Developments in the Compliance Mechanisms of Free Trade Agreements ―Implications from the Labor and the Environment Chapters in the United States-Mexico-Canada Agreement (USMCA) ―

Three years have passed since the United States-Mexico-Canada Agreement (USMCA) entered into force. USMCA is considered the most important tool to achieve a “worker-centered trade policy” advanced by the Biden administration and includes a “Facility-Specific Rapid-Response Labor Mechanism (RRM)” to ensure compliance with obligations under the labor chapter, which had never been included in trade agreements. RRM has already built up a track record of 14 cases and is exerting widespread influence over corporate behavior within the covered areas. Similarly, regarding the environment, continuous efforts can be seen to ensure compliance with environmental obligations through an improvement to a previous mechanism of the North American Free Trade Agreement (NAFTA). The labor and the environment are increasingly being emphasized not only for the protection of their fundamental values, but also from the perspectives of ensuring a level playing field, as well as building a resilient supply chain. The important feature of USMCA labor and environment chapters is having strengthened compliance procedures with the involvement of non-state actors such as trade unions, environmental organizations, and the civil society, in addition to conventional state-to-state dispute settlement mechanism. Through the consideration of the current status of the compliance mechanisms for the labor and the environment chapters in USMCA, this article shows some developments in the compliance mechanisms included in the labor and the environment chapters of free trade agreements and considers their implication on new U.S.-led negotiations such as the Indo-Pacific Economic Framework for Prosperity (IPEF).