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Labor enforcement could be key to Democrats approving North American trade deal

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Labor enforcement could be key to Democrats approving North American trade deal

Democratic lawmakers warned that they may not consider ratifying the United States-Mexico-Canada Agreement if it is not tough enough in enforcing provisions on labor rights in Mexico.

Enforcing a new trade deal to replace the North American Free Trade Agreement has been of paramount concern to Democratic lawmakers. They have also cited a lack of environmental standards that address climate change as a reason to leave the deal unconsidered despite heavy Republican efforts to get it across the finish line.

Earl Blumenauer, D-Ore., who chairs the Ways and Means Committee's trade panel, said May 22 that the deal "will not be jammed" through the subcommittee or the full committee. He cautioned that Section 301 investigations of Canada and Mexico a technique that has been used against China as unilateral punishment would likely lead to more reciprocal tariffs from Mexico and Canada, similarly to retaliation from China in that trade spat.

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Democrats' concerns on enforcement of labor standards in Mexico may hold up passage of the United States-Mexico-Canada Agreement.

Source: The Associated Press

He also said the existing NAFTA does not adequately address enforcement of labor provisos, particularly in Mexico.

"Let's be clear," Blumenauer said in his panel's May 22 hearing. "Section 301 is no substitute for strong enforcement provisions in NAFTA 2.0. Strong enforcement provisions must be baked into the agreement."

Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee, separately wrote to U.S. Trade Representative Robert Lighthizer on May 22 to air his concerns that the USMCA retains similar enforcement problems as NAFTA.

Wyden noted that no case has been resolved through NAFTA's dispute settlement mechanism since the U.S. blocked a case brought by Mexico in 2001, due mainly to the fact that any party can block the formation of a settlement panel.

Mexico's Senate on April 29 passed measures to allow for secret union ballots and prohibit employers from retaliating against workers for union activity, something Democrats have insisted be in any deal.

But Owen Herrnstadt, chief of staff to the international president of the International Association of Machinists and Aerospace Workers, testified May 22 that the deal does not offer any new labor standards, something that Rep. Tom Rice, R-S.C., said was "completely ridiculous" due to the new Mexican laws.

Sandra Polaski, a former deputy director general for policy at the International Labor Organization, also said the USMCA does nothing for labor enforcement and should be reopened to include a new provision. The idea was widely rejected by Republican members of the trade subcommittee.

The Trump administration on May 17 agreed to lift its tariffs on imports of steel and aluminum from Mexico and Canada, leading the two North American trading partners to lift their retaliatory tariffs on U.S. exports, including a bevy of agriculture products.

The move was crucial for the USMCA, leaving lawmakers to sort out existing concerns on the text of the deal itself, as well as concerns about the possibility of a spike in pharmaceutical prices.

House Speaker Nancy Pelosi, D-Calif., must introduce a bill on USMCA before it moves to the Republican-controlled Senate for consideration, though she has not indicated if and when that may happen.

Pelosi reportedly told Lighthizer that she will designate members of her caucus to lead working groups to manage the labor, enforcement, environmental and pharmaceutical provisions of the USMCA as the White House and Congress seek dialogue, according to Bloomberg. And time is of the essence: President Donald Trump is hoping to secure a major trade victory ahead of the 2020 presidential election but also ahead of the looming October Canadian federal election.

The Office of the U.S. Trade Representative declined to comment on the Democrats' concerns.