LABOR, USMCA Forward: Building a more competitive, inclusive, and sustainable North American economy

The North American Free Trade Agreement (NAFTA) represented a significant step towards the integration of the three economies of that region. Launched in 1994, it superseded a previous agreement between Canada and the U.S., so the substantive change was the incorporation of Mexico, a country with a relatively lower average per capita income. NAFTA made significant advances in trade and foreign investment regulations but excluded any binding provisions on immigration or the free movement of labor (other than commitments to enforce pre-existing legislation). Indeed, the expectation was that trade in goods would in part substitute for trade in factors, particularly labor, so that the agreement would narrow wage differences between Mexico and its two northern partners.