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American Shipper

Senate Democrats want assurance USMCA has teeth

Finance Committee members say they are checking to make sure there are adequate enforcement provisions in the North American trade deal before Congress bites into it.

   Key Senate Democrats said that the newly completed U.S.-Mexico-Canada Agreement (USMCA) would need to spur Mexico to enact labor reform laws and have implementable enforcement provisions in order for the pact to garner enough Democrat support to pass Congress.
   For the constituents of Senate Finance Committee ranking member Ron Wyden, D-Ore., “the first question people have is: ‘You know, I’ve heard about all these trade agreements in the past, and they always promise all kinds of things. What are you going to do to actually enforce the trade laws on the books?’” Wyden told reporters Tuesday. “So I think the disposition of this bill’s really going to come down to whether the trade enforcement provisions have teeth, and [if they are] going to really help workers.”
   Under timelines set out in Trade Promotion Authority legislation, the earliest a vote on USMCA implementing legislation could happen is February, at which point there’s a possibility that Senate and/or House control shift from Republicans to Democrats.
   Wyden said if the Senate flips and he becomes Finance chairman, legislative movement on USMCA will depend heavily on enforcement provisions.
   “Certainly, no matter how the election comes out, I think the issue of enforcing trade laws is going to be central, and the Trump administration always talked about it; now we’ll see if what they’re offering really has teeth,” he said.
   For Sen. Sherrod Brown, D-Ohio, whether USMCA will pass muster will come down to how the deal will affect jobs in his state, as well as whether Mexico enacts legislation raising labor standards.
   Congressional Democrats have long pushed for trade agreements to include enforceable language requiring parties to allow collective bargaining and provide for other worker rights.
   “Mexico has to pass that law before the [USMCA] implementing language bill passes,” Brown told reporters Tuesday.
   Stopping short of outright endorsing the USMCA text, which was completed Sunday, Finance Republicans hailed as a success the fact that USMCA’s three parties reached an agreement to modernize NAFTA.
   Speaking on the Senate floor Tuesday, Senate Majority Whip John Cornyn, R-Texas, who chairs Finance’s International Trade, Customs, and Global Competitiveness Subcommittee, said it may seem like the Trump administration’s trade policy is sometimes “like a bull in a China shop,” but it appears that the NAFTA renegotiation yielded good results and that the administration kept its promises to update the nearly 25-year-old pact.
   Further, “the agriculture sector, that I think was most concerned about some of these negotiations, I think is breathing a giant sigh of relief,” Cornyn said.
   Another senior Finance member, Sen. Chuck Grassley, R-Iowa, applauded the agriculture provisions, saying in a Monday statement that they increase market certainty. He also tweeted on Monday that his first reading of USMCA indicated the pact is “very favorable” to U.S. and Iowa agriculture, adding that President Donald Trump’s “tough negotiation position may be paying off.”
   Finance member Rob Portman, R-Ohio, who has been somewhat critical of the Trump administration’s trade policies and introduced legislation to check the executive branch’s Section 232 tariff powers, said on the Senate floor Tuesday that he thinks USMCA is going to be a “step forward.”
   He said the agreement offers two general advantages: promotion of North American production and stronger alignment of North American economies against countries that engage in unfair trade, apparently referring to a provision in USMCA’s Exceptions and General Provisions chapter aimed at fostering cohesion between member states against non-market economies.
   That chapter requires parties to inform other parties of intents to start free trade agreement talks with a non-market country at least three months before commencing negotiations.
   The language defines a non-market country as any country that on the date of USMCA’s signature at least one USMCA party has determined to be a non-market economy for purposes of its trade remedy laws and is a country with which no party has a free trade agreement.
   “It will encourage more production here in North America of things like automobiles,” Portman said of USMCA. “You have to have a higher content of [North] American content, Canadian, Mexican and U.S. content in automobiles than in the old agreement. So you will have more cars being built in America and North America as well as auto parts. I think thats good.”
   USMCA’s auto provisions bumped up NAFTA’s North American value content requirement from 62.5 percent to 75 percent and will require, starting in 2020, 30 percent of the work on automobiles made in Mexico to be done by workers earning $16 an hour, rising to 40 percent by 2023.

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