[CTC] Ways & Means Dems question whether NAFTA will lead to Mexican labor reform

Thu Apr 11 16:31:04 PDT 2019

Letter attached…

Ways & Means Dems question whether USMCA will lead to Mexican labor reform
INSIDE US TRADE, April 11, 2019 at 6:46 PM
House Ways & Means Committee Democrats on Thursday questioned whether the labor standards in the U.S.-Mexico-Canada Agreement would lead to “meaningful change” in Mexican labor practices and called for a strong enforcement mechanism to ensure the new labor standards are followed.
“Reflecting on the history of our concerns with NAFTA, we question whether there is reason to believe that the new Agreement will lead to meaningful change and real improvements for labor standards in Mexico,” they said in a letter <https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2019.04.11%20WM%20Dem%20Ltr%20to%20Amb%20Lighthizer%20re%20NAFTA%20Labor.pdf> to U.S. Trade Representative Robert Lighthizer.
The letter comes after an initial release <https://insidetrade.com/node/166225> earlier this week from Ways & Means Chairman Richard Neal (D-MA) that promised additional letters outlining Democratic demands with USMCA.
The 25 Democrats on the committee acknowledged that USTR had taken some of their concerns on Mexico’s labor practices into account by incorporating the “May 10” standard, negotiated in 2007 between the Bush administration and congressional Democrats, into the labor chapter. That, however, was not enough to assuage the Democrats’ concerns because USMCA’s enforcement mechanism is insufficient to ensure those standards will be followed, according to the letter.
The Democrats pointed to 39 labor complaints under NAFTA since 1998, none of which have “led to a formal arbitration between the parties or any penalty.” They also note that, during the first 20 years of NAFTA, wages for Mexican workers declined even as production rose.
Democrats also say they have “particular concerns regarding the enforceability of the violence and intimidation provision” in USMCA, citing the ongoing difficulties for Mexican workers to organize.
USMCA must allow for a way to resolve disputes over labor issues, the letter says. What is in the agreement now is “designed to be easily frustrated and will be ineffective,” the Democrats argue.
“With respect to the known challenges in achieving labor obligation compliance, the new Agreement should be breaking new ground and incorporating more flexible and versatile enforcement tools,” the letter adds. “It should be obvious that enforcement in an improved, new NAFTA cannot rely on the broken elements of the existing NAFTA’s dispute settlement procedures.”
Mexico’s passage of labor reform legislation will be a “necessary first step” for any Democratic support of the deal, according to the letter. It also notes the “ongoing developments” in Mexico City in recent weeks. Inside U.S. Trade reported earlier this week <https://insidetrade.com/node/166230> that a labor reform bill designed to implement reforms called for in USMCA is expected to pass the Mexican lower chamber by Friday and move on to the Senate.
“Congressional Democrats concerned whether trade agreement labor provisions will be meaningful have always been required to take a leap of faith: vote first and hope to see changes later,” the letter says. “This time needs to be different.”
The Trump administration has indicated it is waiting for House Speaker Nancy Pelosi (D-CA) to call for the bill before the White House will send it down. Pelosi said last week <https://insidetrade.com/node/166175> the Democrats’ enforcement concerns would not be fixed in the implementing legislation alone. Administration officials have continued to express optimism about the deal’s chances of passing Congress despite Democrats’ calls for negotiations to be re-opened to address enforcement concerns.
“I hope that the speaker brings it to the floor quickly,” Treasury Secretary Steven Mnuchin told CNBC <https://www.cnbc.com/2019/04/10/cnbc-exclusive-cnbc-transcript-treasury-secretary-steven-mnuchin-speaks-with-cnbcs-sara-eisen-today.html> on Wednesday. “I think this will pass. I don't know why it's not been scheduled yet. So we look forward to her bringing it to the floor.”
Republicans, including Senate Finance Chairman Chuck Grassley (R-IA), have said they are willing to address Democratic concerns in ways that do not require opening up negotiations.
“If you can do it without renegotiation I’m going to be open to it because I want to get it passed,” Grassley told reporters on Wednesday, referring to a recent labor enforcement proposal <https://insidetrade.com/node/166205> from Sens. Sherrod Brown (R-OH) and Ron Wyden (D-OR), ranking member of the Finance Committee.
Jesús Seade, Mexican Foreign Affairs under secretary for North America, told a Mexican outlet <https://noticieros.televisa.com/ultimas-noticias/tmec-tiene-gran-apoyo-estados-unidos-jesus-seade/> on Wednesday that he saw a lot of support for USMCA in the U.S. and put the chances of approval at 80 percent, according to an informal translation. He also said Mexico is eyeing passage in June or July.
Trump has repeatedly threatened to pull out of NAFTA if Congress does not pass USMCA, although he has backed off that threat in recent months. Agriculture Secretary Sonny Perdue told reporters on Thursday that he didn’t think the threat was “helpful.”
“I don’t think it’s helpful to speculate about what the president will do there,” he said. “I don’t think it’s even helpful to make threats about that, but I could tell you it would be devastating if the three countries don’t ratify this agreement in the future for the benefit of all three.” -- Hannah Monicken (hmonicken at iwpnews.com <mailto:hmonicken at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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