International Trade Today is providing readers with some of the top stories for Dec.9-13 in case they were missed.
The House Ways and Means Committee, with near-unanimity, recommended the U.S.-Mexico-Canada Agreement go to the floor. A vote on the replacement for NAFTA is expected on Dec. 19. For about three hours, Democrats and Republicans praised the rewrite of North America's free trade pact, though many Republicans complained that it took a year to get the opportunity to vote for it.
As the auto industry grapples with how much the rules of origin for cars and trucks will change from NAFTA to USMCA, the implementing bill that will be voted this week suggests there may be an opportunity to re-evaluate the system when USMCA undergoes review in six years. In two years -- and again in four, and six years -- the International Trade Commission must prepare a report on the economic impact of the auto ROO, including on exports and imports; aggregate employment, employment and wages of automotive workers, “production, investment ... and profit levels in the automotive industries and other pertinent industries in the United States affected by the automotive rules of origin and the interests of consumers in the United States.”
Sen. Ron Wyden of Oregon, the senior Democrat on the Finance Committee, and Sen. Sherrod Brown, an Ohio Democrat who voted against NAFTA, have endorsed the NAFTA rewrite, known as the U.S.-Mexico-Canada Agreement. The two had said they would oppose the USMCA unless it included a labor enforcement mechanism that carried consequences for Mexican imports from factories that weren't honoring workers' rights.
House Democrats and the Office of the U.S. Trade Representative say that the new NAFTA can serve as a template for future trade deals, but experts question how that might come to pass, and a key Republican wants at least one Republican priority restored in future deals.
Although the Senate Finance Committee will still have a mock markup on the U.S.-Mexico-Canada Agreement, it will happen after the implementing bill has been sent to Congress, so it will be more “mock” than in past deals. The reason the process of Congress weighing in on a trade deal is a mock markup is that under fast track, or Trade Promotion Authority, Congress cannot amend the deals. But typically, the administration sends up a draft implementing bill, and then does incorporate at least some of Congress's suggestions on language before sending the final implementing bill.
If a panel of labor experts determines that a Mexican factory is violating its workers' rights to collective bargaining, the U.S. may deny the goods from that factory the tariff benefits of the U.S.-Mexico-Canada Agreement -- but that denial of tariff benefits is not automatic.
Even though the Democrats won some changes to the new NAFTA that are seen as contrary to business interests -- primarily, removing extended patent protection for pharmaceuticals in Canada and Mexico -- business groups celebrated House Speaker Nancy Pelosi's decision to hold a vote on the trade pact. A vote in the House is expected next week, but a Senate vote won't come until next year.
International Trade Today is providing readers with some of the top stories for Dec. 2-6 in case they were missed.
It will be easier to bring a labor case under the U.S.-Mexico-Canada Agreement than it was in previous trade deals, but several particulars remain undisclosed. There will be expedited labor enforcement that “provides for facility-based enforcement,” and if independent labor experts find that collective bargaining rights weren't honored at particular factories, it will “lead to penalties,” a summary of the changes to USMCA says. But what those penalties are is not mentioned, and members of the House Ways and Means Committee and Senate Finance Committee said they don't know what they are, as no other details beyond the memo have been shared. A Ways and Means spokeswoman and trade staffer did not answer questions.