued 39 RRM cases related to facilities in various industries, including auto/auto parts manufacturing, mining, garments, food processing and cargo services.[2] Cases have involved companies headquartered in the United States, Europe, Asia and elsewhere that have facilities in Mexico. The Biden Administration pursued most of these cases, and, since January, the Trump Administration has continued to do so — again reflecting a bipartisan approach to RRM enforcement.
Many cases have ended soon after Mexico’s investigation — via settlement agreement between the governments or because USTR found that Mexico remediated the situation. Remedial steps have included labor rights training for workers, modified personnel policies, and reinstatement and back pay for workers fired for their union activities. According to USTR, as of September 2024, resolved cases have benefited over 36,000 workers and provided workers nearly $6 million in back pay and benefits.
The rate of case closures after Mexico’s investigation has dropped in recent months, and several cases are pending before panels. Damages can be uncertain at the panel stage.
First decision finding employer liability
On July 4, an RRM panel found for the first time that a facility in Mexico denied its workers’ rights.
The panel relied in part on International Labor Organization (ILO) standards to reach its determination that the conduct of the facility, which provides call center services, was unlawful. Specifically, after reviewing voluminous evidence from workers, union officials and management, the panel concluded that the facility fired workers based on their union preferences and helped the company’s favored union gather worker support, among other denials of rights.
The panel found Mexico failed to remediate the denials of rights but provided few clues on how they should be remediated. This is an important issue that has not been resolved to date.
Changes in store?
Employers that wish to influence how the RRM will be enforced going forward must file comments by November 3. USTR will also hold a public hearing on November 17, where interested persons can present testimony. These activities are part of a broader review of the USMCA that the United States, Mexico and Canada are scheduled to conduct in July 2026, when each can make recommendations to modify the agreement.
Responding to comments in 2023, the Biden Administration found that a facility has no due process right to be notified when an RRM petition has been filed alleging the facility denied its workers’ rights (although the government would consult the facility “whenever practicable”). It remains to be seen whether the current administration will respond the same way to any similar comments filed in November. Employers could consider filing other comments, including with respect to the extent to which a facility may participate in panel and settlement discussions and the types of penalties that may be imposed.
Next steps
The RRM is still a new legal regime, the boundaries of which have not been heavily tested, unlike the NLRA, which the NLRB and federal courts have interpreted since 1935.
USTR’s historic panel victory, combined with fewer settlement agreements recently, could foreshadow more aggressive enforcement activities.
Companies that have facilities in Mexico or plan to open them — regardless of where they are headquartered — may find it wise to conduct proactive training on their RRM obligations. They should immediately contact counsel experienced in labor and international trade matters if they wish to offer such training or file comments by November 3.
[1] USTR also has the authority to self-initiate an investigation absent the filing of an RRM petition.
[2] USTR does not publish the number of RRM petitions it receives but decides not to pursue.
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