A report by the House Democrat working group for the U.S.-Mexico-Canada Agreement (USMCA) reflects a demand by Democrats for enforcement mechanisms other than NAFTA’s existing state-to-state dispute settlement system, but the report gives little detail as to any specific measures being formally called for.
The report was sent to House Speaker Nancy Pelosi, D-Calif., on Friday and sums up the working group’s meetings with officials from the Office of the U.S. Trade Representative over roughly the last month. The USMCA negotiation officially was completed on Nov. 30, when leaders from the three member countries signed the final text of the NAFTA successor agreement.
The working group also is calling for the Trump administration to “fix the procedures in the NAFTA’s state-to-state dispute settlement mechanism” that have allowed parties to block formation of an arbitral panel and to impede formal enforcement for all obligations across the agreement, according to the report.
In addition to the call for an improved state-to-state dispute settlement structure, the report calls for the U.S. to establish additional “enhanced enforcement mechanisms” for labor and environmental provisions.
Though not formally documented in the working group report, Democrat Sens. Sherrod Brown of Ohio and Ron Wyden of Oregon have floated a proposal that would provide for U.S. and Mexican officials to inspect Mexican factories accused of violating labor standards and for the U.S. to deny tariff benefits and/or block the entry of relevant goods upon discovery of forced labor violations.
A House Ways and Means Committee spokesperson confirmed that members of the working group are calling for enforcement measures in addition to state-to-state dispute settlement, but did not respond to a follow-up question seeking information on any measures lawmakers are demanding outside of the Brown/Wyden proposal.
The report states that the working group and USTR made “substantial progress” throughout the weeks they met and that the working group outlined “clear and specific objectives and proposals” to improve USMCA in the areas of labor, environment, enforcement, and access to affordable medicine.
On the issue of Mexico’s implementation of USMCA’s labor standards, the report states that the country’s government has the political will to deliver “real labor reforms,” adding that “resources are a question.”
The report says, “Given the strict austerity measures the president is imposing as part of an aggressive anti-corruption reform effort, the government will likely not have the resources to successfully deliver on the changes.”
The working group said the expected approval of a budget by the Mexican congress in November will be a “critical measure” of Mexico’s commitment to provide the resources necessary for labor reform.
The working group’s medicines proposal seeks to “preserve Congress’ freedom to legislate to improve access to affordable medicines, particularly for some of the most expensive drugs,” and to improve opportunities for competition in order to expand access for affordable medicines, the report states.
USMCA provides a 10-year data exclusivity period for development of biologic drugs, two fewer years than the time frame provided by U.S. law.
During a June Senate hearing, Sen. Debbie Stabenow, D-Mich., questioned whether USMCA biologics language could hinder any congressional action to shorten the exclusivity period.
U.S. Trade Representative Robert Lighthizer during that hearing said he didn’t believe the USMCA language stops Congress from changing laws as it sees fit, adding that he would correct any problem if necessary.
“It is now USTR’s turn to respond,” the report says. “It is time for the administration to present its proposals and to show its commitment to passing the new NAFTA and delivering on its own promises.”
USTR didn’t respond to an American Shipper request for comment.
The report states that members of the working group “stand ready” to work with USTR throughout the August recess, including through congressional staff. The House recessed on Thursday, and the Senate will recess at the end of this week.
The working group this week will “share text” with USTR “memorializing the concrete and detailed proposals that we have made,” the report says.
The working group comprises Democrat Reps. Richard Neal of Massachusetts; Earl Blumenauer, Oregon; Rosa DeLauro and John Larson, both of Connecticut; Jan Schakowsky, Illinois; Mike Thompson, California; Terri Sewell, Alabama; Suzanne Bonamici, Oregon; and Jimmy Gomez, California.
