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American ShipperTrade Compliance

USMCA conversation intensifies on Capitol Hill

A coalition of interest groups held a “day of action” on the trade pact as lawmakers heard testimony regarding Mexico’s recently passed labor reform legislation.

   The focus on the U.S.-Mexico-Canada Agreement (USMCA) sharpened on Capitol Hill this week.
   On Tuesday, several organizations formally urged Congress to not vote on the deal until certain changes are made, while U.S. Trade Representative Robert Lighthizer met with House Democrats and a key House panel heard from witnesses regarding the impacts that Mexico’s recently passed labor reform law could have on the agreement.
   A coalition of several interest groups delivered petitions “signed by hundreds of thousands of Americans” and calling for Congress to refrain from holding any vote on the renegotiated NAFTA in its current form.
   “That congressional Democrats, unions and others who have opposed past pacts are seeking to correct core flaws of the 2018 text rather than defeat the deal reveals that there is a path to build broad support,” the coalition said in a press release.
   The press release identified 45 groups involved in the initiative, including AFL-CIO, the Franciscan Action Network and Green America.
   The coalition urged President Donald Trump against several potential actions that it said would hurt progress toward USMCA approval, including the possibilities that Trump may “prematurely” push for a vote before the agreement’s text is “fixed,” refuse to make changes or continue threatening to “upend” discussions about improving USMCA and/or threatening any deal resulting in “anti-immigrant tariffs” against Mexico.
   “Many of the changes we’re talking about cannot be done in the implementing language,” AFL-CIO President Richard Trumka said during a press conference in front of the Capitol on Tuesday. “They must be amendments in the existing [USMCA] text.”
   During the press conference, Rep. Rosa DeLauro, D-Conn., called for the removal of the USMCA provision providing 10 years of data exclusivity for development of biologic drugs.
   The period is two years less than current U.S. law provides, but progressives have expressed concern that the pact will lock in the time frame as a precedent and hamper any efforts in the U.S. to shorten the data exclusivity period for biologics.
   Rep. Jan Schakowsky, D-Ill., last week introduced a bill that would shorten the U.S. data exclusivity period for biologics from 12 years to five years.
   “We believe because of the incredible need — now — to make pharmaceuticals more available and more affordable for the American people, that five-year patent exclusivity is enough,” she said during the press conference. “We also have to deal with what is called ‘evergreening,’ where [pharmaceutical] companies change one little thing about the drug that they’ve offered and ask for an additional 10 years, 12 years of patent exclusivity.”
   DeLauro added that USMCA environment provisions should be strengthened to address climate change.
   Asked after the press conference whether Lighthizer seems open to the idea of renegotiating parts of USMCA, DeLauro said, “I’ve dealt with several administrations and I will say that Ambassador Lighthizer has been singularly open to ideas and conversations and trying to move the ball forward. We know where he is and he knows where we are, and that has been the basis of a good relationship. … We are trying to get to where we have an agreement that works. I think he understands that, and we’re not there yet. And that’s what the debate will be about.”
   In its press release, the coalition noted that the last four U.S. free trade agreements required changes to the body of the text after they were signed, before getting congressional approval.
   Former President Barack Obama submitted the U.S.-Korea, U.S.-Colombia and U.S.-Panama trade deals as a package to Congress in October 2011, after they were all renegotiated. Under fast-track procedures, all three agreements passed both houses of Congress on Oct. 12, 2011.
   As for the U.S.-Peru Trade Promotion Agreement, the House and Senate approved the pact in November and December 2007, respectively.
   After a press conference on Capitol Hill on Tuesday, Lori Wallach, director of Public Citizen’s Global Trade Watch, said it’s “normal operating procedure” to make changes to the text of free trade agreements after signing and before a congressional vote.
   Wallach noted that the four abovementioned trade deals passed only after then-House Speaker Nancy Pelosi, D-Calif., tasked lawmakers with securing changes to certain text, including labor and enforcement language.
   Wallach added that the one pact that took three years to approve was the trade deal that former President George W. Bush “tried to jam” through Congress without Pelosi’s endorsement.
   The Colombia pact originally was sent to Congress in April 2007, prior to changes to labor, environment and enforcement provisions.
   The last four trade agreements were renegotiated to include a wide-ranging bipartisan trade framework reached by the Bush administration and Congress on May 10, 2007, known as the “May 10 Agreement,” which set forth key labor and environmental standards to be included in free trade agreements from that point forward.
   USMCA incorporates essential elements of the May 10 Agreement, though Ways and Means Democrats expressed disappointment in an April 17 letter to U.S. Trade Representative Robert Lighthizer that the pact’s environment chapter didn’t incorporate May 10 Agreement language calling for countries to “adopt, maintain and implement” seven specific multilateral environmental agreements.
   Despite not including specific references to several of those agreements, the USMCA environment chapter reflects general concepts underpinning most of the environmental pacts referenced in the May 10 Agreement.
   For instance, the USMCA environment chapter mentions neither the Ramsar Convention on the Wetlands nor the International Convention for the Regulation of Whaling, but includes language providing for wetlands protection and whaling prohibitions.
   Democrats also have expressed concern that USMCA omits language dealing with climate change.
   Lighthizer during a Ways and Means hearing earlier this month noted free trade agreements don’t normally cover climate change and that the USMCA doesn’t include such language.
   In an April 11 letter to Lighthizer, Ways and Means Democrats noted that USMCA generally reflects the strengthened labor standards developed in the May 10 Agreement.
   They noted that the pact elaborates on some May 10 core labor standard commitments, taking into account enforcement challenges the U.S. has had over the past 12 years, including the denial of freedom of association through violence and threats.
   DeLauro, who is on the House working group charged with ensuring Democrats’ USMCA concerns are addressed as Congress considers the pact, said substantive discussions between the working group and Trump administration would occur “in short order.”
   Lighthizer met with Democrats on Capitol Hill on Tuesday, as the Trump administration and congressional Democrats work on a path forward.
   Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., on Wednesday said he expects that House Democrats will meet with Lighthizer at least once a week as discussions proceed.
   In response to an American Shipper question during the press conference, Trumka outlined some steps he said Mexico could take prior to a congressional USMCA vote to assure U.S. organized labor that the country is able and willing to implement its recently passed labor reform law.
   “They’ve promised to create a new court system; they’ve promised to create a new department of labor; they’ve promised to train all of those people; and they have promised to do away with a minimum of 700,000 protection contracts,” Trumka said. “We need to see that they have the infrastructure and resources available to enforce the law in Mexico, because if Mexican wages aren’t allowed to rise, then this agreement will continue to suck jobs out of the United States.”
   Trumka also noted there are 96 current constitutional challenges to the new Mexican labor law and that he wants to “see some clarity” that the law won’t be declared unconstitutional, which would make both the law and the USMCA unenforceable, he said.
   “If that happens, then we’re back to NAFTA 1, where we had a model which keeps wages artificially low,” he said.
   Mexican unions, most of which are employer-dominated, are challenging the constitutionality of newly passed Mexican labor reform legislation, with almost 100 different cases filed in district courts in June, Inside U.S. Trade reported Monday.
   During a Trade Subcommittee hearing on Tuesday, Joyce Sadka, professor at the Mexico Autonomous Institute of Technology, said there are signs that Mexico is giving a “real commitment” to implementing its labor reform law, passed by the Mexican congress in April.
   The law was negotiated and passed with an “unprecedented” level of participation from all sectors, representing a “new and radically different” agreement at the national level on how to regulate and enforce labor rights, Sadka said.
   The law also addresses many issues beyond the requirements of the Mexican constitution and USMCA, including revamping notifications, mandating interoperable databases to verify union representation, modernizing and streamlining of lawsuit procedures and instating more effective enforcement of court judgments, Sadka said.
   Harley Shaiken, director of the Center for Latin American Studies at the University of California, Berkeley, during the hearing cited a strong commitment by Mexico to implement labor reforms, but noted that the “forces arrayed against it are very powerful and not about to walk away.”
   Those “forces” include “the corrupt, existing official union structure,” as well as corporations that benefit from the existing Mexican labor structure, Shaiken said.
   Mexico’s institutions in the labor area are currently weak, and state capacity must be built to implement reforms, which is a “tall order,” he said.
   Subcommittee ranking member Vern Buchanan, R-Fla., said he believes Mexico is firmly committed to implementing its labor law, adding that passing USMCA will help the U.S. ensure Mexico “faithfully implements” the reforms therein.
   “I am a strong supporter of USMCA because it modernizes our trade relationships with our closest trading partners in a smart, effective and seamless way,” Buchanan said. “That includes areas like agriculture, services, intellectual property and digital trade. Delay in congressional consideration of this agreement means that we don’t see these considerable new benefits.”
   Blumenauer during the hearing said that ongoing USMCA discussions between Congress and the Trump administration are part of a process that aims at “getting it right” before the pact enters into force.
    “This will be our last chance,” he said. “We’ll live with it if we pass it and be frustrated if we don’t address … questions” regarding labor and other areas of concern.
   Speaking Wednesday during a Washington International Trade Association event, Blumenauer said House Democrats are “very interested” in “being able to move forward in an expeditious fashion” on USMCA.
   He added that he doesn’t think a House vote can occur before Congress’ August recess, which the U.S. Chamber of Commerce and others have pushed for.
   “That’s not to say that we can’t move with dispatch, make progress and be able to move something in the fall,” Blumenauer said.

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Brian Bradley

Based in Washington, D.C., Brian covers international trade policy for American Shipper and FreightWaves. In the past, he covered nuclear defense, environmental cleanup, crime, sports, and trade at various industry and local publications.

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