On the heels of successful efforts against labor violations in Mexico and dairy tariff-rate quotas in Canada, lawmakers are calling on the Biden administration to consider enforcement efforts on a number of other issues under the U.S.-Mexico-Canada Agreement. Such efforts could further open markets for U.S. companies but could also result in trade retaliation measures if the issues are not resolved.
For more information on USMCA implementation and enforcement, please contact Nicole Bivens Collinson at (202) 730-4956 or via email.
In a Jan. 12 letter to U.S. Trade Representative Katherine Tai, Senate Finance Committee Chairman Ron Wyden, D-Ore., and Ranking Member Mike Crapo, R-Idaho, raised concerns that Canada and Mexico “continue to ignore … critical USMCA obligations” in a number of areas and said USTR “must be prepared to use the strong and innovative enforcement tools that Congress pushed to include in USMCA” to resolve these concerns if necessary. House Ways and Means Committee Ranking Member Kevin Brady, R-Texas, mentioned some of the same issues in a letter he sent to Tai the same day. Many of these issues were discussed between a senior USTR official and his Canadian and Mexican counterparts in separate discussions also held Jan. 12.
Labor. Wyden and Crapo said efforts to improve labor rights for Mexican workers “are uneven and in many cases not progressing rapidly enough” despite USTR’s use of the USMCA’s rapid response mechanism to address specific problems. They also noted that concerns about forced labor in the production of Mexican tomatoes recently prompted the U.S. to issue a withhold release order on such goods. The USMCA includes a prohibition on the importation of goods produced with forced labor, and in a Jan. 12 meeting Deputy USTR Jayme White stressed to Mexican under secretary for international trade Luz Maria de la Mora the need for Mexico to fully implement that prohibition.
Agriculture. The two senators asserted that the Mexican government has campaigned to curtail food and agriculture imports from the U.S. by (1) attacking the reputation of imported products, including by branding them as detrimental to the health of Mexican consumers, (2) restricting their placements on store shelves, and (3) preventing the legitimate use of trademarks.
Brady added that Mexico “remains in violation of its USMCA commitment to promptly consider applications for innovative U.S. agricultural biotechnology products and support all approval decisions with scientific evidence.” USTR said White highlighted this issue with de la Mora but gave no indication of any progress.
With respect to dairy, the senators called on USTR to “scrutinize” Canada’s implementation of (1) a recent USMCA dispute settlement panel decision against its allocation of dairy TRQs and (2) other USMCA commitments on milk pricing and export surcharges. They also said Mexico’s new conformity assessment requirements for imported dairy products “are of significant concern to U.S. dairy producers seeking access to the Mexican market.”
Services. According to Wyden and Crapo, Mexico has proposed to require a certain percentage of audiovisual content to be produced domestically, which “would impede market access for U.S. content providers and may conflict with USMCA obligations.” Canada, meanwhile, “continues to deny authorization to U.S. programming services for home shopping despite making explicit commitments to do so,” an issue White brought up in talks with deputy Canadian trade minister David Morrison Jan. 12.
Environment. The two senators said Mexico “has yet to implement fully its USMCA environmental commitments with respect to sustainable fishing practices” and noted the filing of two public submissions claiming that the Mexican government has failed to effectively enforce its environmental laws related to marine species conservation. White emphasized to his Mexican counterpart that these are “priority areas” for the U.S.
Energy. White said “energy policies that promote fair competition and renewable energy production” are a high priority for the U.S., but Brady said Mexico’s president has “directed Mexican regulators to use all available resources to preference” Mexico’s state-owned petroleum and utility companies “to the detriment of U.S. energy-sector operators.” Wyden and Crapo said this includes suspending import permits for more than 80 energy companies, ending permits for energy import facilities, and advancing a constitutional reform bill that would dissolve the Mexican power market and eliminate independent regulators. Brady said these measures violate USMCA provisions on state-owned enterprises, investment, and trade in goods.
Telecom. White highlighted the importance of competition in Mexico’s telecommunications sector, and the USMCA requires Mexico to maintain an independent regulator for this sector. However, the two senators said the Mexican government is pursuing a constitutional amendment to eliminate independent regulators for telecom, broadcasting, and antitrust.
Pharmaceuticals. USMCA requires that marketing authorizations for pharmaceuticals be done reasonably, objectively, impartially, and transparently, Wyden and Crapo said, but Mexico “appears to be contravening these requirements, resulting in severe delays for approval of U.S. pharmaceutical products.”
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