[CTC] Mexican official: Congress to pass USMCA labor bill this week

Wed Apr 10 13:49:50 PDT 2019

Mexican official: Congress to pass USMCA labor bill this week 

Inside US Trade, 4/10/2019

The Mexican Chamber of Deputies is expected this week to pass labor legislation that fully complies with the U.S.-Mexico-Canada Agreement, a Mexican official told Inside U.S. Trade.

Legislation resembling a December 2018 bill crafted by the ruling Morena party and the Mexican labor secretariat was submitted to the Chamber of Deputies <https://insidetrade.com/node/166198> for consideration last week and likely will be approved by Friday, the official said, allowing it to then progress to the Senate.

The lower chamber’s Labor Commission met on Tuesday to discuss the bill, which includes a number of improvements over the December version, the Mexican official said, adding that the Chamber could vote on its approval as soon as it moves to a plenary session on Thursday.

Last week, Mexican President Andrés Manuel López Obrador said his country “must approve a labor reform in accordance with the agreements that were established” in USMCA. “We don’t want to give any excuse for reopening the treaty negotiations,” he said.

But another labor proposal, introduced by the Partido Revolucionario Institucional in January, is also under consideration <https://insidetrade.com/node/166112>. It includes new amendments that would significantly undermine the requirements outlined in USMCA, according to a U.S. union representative with knowledge of Mexican labor issues.

Eight provisions in the PRI bill make it “hard to tell if the Mexican Congress is moving forwards or backwards in terms of compliance with the Labor Annex” to USMCA, the representative said in an email to Inside U.S. Trade.

Specifically, Article 358 of the bill would obviate a direct vote requirement for union election procedures, leaving votes secret. It would also remove the term limits of union officials. Article 373, meanwhile, “eliminates the union’s obligation to provide its members with information on administration of union resources,” the representative added.

Other amendments to the bill would reduce the percentage of workers necessary to validate “representativity for an initial contract” from 30 percent to 20 percent and strip the requirement for a direct vote. Lastly, the legislation would make it more difficult to bring labor arbitration cases by eliminating the “waiver of the conciliation requirement for violations of fundamental rights of freedom of association, collective bargaining or objections in representation elections,” the representative said.

The Office of the U.S. Trade Representative, meanwhile, is considering a proposal <https://insidetrade.com/node/166205> from Democratic Sens. Ron Wyden (OR) and Sherrod Brown (OH) aimed at boosting confidence in the U.S. that Mexico will adhere to labor commitments in the pact, as Inside U.S. Trade recently reported.

The “Labor Cooperation and Enforcement Agreement” would arm both the U.S. and Mexican governments with more effective tools to detect labor violations in mining and manufacturing sectors and would “target enforcement actions” against shipments from facilities in violation of the deal’s labor standards, according to the senators' offices.

It would also allow the two governments to “audit and inspect facilities suspected of violating labor standards.” Accordingly, if facilities are found to be in violation, the U.S. could deny preferential treatment afforded under the deal for goods from that facility.

But such a proposal likely will run into opposition in Mexico, the Mexican official contended. “We believe it is not compatible with our laws and not compatible with the commitment we made [in USMCA],” the official said, adding the revised, Morena-backed labor legislation “we will have in place will be sufficient” to address U.S. concerns.

“We don’t believe our Congress, our Senate would go for an agreement that would include unilateral measures of this respect,” the official said. “It’s like should Mexican authorities or Canadian authorities also go to U.S. company to make sure there is compliance with the labor provisions in the USMCA? That is our initial view.”

Simon Lester, associate director for trade policy studies at the Cato Institute, said on Twitter last week that “A neutral adjudication of issues of USMCA labor compliance could work <https://twitter.com/snlester/status/1114206559301713920>. By contrast, a unilateral determination is likely to lead to retaliatory tariffs."

AFL-CIO President Richard Trumka is scheduled to deliver a USMCA presentation to House Democrats on Wednesday. Republican lawmakers, several of whom met with President Trump and other administration officials at the White House last month, said they were hopeful USMCA would be passed before Capitol Hill breaks for an August recess. But Trumka said such ambitions were not likely to pan out, pointing  <>to Mexico's need to pass and implement <https://insidetrade.com/node/166168> meaningful labor reforms.

An international trade lawyer told Inside U.S. Trade the key question “we are all going to be monitoring” is whether the approval and subsequent implementation is enough to “get Democratic votes one way or another.” The attorney also pointed to issues that many Democrats have with biologics provisions in the deal.

“We will have to see where we are on labor and whether enough Democratic votes are picked up to cover the spread that’s going to pop up on the pharmaceutical side,” the lawyer added. “The next big test for me is ‘Are we able to swing enough votes because of what Mexico does?'” The lawyer also pointed to the Wyden-Brown labor proposal as a possible way to build “momentum” that could clear the path “to get something done on labor throughout the spring and early summer that gets you a vote before Labor Day.”

“I think USMCA is going to be in significant trouble if we are dealing with labor and pharma simultaneously. I think if we are able to sequence labor and then pharma -- I think we will be able to get the vote done. But if both of those are unresolved going into summer we’ve got problems,” the lawyer contended.

In February, House Democrats drafted a letter to Lighthizer calling for more balanced access to prescription drugs, urging USTR to achieve levels similar to those included in the May 10 agreement. But USTR, in a March 25 statement <https://insidetrade.com/node/166127>, claimed nothing in USMCA would lead to higher drug prices for U.S. consumers.

House Ways & Means Committee Chairman Richard Neal (D-MA) on Tuesday told U.S. Trade Representative Robert Lighthizer to expect increased engagement from Democrats in the coming days.

“Strong labor standards. Strong environmental standards. Mechanisms inside the agreement to ensure that those provisions (and other provisions) are enforceable and will make a difference. Terms that are favorable to Americans’ access to affordable health care and preserve Congress’s space to make future policy changes,” he wrote in the April 9 letter <https://insidetrade.com/node/166225>. “You should not be surprised by the concerns.” -- Isabelle Hoagland (ihoagland at iwpnews.com <mailto:ihoagland at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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