[CTC] W&M Dems Emphasize Importance of Enforcement in Renegotiated NAFTA

Fri Apr 26 06:21:59 PDT 2019

Article on the series of Ways & Means letters is below…

https://waysandmeans.house.gov/media-center/press-releases/ways-means-committee-democrats-emphasize-importance-enforcement
WAYS & MEANS COMMITTEE DEMOCRATS EMPHASIZE IMPORTANCE OF ENFORCEMENT PROVISIONS IN RENEGOTIATED NAFTA
Apr 25, 2019  Press Release 
WASHINGTON, DC – Today, Ways & Means Committee Chairman Richard E. Neal (D-MA), Trade Subcommittee Chairman Earl Blumenauer (D-OR), and Committee Democrats sent a letter <https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2019.04.25%20WM%20Dem%20Ltr%20to%20Amb%20Lighthizer%20re%20NAFTA%20Enforcement.pdf> to U.S. Trade Representative (USTR) Robert E. Lighthizer highlighting their concerns with the current enforcement provisions in the replacement for the North American Free Trade Agreement (NAFTA). The letter is part of the Committee’s ongoing engagement with the Administration to secure congressional support for a NAFTA replacement – it follows a letter <https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2019.04.09_Ltr%20from%20Chairman%20Neal%20to%20Amb.%20Lighthizer%20re%20NAFTA%20Replacemen....pdf>that Chairman Neal sent to the Ambassador on April 9, 2019 to bring the Ambassador’s attention to Committee Democrats’ main concerns as they consider the NAFTA replacement; an April 11, 2019 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 the Ambassador that highlights Committee Democrats’ concerns with the new agreement’s labor provisions; and an April 17, 2019 letter <https://waysandmeans.house.gov/media-center/press-releases/ways-means-committee-democrats-raise-concerns-environmental-provisions> raising Committee Democrats’ concerns with the renegotiated agreement’s environmental provisions. 

Full text of today’s letter can be found HERE <https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2019.04.25%20WM%20Dem%20Ltr%20to%20Amb%20Lighthizer%20re%20NAFTA%20Enforcement.pdf> and below:

The Honorable Robert E. Lighthizer
U.S. Trade Representative
600 17th Street, NW
Washington, D.C. 20508

Dear Ambassador Lighthizer:         

As our Committee prepares to consider the renegotiated trade agreement with Canada and Mexico (“the new Agreement”), we write to express our concerns regarding the enforceability and eventual enforcement of the new Agreement.  The question of enforceability relates directly to the value of the deal that has been negotiated:  will the commitments each of the parties signed onto have meaning?  What happens when a party fails to deliver on its commitments, whether because it has overlooked a promise, its system has produced an imperfect result, or because it no longer wishes to be bound by the promise?

Our concerns are most pointed with respect to the enforceability of the new Agreement’s labor and environment commitments.  But they also apply more broadly to all commitments enshrined in the new Agreement.

Since the debate and consideration of the North American Free Trade Agreement (NAFTA) over 25 years ago, Committee Democrats have persisted in advocating for not just strong, but also enforceable labor and environment provisions in U.S. trade agreements.  Our efforts resulted in labor and environment cooperation provisions in side agreements to NAFTA in 1993.  Those provisions were subject to special enforcement mechanisms different from the mechanism applicable to other commitments in the NAFTA, which were never fully pursued or utilized.

In the early 2000s, labor and environment provisions found their way into the main text of U.S. trade agreements, subject to the same dispute settlement mechanism as other obligations in the agreement.  However, the commitments were largely limited to the requirement that partner countries “effectively enforce” their own labor and environmental laws and try not to weaken those laws to encourage trade or investment.  And the enforceability of those commitments was qualified by the requirement that failures be sustained or recurring.

In 2007, after Democrats assumed the majority in the House, Committee Democrats led the negotiations of the May 10 Agreement with the Bush Administration and Congressional Republicans.  As a result of May 10, four pending trade agreements were reopened to, among other things, strengthen their labor and environment commitments and the enforceability of those commitments.

Despite the incorporation and advancement of labor and environment provisions in our trade agreements, since 1993, no environmental disputes have ever been litigated and only one labor enforcement dispute has ever been pursued under a U.S. trade agreement.  That case, brought against Guatemala under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), failed to secure affirmative findings of breach, despite clear evidence of the Guatemalan government’s failure to ensure compliance with court orders, conduct labor inspections, impose penalties, and register legitimate unions.  This record of general non-enforcement and one deeply disappointing result, has led Democrats to question whether labor and environmental provisions are at all enforceable or will ever be enforced.

Our questioning is compounded by the fact that the new Agreement’s mechanism for resolving disputes carries over NAFTA’s flawed procedures.  Those procedures are easily frustrated by a responding party that wishes, for whatever reason, not to be sued.  

In the first years of NAFTA, three state-to-state disputes were fully litigated between the parties.  In the fourth instance, a case that Mexico brought against the United States, the United States managed to prevent the formation of the arbitral panel.  That case was never able to proceed further and no other case has ever been resolved through NAFTA’s state-to-state mechanism since.  

With the same procedures in place in the new Agreement, what reason do we have to believe that any disputes over broken promises in the labor, environment, or any other chapter in the agreement will lead to recourse or remedy?  What reason do we have to believe that the new Agreement will truly modernize the terms of North American trade or level the playing field for our workers and communities?

We look forward to engaging with you on addressing our concerns and questions.  Our interest is in replacing NAFTA with an agreement that remedies the well-known flaws of NAFTA.

Sincerely,

The Honorable Richard E. Neal    
Chairman                                          

The Honorable Earl Blumenauer
Chairman, Subcommittee on Trade

The Honorable John Lewis                                                

The Honorable Lloyd Doggett

The Honorable Mike Thompson                                       

The Honorable John B. Larson

The Honorable Ron Kind                                                  

The Honorable Bill Pascrell, Jr.

The Honorable Danny K. Davis                                        

The Honorable Linda T. Sánchez

The Honorable Brian Higgins                                                        

The Honorable Terri A. Sewell

The Honorable Suzan K. DelBene                                                

The Honorable Judy Chu

The Honorable Gwen Moore                                                        

The Honorable Daniel T. Kildee

The Honorable Brendan F. Boyle                                      

The Honorable Donald S. Beyer Jr.          

The Honorable Dwight Evans                                                       

The Honorable Bradley S. Schneider

The Honorable Thomas R. Suozzi                                                

The Honorable Jimmy Panetta

The Honorable Stephanie Murphy                                               

The Honorable Jimmy Gomez

The Honorable Steven Horsford       

###

Ways & Means Democrats cite 'flawed' dispute process in questioning USMCA
INSIDE US TRADE, April 25, 2019 at 3:14 PM

“Well-known” flaws in NAFTA’s dispute settlement process are making some Democrats question whether to support the U.S.-Mexico-Canada Agreement, a group of 25 lawmakers said this week.

“With the same procedures in place in the new Agreement, what reason do we have to believe that any disputes over broken promises in the labor, environment, or any other chapter in the agreement will lead to recourse or remedy?” the group wrote in an April 25 letter <https://insidetrade.com/sites/insidetrade.com/files/documents/2019/apr/wto2019_0121d.pdf> to U.S. Trade Representative Robert Lighthizer. “What reason do we have to believe that the new Agreement will truly modernize the terms of North American trade or level the playing field for our workers and communities?”

The correspondence is part of what House Ways & Means Committee Chairman Richard Neal (D-MA), in an April 9 letter <https://insidetrade.com/node/166225> to Lighthizer, said would be increased engagement from Democrats before USMCA is sent to Capitol Hill for consideration. Earlier this month, Democrats also sent letters <https://insidetrade.com/node/166297> urging USTR to bolster environmental and labor language <https://insidetrade.com/node/166278> in the deal. A letter on biologics issues, a key sticking point for several Democrats, could also be part of the series.

“The question of enforceability relates directly to the value of the deal that has been negotiated: will the commitments each of the parties signed onto have meaning?” the letter asks. “What happens when a party fails to deliver on its commitments, whether because it has overlooked a promise, its system has produced an imperfect result, or because it no longer wishes to be bound by the promise?”

“Despite the incorporation and advancement of labor and environment provisions in our trade agreements, since 1993, no environmental disputes have ever been litigated and only one labor enforcement dispute has ever been pursued under a U.S. trade agreement,” the letter continues. “This record of general non-enforcement and one deeply disappointing result, has led Democrats to question whether labor and environmental provisions are at all enforceable or will ever be enforced."

Citing three “fully litigated” disputes in the early years of NAFTA, the group notes that the state-to-state dispute settlement mechanism was once functional. But in a fourth claim, filed by Mexico against U.S. restrictions on sugar, the U.S. blocked the appointment of the arbitration panel, and the process has been paralyzed ever since.

“That case was never able to proceed further and no other case has ever been resolved through NAFTA’s state-to-state mechanism since,” the letter states.
Mexican Ambassador to the U.S. Martha Bárcena also cited the fourth dispute <https://insidetrade.com/node/166314> this week.

“So, what we need to know, there have been some problems with the implementation of the arbitration panels under NAFTA, and why there have been these problems? Because the U.S. never submitted their list of experts for the arbitration panels,” she said on April 22.

Under NAFTA, all three countries must agree on a list of potential panelists from which to choose in dispute settlement cases. But due to a provision allowing the roster of panelists to expire every three years, it would often remain empty or incomplete. Under Article 31.8 of USMCA, the roster won't expire until a new one is in place.

“The Parties shall establish by the date of entry into force of this Agreement and maintain a roster of up to 30 individuals who are willing to serve as panelists. The roster shall be appointed by consensus and remain in effect for a minimum of three years or until the Parties constitute a new roster,” the USCMA text reads.

If each country “submits their list of the panelists for labor arbitration panels at the same time that USMCA is ratified,” the issue will be resolved, Bárcena said on April 22.

Celeste Drake, the AFL-CIO’s trade policy specialist, this week reiterated calls <https://insidetrade.com/node/166131> to change the deal’s text. “Enforcement can’t happen unless the text is repaired to make sure that one party can’t block enforcement, unless labor loopholes are eliminated, unless new swift and certain monitoring and enforcement tools are added, and unless adequate, long-term resources are devoted to enforcement,” she said in an April 24 statement <https://aflcio.org/2019/4/24/usitc-report-backs-need-fix-new-nafta-add-real-enforcement>. “And those changes to the deal can’t happen unless Congress tells the administration that it refuses to vote on the new NAFTA until it is fixed.”

U.S. Trade Representative Robert Lighthizer has cited Section 301 of the Trade Act of 1974 as a tool to enforce USMCA and address dispute settlement issues, though the idea has sparked concerns among Democrats and others who fear Mexico and Canada will not agree to a deal if unilateral actions are threatened. --Isabelle Hoagland (ihoagland at iwpwnews.com <mailto:ihoagland at iwpwnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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