Lawyers Discuss How USMCA Is Changing Business Landscape
One of the obligations Canada and Mexico agreed to in the NAFTA rewrite is a ban on goods made with forced labor, but Baker McKenzie lawyers said it's not clear how much things are changing in that regard. Paul Burns, a Baker McKenzie partner in Toronto, said that while Canada has changed its law to ban the importation of goods made with forced labor, the Canadian customs agency does not disclose information about its enforcement. "We don’t know if there have been any detentions made," he said. "I expect there hasn't been."
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If Canada does enforce the law, it will close an avenue for U.S. importers, who have at least occasionally avoided detentions under a withhold release order by dropping off goods in Canada (see 2107020014).
Burns, who spoke during a Baker McKenzie webinar on free trade agreements, also said some people have pointed to the dispute panel requests between the U.S. and Canada as evidence that USMCA, the NAFTA replacement agreement, is flawed. The U.S. is arguing that Canada is violating the agreement in its administration of dairy tariff rate quotas. Canada is arguing that the U.S. is violating the agreement by applying a safeguard tariff to Canadian solar panels, even though Canadian panels are not a major contribution to the injury to domestic panel manufacturers caused by imports.
He disagrees. He said countries always have disagreements in trade, and having a way to resolve them is a good thing.
Adriana Ibarra-Fernandez, a Baker McKenzie partner in Mexico City, said that Mexico has not yet passed a law on the import of goods made with forced labor, but the legislation under discussion would name specific companies that cannot export, and liken the exports to smuggling. She said that's a flawed approach.
Ibarra-Fernandez also talked about the early activity under the rapid response mechanism aimed at labor violations in Mexican factories. She advised companies with Mexican operations that export using USMCA to create a defense file, and make sure it has supporting documents to show that the company's labor practices are in compliance with the change in Mexican labor laws.
In the Q&A at the end of the webinar, a listener asked if a manufacturer's affidavit is enough to establish that a product is originating. The listener said they didn't think so. Ibarra-Fernandez said that as long as the factory is in the same country as the exporter, and the affidavit covers the nine data elements that CBP is looking for, it is fine.