[CTC] USTR 'rapid-response' NAFTA enforcement plan pulls from Wyden-Brown draft

[Arthur Stamoulis]

USTR 'rapid-response' USMCA enforcement plan pulls from Wyden-Brown draft
By Isabelle Hoagland 
07/31/2019, Inside US Trade

The Office of the U.S. Trade Representative is working on a “rapid-response” enforcement approach for the U.S.-Mexico-Canada Agreement that borrows heavily from a proposal introduced by two key Democratic senators earlier this year, Inside U.S. Trade has learned.
 
A USMCA working group of House Democrats is working with U.S. Trade Representative Robert Lighthizer to bridge gaps in four key areas: enforcement, labor, environment and access to affordable medicines. Some Democrats and other stakeholders have pinpointed enforcement as the key issue because it directly influences the others.
 
Senate Finance Committee ranking member Ron Wyden (D-OR) and Sen. Sherrod Brown (D-OH) have introduced a proposal that would allow for reciprocal facility inspections, and for Mexico to boost enforcement personnel and capacity with U.S. help, among other actions. If a facility were found in violation of USMCA’s labor standards, countries could deny preferential treatment afforded under the deal for goods from that facility, according to a summary of the proposal.
 
Brown, during a Finance Committee USMCA hearing on Tuesday, said the proposal would “allow the U.S. government to inspect factories in Mexico and then block goods from those factories into the United States -- not just denial of NAFTA benefits -- but blocking goods from those plants into the United States if violations are found.”
 
In April, Mexican Ambassador to the U.S. Martha Bárcena said the senators’ proposal was on the right track but cautioned that it would not be accepted in Mexico if it was not implemented “on the basis of reciprocity.” That same month, Brown told Inside U.S. Trade “We have always been willing to make it bilateral, not just one-sided.”
 
USMCA working group members said last week that they intended to send detailed text proposals to USTR this week, expecting the administration to respond with counter-proposals.
 
One labor source believes the final USMCA package could contain self-executing amendments relating to labor enforcement -- and will include something close to the Brown-Wyden mechanism, which “is a testament to the creativity of Sens. Brown and Wyden and their staffs and also the pragmatic flexibility of the USTR in achieving a solution to the top concern among congressional Democrats.”
 
The source described the developing USTR approach as a “rapid response, facility-specific enforcement mechanism.”
 
A Wyden aide told Inside U.S. Trade this week that the senator's staff members had “discussed the [Wyden-Brown] proposal with the administration at length, and have shared outlines of how it could be structured.” The proposal also came up during last week’s House USMCA working group meeting with U.S. Trade Representative Robert Lighthizer.
 
Labor analysts in May told the House Ways & Means Committee that the Wyden-Brown proposal was creative in that it would enable all parties to the deal to work together to identify factory-level labor violations. The language draws from a verification tool in the U.S.-Peru Free Trade Agreement, as well as from language in the USMCA textiles chapter.
 
Elizabeth Baltzan, principal with American Phoenix Trade Advisory Services and a former USTR official, said the proposal likely would require a self-executing amendment to the agreement, similar to a forestry annex added to the U.S.-Peru FTA after it was signed in 2006.
 
Sandra Polaski, former deputy director-general for policy at the International Labor Organization, said the Wyden-Brown proposal was focused on the crux of the enforcement issue and could be built upon to include input from stakeholders and lawmakers. She also said it should be built up to require the denial of entry of goods from any facility found in violation, which Brown confirmed.
 
When violations are identified, she testified on May 22, “there should be a requirement to deny entry to the goods, in order to incentivize prompt remediation as well as to create the desired deterrent effect.” Enforcement, she added, “would be further strengthened by adding a legal right for stakeholders to compel action by the governments through national courts.”
Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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