Democrats in the House of Representatives are holding firm to their position that several improvements are needed to the U.S.-Mexico-Canada Agreement before they would approve implementing legislation. The White House and others are beginning to call more frequently and loudly for Congress to approve the agreement updating the 25-year-old NAFTA, but a recent document from the House Ways and Means Committee states that “the ball is squarely in the Administration’s court.”

For more information on the USMCA and the process for securing congressional approval, please contact trade consultant Nicole Bivens Collinson at (202) 730-4956.

A nine-member working group representing House Democrats has been working with the Office of the U.S. Trade Representative since June to resolve concerns in four areas of the USMCA: labor rules, environmental rules, access to affordable medicines, and enforcement mechanisms. The Ways and Means document states that the working group has given USTR “detailed written proposals that … fix significant problems in each of the four areas,” including the following.

- fixing the procedures in the NAFTA state-to-state dispute settlement mechanism that have allowed parties to block the formation of arbitral panels and frustrated formal enforcement for all obligations

- establishing enhanced enforcement mechanisms to secure compliance with the USMCA’s labor and environmental rules

- preserving Congress’ freedom to legislate to reduce high prescription drug prices and foster timely access to medicines

- enhancing opportunities for generic competition to improve access to medicines

- establishing high-standard labor and environmental rules that are strong and clear enough to be enforceable

- establishing mechanisms and resources to monitor whether internationally-recognized core labor rights are being afforded to workers and environmental protections are being applied

- establishing mechanisms, resources, and commitments to hold partners and actors accountable to labor and environmental commitments and rules in the agreement

The document asserts that USTR has yet to make “serious counter-proposals” on these issues. For example, the administration has raised the idea of utilizing the president’s Section 301 authorities to increase tariffs, which have most recently been used against imports from China, to respond to USMCA violations. However, the document states that such measures are “not a substitute for meaningful enforcement commitments in the agreement.”

As a result, the document states, “it is up to the Administration how fast and intensive negotiations in September and October will be.” While President Trump has sought to accelerate the process by threatening to withdraw the U.S. from NAFTA if Congress does not approve the USMCA, the document warns that this is “not an effective strategy.”

The document also responds to arguments that the USMCA is needed to give U.S. business owners, farmers, and ranchers added certainty. “Farmers and small businesses are hurting because of uncertainty and lost market access stemming from the President’s trade policies,” the document states, including withdrawal from the Trans-Pacific Partnership as well as “the escalating China trade war, threats to impose new tariffs on Mexico, Europe and others, and retaliation from other countries in response to the President’s actions.” Passing the USMCA “won’t fix the President’s erratic and unpredictable trade actions” or their negative effects, the document states.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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