The final provision, as written, could also prove relatively ineffective at shifting production, because it is not indexed to inflation. An average wage of $16 an hour will be less constraining in 2023 dollars than it is today.

Stronger labor rules in Mexico

The U.S.M.C.A. includes expansive changes that, at least on paper, should help level the playing field among workers in the United States, Canada and Mexico.

NAFTA’s original provisions on labor and environment were added as side letters after the original agreement was signed, to win the support of Democrats and ensure the deal’s passage during the Clinton administration. The U.S.M.C.A. moves these chapters into the main body of the trade agreement, meaning issues like the right to organize are now subject to the pact’s normal procedures for settling disputes.

The deal also expands those commitments, requiring more protections for workers, blocking imports of goods made with forced labor, and setting up mechanisms to ensure that those rules are enforced.

In response to the concerns of congressional Democrats, it sets up an independent panel that can investigate factories accused of violating labor rights and stop shipments of that factory’s goods at the border. It establishes an interagency committee to monitor Mexico’s labor reforms, as well as American attachés who will report to Congress on the progress.

In an annex to the agreement, Mexico also committed to enact sweeping legal changes to combat forced labor and violence against workers, and allow for independent unions and labor courts. The International Trade Commission has estimated that, if the changes are made, they will increase wages for Mexico’s unionized workers and decrease their pay gap with American workers.

Less protection for drug companies

In a major concession to Democrats, the Trump administration agreed to pare back certain protections for an advanced and very expensive class of drugs called biologics. The final agreement removes a provision that had offered the drugs 10 years of protection from cheaper alternatives in both Canada and Mexico.