[CTC] Dems Look to Peru Deal for Answers to NAFTA Labor Woes / Autoworkers See Few Wins in NAFTA 2.0

Thu Dec 20 07:16:06 PST 2018

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12/20/2018 10:00 AM EDT

By MEGAN CASSELLA (mcassella at politico.com <mailto:mcassella at politico.com>; @mmcassella <http://go.politicoemail.com/?qs=11618539e8763b3527d215b71cca0cf469a8f08bcd4b8608ee44f74ee987f8cc57bdf698491fcee94355fa25f588b274>)

QUICK FIX: A prominent Senate Democrat who has pressed the Trump administration to strengthen NAFTA's labor laws has offered an idea for how to do so — one that closely resembles a mechanism already in place in the U.S.-Peru free trade agreement.

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— U.S. autoworkers are warning that the new U.S.-Mexico-Canada trade deal that the administration says will bring back "a vast majority" of their jobs is likely to do nothing of the sort. 

DEMS LOOK TO PERU DEAL FOR ANSWERS TO USMCA LABOR WOES: Sen. Sherrod Brown <http://go.politicoemail.com/?qs=11618539e8763b354b3945b77cce89a8aa37ae6c48b216c8688d98ba908d9dcf1b96bf6e7eae47866f3f8edd092c61f3>(D-Ohio) has pitched to U.S. Trade Representative Robert Lighthizer a way to address labor enforcement with Mexico in the new NAFTA deal — emulate U.S.-Peru trade deal rules aimed at stopping illegal logging, according to a source familiar with discussions between the two officials.

The U.S.-Peru FTA, which went into force in 2009, included an annex <http://go.politicoemail.com/?qs=11618539e8763b35080528474c8e1031d35f68debde25aa5b71b67bba6d77a336dcc2680ede7507fd71b26563f47fdf0> that required Peru to strengthen efforts against illegal logging in the Amazon. It set up an enforcement and compliance mechanism that gave the U.S. the power to verify that shipments were legally harvested and even allowed on-site inspections to ensure that Peruvian loggers were above board in their practices. The agreement also gave the U.S. the authority to block imports if they couldn't be verified.

Inspections, verification: The source said that same process could be applied to products manufactured in Mexico. That could include the option for the U.S. to conduct inspection visits and verification that companies operating in Mexico are producing goods in line with its obligations under the labor chapter of the U.S.-Mexico-Canada Agreement. The labor chapter includes provisions that leave it to a country to "promote compliance" of its own labor laws through a variety of actions. However, a Peru-like annex would give the U.S. more leeway to act, including by blocking imports, the source said.

Mexico open to talks: The source said the option is one of a number that are under consideration but added there is a desire to negotiate changes in the body of the agreement. Democrats and labor unions want to see Mexico make good on commitments it made in USMCA to give workers more freedom to form independent labor unions. Jesús Seade, Mexico's undersecretary-designate for North America, said last week that Mexico was willing to cooperate. "Of course, we are open to talk. We respect the concerns being raised," he said.

IT'S THURSDAY, DEC. 20! Welcome to Morning Trade, where your host is fully in the Christmas spirit after finally watching the most recent episode of "Saturday Night Live," where a fictionalized President Trump undergoes his own version <http://go.politicoemail.com/?qs=02a5240901b376a952981f967ea492f0ae0fa51ac0c562e43645caf3d0967a7d45e6aa02f6d947afd8890ee41fa88053> of "It's a Wonderful Life." Any trade tips or news out there before we all head out of town? Let me know: mcassella at politico.com <mailto:mcassella at politico.com> or @mmcassella <http://go.politicoemail.com/?qs=02a5240901b376a918b222c87f179c75cd26cf6e27a52379e41ec6e58cebe09beb16cc556797f8fd4b0c07d5a76b71ba>.

LIGHTHIZER PRESSED ON PERU: Speaking of, House Ways and Means Democrats are pressing Lighthizer to take Peru to task for an apparent violation of its trade deal. The lawmakers say a decision last week to fold Peru's Supervisory Body for Timber Resources — known more commonly by its Spanish-language acronym OSINFOR — into the Ministry of Environment goes against the trade agreement's requirement that the watchdog body should be an independent and separate agency.

"We consider this to be a flagrant attack on the heart of the Forestry Annex that cannot go unchallenged," the lawmakers wrote in a letter <http://go.politicoemail.com/?qs=02a5240901b376a934f13271770ea7fcdd36d0c5467b79f92d5c8613c3df58d0050aabb3b7b6315f746d7d6925203979> to Lighthizer. "Peru must revoke the decree immediately and reverse any action already taken as a result of the decree."

Prelude to a challenge: The New York Times reported  <http://go.politicoemail.com/?qs=02a5240901b376a9ef17f50e46d0b5b27f127938d1db5efc4b759efae301e2ecb5a5bee1e07481467e00fb49b7303c63>that the Trump administration may formally challenge Peru's action to gain favor among congressional Democrats and show that it is serious about pressing Mexico on labor and environment enforcement.

Considering all options: A senior congressional aide confirmed that USTR "is considering all options under the agreement for securing compliance from the Peruvians."

Lighthizer's office raised the issue with the congressional trade committees immediately upon finding out about Peru's action last Thursday and has been coordinating efforts with Congress to pressure Peru to reverse course, the aide said.

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AUTOWORKERS SEE FEW WINS IN USMCA: A core constituency that President Donald Trump sought to help with his renegotiation of NAFTA is warning <http://go.politicoemail.com/?qs=02a5240901b376a9bb9eac24c3777efcfca7a8f15dcc574e2733ff5ee6607632e685a5f70c6e700698319247765b713d> that the updated agreement will do little to bring auto jobs back from Mexico and is likely to affect investment only on the margin.

The United Automobile Workers, the industry's largest labor union, said in new comments <http://go.politicoemail.com/?qs=02a5240901b376a9319110913a28c44e27e4bd8dd3b65f9a113a8afb872093745dab5a29cc5cccf97fbb365b675c7851> filed to the U.S. International Trade Commission this week that the three parties should return to the bargaining table to make further changes that would have a more "substantive impact" on reducing the U.S.'s trade imbalances.

Numbers game: Trump and other top members of his administration have said repeatedly that they expect auto jobs that have been lost to Mexico under NAFTA to come back to the U.S. under USMCA. Commerce Secretary Wilbur Ross said <http://go.politicoemail.com/?qs=02a5240901b376a9427eea0b2b65bdf8c7756476dc4248f40c30c1584ffe38806f1424946ffdf9649fb24176f5a5e045> "the vast majority" of 250,000 auto parts jobs lost in the U.S. would return. UAW, however, said it sees "no evidence" to support that.

Flashback: "Deal with Mexico is coming along nicely," Trump tweeted <http://go.politicoemail.com/?qs=02a5240901b376a9ec3a421bf44db3f780fedaec070b389aceb647dc44539df201ba93e30cf4dee548a4b51cc6335178> in August. "Autoworkers and farmers must be taken care of or there will be no deal."

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BUSH TRADE ECONOMIST CHALLENGES TRUMP'S USMCA MATH: Trump's claim that the new U.S.-Mexico-Canada Agreement will pay for the wall that he wants to build along the southern U.S. border is "ridiculous," Phil Levy, a senior fellow at the Chicago Council on Global Affairs, wrote  <http://go.politicoemail.com/?qs=02a5240901b376a953042e479dd0fb341612b403040272b572adb536364b8bca5b0771507d55b87988b1cbb8b315714a>this week on Forbes.com <http://forbes.com/>. Since tariffs will be zero on almost all goods under the pact, there's little chance of raising revenue on that front, said Levy, who served as senior White House trade economist in the George W. Bush administration.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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