“We should work collaboratively for … passage of a trade agreement that creates jobs, protects workers and consumers,” said Rep. Mike Thompson of California.
During a House Ways and Means Committee hearing on Wednesday, Democrats said they will work in good faith with the Trump administration throughout the congressional consideration process for the U.S.-Mexico-Canada Agreement (USMCA).
“I commit to you in this public forum, as I have in private for the past many months, to continue working with you on [the renegotiated] NAFTA in good faith, based on facts and on a desire to make responsible policy,” Ways and Means Committee Chairman Richard Neal said in his opening statement. “The opportunity we have right now to improve the NAFTA is too important not to get it right. We have a chance to set the American economy and American workers on a better course.”
As chair of a working group charged with ensuring Democrat labor concerns are addressed in USMCA implementing legislation, Rep. Mike Thompson, D-Calif., also committed to work in good faith with U.S. Trade Representative Robert Lighthizer on the new agreement.
“We should work collaboratively for the best possible outcome — passage of a trade agreement that creates jobs, protects workers and consumers in Mexico, Canada and the United States of America,” Thompson said. “I hope that you’ll continue to work with Democrats and not rush through an implementing bill.”
House Speaker Nancy Pelosi, D-Calif., has appointed House Democrats to several working groups to ensure the USMCA implementation package reflects Democrat demands on issues including labor, the environment, enforcement and pharmaceutical pricing.
Thompson noted that Mexico recently passed major labor reform legislation, but added that it will take years for the actual reform to take place.
The new Mexican labor law says secret ballot votes for all current union protection contracts — of which there are 700,000 — must occur in Mexico within four years and must occur for all new collective bargaining agreements. The law also tasks Mexico with setting up labor courts to replace the country’s current system of conciliation and arbitration boards.
“Obviously, we can’t wait to pass USMCA until they do this, or else we would have no USMCA, and the effect on the economy would be dramatically negative, but we will have actual benchmarks on some things like getting these votes done on that, setting up their courts, how much money they put in,” Lighthizer said during the hearing. “We have very specific obligations and we can then enforce it by saying, ‘This is a specific thing, you can do it.’ So I expect to do that.”
Lighthizer added that he expects to have a “level of monitoring” in Mexico and wants to work with lawmakers to determine that level.
“I don’t think we should start with the proposition that the leadership in Mexico does not want to enforce it,” Lighthizer said. “These people are actual reformers, so I have to assume that they want to do the right thing.”
The Mexican Senate on Wednesday ratified USMCA, leaving the U.S. and Canada to approve the agreement before it can enter into force.
Rep. Lloyd Doggett, D-Texas, said he would like to see an “early approval” of USMCA. He said he believes Lighthizer is committed to ensuring the agreement doesn’t limit the power of Congress to address drug pricing.
USMCA provides a 10-year data exclusivity period for development of biologic drugs. That’s two less years than provided under current U.S. law, yet one concern expressed among progressives is that USMCA will lock in 10 years as a floor, thereby hampering potential efforts to shorten the time frame.
Rep. John Larson, D-Conn., a chair of the environmental working group, commended USTR for the inclusion of environmental provisions in the main text of USMCA. NAFTA includes those provisions as a side agreement, which means they are not enforceable.
Larson questioned why USMCA omits some climate change language of the Montreal Protocol, a 1987 international treaty that aims to phase out production of several substances that contribute to ozone depletion.
Lighthizer said climate change isn’t normally covered in trade agreements and isn’t included in USMCA, as Trade Promotion Authority legislation specifically states that the U.S. cannot take on new obligations regarding environmental emissions in free trade agreements. Lighthizer also noted the Montreal Protocol is specifically mentioned in the agreement.
Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said the tone of the USMCA conversation between congressional Democrats and the Trump administration has been encouraging, but noted Democrats have identified several areas to make it possible to move USMCA forward in Congress.
He said he’s hopeful the working groups established by Pelosi can start working with the Trump administration “within the week so that we can drill down” on Democrats’ four priority areas they would like to see addressed in the USMCA implementation package and that committee Democrats are committed to reaching a resolution.
Lighthizer said, “In terms of coming to agreement with members, I could sit down in half a day and work out the labor provisions; I could sit down in a half a day and work out the environmental provisions. We all know what they are, and I’m not on the other side. … I’m on the same side.”
In response to a question by Rep. Jackie Walorski, R-Ind., Lighthizer also touched on the disparity between the U.S.’s de minimis level and the Canadian and Mexican de minimis levels, noting that “one way to engage with them” is to say, “‘You get the same [level] in the U.S. that we get there.’”
Lighthizer continued, “That’s one way to engage with them. Now, some [Congress] members don’t like that, but that’s one way to engage with them. Otherwise, I don’t know how to engage with them. Call them on the telephone and say, ‘Please?’”
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., in a February letter urged Lighthizer to not reduce the United States’ de minimis level to levels reciprocal with trading partners like Canada and/or Mexico.
USMCA states that the U.S. de minimis level is to be at least $800, though a footnote in the agreement states that a USMCA party may institute a de minimis level reciprocal with another party’s lower de minimis level.
USMCA sets Mexico’s de minimis level at a fixed amount of $117 and Canada’s de minimis level at a fixed amount of $150.
Along with the USMCA footnote, existing statute (19 U.S. Code 1321) allows the government to eliminate de minimis entry benefits if necessary to protect U.S. revenue or prevent unlawful imports.
