[CTC] Wyden, Brown propose NAFTA labor enforcement methods

[Arthur Stamoulis]

Wyden, Brown propose USMCA labor enforcement methods

POLITICO, By Adam Behsudi 
04/04/2019 03:35 PM EDT

Sens. Ron Wyden <http://go.politicoemail.com/?qs=a280dfb85e81a3ce3ee89b46ee8033a8b390b390435ffb9aea9defd3c0000ca5de19a4a9a45a3279941068bae6fde91c> and Sherrod Brown <http://go.politicoemail.com/?qs=a280dfb85e81a3ce13408d5c588ce396310e89ecb84e857c824ca4473b2e2ec3023f9f2a59a37179fd0e7188eec9d44e> want to require Mexico to conduct inspections of factories accused of poor working conditions as part of their new proposal to address labor concerns in the new NAFTA deal, aides with those offices told POLITICO.

The plan comes as congressional Democrats look to improve the U.S.-Mexico-Canada Agreement by bolstering enforcement.

House Speaker Nancy Pelosi <http://go.politicoemail.com/?qs=a280dfb85e81a3cece4ec38c07ae273bd6951ca91437546c2198a998f1fdd446c3acbc1c89bce58ce3bf2e7a217c49a7> rejected the deal in its current form and made clear that any improvements must be made to the agreement's text, not just reflected in U.S. legislation to implement the pact.

"If you don't have real enforcement, then again, we will be disappointed as I have been in NAFTA," Pelosi said during her weekly press conference on Thursday.

The Wyden-Brown proposal would target Mexico's pledge to comply with specific labor commitments it made in the deal, including giving workers the right to organize independently from the country's government-sanctioned labor unions and improving the country's labor arbitration system.

Aides said the proposal has been the subject of "good discussion" with Pelosi and other key Democrats in the House.

The 25-year-old NAFTA has long been criticized by Democrats and labor unions for doing little to force Mexico to improve its labor standards. Poor working conditions and low wages south of the border have been blamed for attracting U.S. manufacturers and taking jobs away from American workers.

"Anti-outsourcing rules are only as strong as the tools that enforce them. Words on a paper won't stop jobs from going to Mexico," Brown (D-Ohio) said in a statement.

Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, said the proposal would "help Mexico live up to its commitments when it comes to higher labor standards."

Mexican lawmakers are in the process of considering legislation that would implement the labor commitments it made in USMCA. Many Democrats are looking to that as the next big step for moving the deal forward.

Mexican President Andrés Manuel López Obrador said Thursday that his administration recognizes the government must approve a labor reform bill in accordance with USMCA.

But López Obrador opposes reopening the deal and has said renegotiation is "not in [Mexico's] interest." Canada has also been reluctant to alter the provisions of the deal.

That hasn't deterred Democratic lawmakers from demanding changes to USMCA text.

The debate over reopening has become "a game of semantics," one aide said.

"There's reopening the agreement and all the fundamental trade-offs that were made between market access and IP and etc. And then there's having a follow-on discussion with Mexico about some labor issues. I think that's different and that's what we're asking for," the aide said.

The changes could be agreed to in a side letter or through some other legal instrument, but the aides said they aren't too focused on the technicalities of how to alter the deal.

The aide added that while the Wyden-Brown effort is centered on enforcement, it should also be viewed as a cooperative effort with Mexico that is aimed at building the country's capacity to improve labor standards.

The proposal would allow the U.S. to request that Mexico inspect and verify that specific factories are complying with the labor standards in the deal. If they're found in noncompliance, the U.S. can revoke tariff reductions for products from those factories when they cross the border.

Products from specific Mexican factories could also be stopped from entering the U.S. if there is evidence they were produced with forced labor. Current U.S. laws against forced labor would allow that.

Under the proposal, the U.S. could request to participate in the verification process. If Mexico refuses to allow U.S. participation, the U.S. could take action on shipments.

"We want to create an incentive of cooperation and denying access to a verification effort obviously goes against that," another aide said. "We think it would be in the Mexican government's interest."

The Wyden-Brown proposal borrows concepts from pre-existing U.S. trade agreements that include verification requirements. For example, a provision in the U.S.-Peru deal allows verification of timber shipments to ensure they were legally harvested. A similar verification process is also available in NAFTA and other U.S. trade deals to ensure that trading partners' textile and apparel production complies with rules of origin, which define how much of the product has to be produced by the U.S. and another country to get a tariff cut.

The plan would address specific concerns about Mexico's labor compliance, but the aides said there are still expectations that the administration improve language borrowed from NAFTA that allows a country to indefinitely block dispute panels from moving forward. U.S. Trade Representative Robert Lighthizer has been averse to language that would bind the U.S. to decisions of independent dispute panels, arguing that rulings can infringe on U.S. sovereignty.

"Lighthizer seems ideologically opposed to dispute settlement," one of the aides said. "He might be opposed to dispute settlement, but he wants an agreement passed."

Sabrina Rodriguez contributed to this report.


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