Forced labor, rules of origin for automobiles, and other issues involving implementation and enforcement of the U.S.-Mexico-Canada Agreement are among those cited as concerns in a recent report from House Ways and Means Committee Democrats. Separately, Senate Finance Committee Ranking Member Ron Wyden, D-Ore., said in an Oct. 30 letter to President Trump that Canada and Mexico have failed to fully come into compliance with the agreement in areas ranging from customs and trade facilitation to agricultural issues.
Labor. The report cites “grave concerns” that labor implementation is “on the wrong track.” For example, the Trump administration did not establish on time a new Forced Labor Enforcement Task Force designed to oversee and guide U.S. enforcement efforts, and the task force’s first report is now two months overdue. In addition, the Department of Labor has only begun to issue $40 million of the $180 million provided by the USMCA Implementation Act to support labor reforms in Mexico and ensure that workers there are effectively able to exercise their rights in the workplace, and only a fraction of that money is going to directly support worker organizing. Wyden added that Mexico “has already begun to miss benchmarks” for meeting its labor obligations.
Both also highlighted the lack of any U.S. labor-related enforcement actions to date. The USMCA allows the U.S. to adopt a proactive approach to monitoring and enforcement instead of waiting for stakeholders to bring cases, the report states, and both the DOL and the Office of the U.S. Trade Representative have “slowly added staff” in this area. However, Wyden pointed out that the U.S. has yet to bring any enforcement actions under either traditional state-to-state dispute settlement or the USMCA’s new rapid response mechanism “despite the persistence of labor violations in Mexico.”
Autos. Committee Democrats said they are closely monitoring the impact of the USMCA’s automotive rules of origin. While the administration has claimed that these rules will lead to billions of dollars of new investment in the U.S. and create tens of thousands of U.S. jobs in this sector, the report asserts that automakers continue to make significant investments in Mexico and announce U.S. plant closures. Wyden added that “tremendous gaps remain as to what automakers and their suppliers must do to comply with the rules” and that automakers continue to negotiate transition plans “that will excuse noncompliance for years to come.”
Dairy. Both assailed Canada’s recent allocation of its dairy tariff-rate quotas, which they said is not consistent with Ottawa’s commitments in the USMCA and appears to limit the ability of U.S. dairy exporters to make full use of the agreement’s market access opportunities.
Environment. Another concern in the report is that the administration has yet to utilize the “historic” resources and tools provided for enforcing the USMCA’s environmental obligations, which were intended to “elevate environmental enforcement as a trade enforcement priority for both sustainability and economic reasons.”
Other. Other concerns raised by Wyden included Mexico’s failure to revise its federal laws on foreign bribery, meaningfully translate into regulation an obligation to recognize certain common cheese names, or grant approvals for U.S. biotechnology products.
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