[CTC] USTR, Labor Department moving ahead on NAFTA implementation

Wed Mar 18 10:55:18 PDT 2020

USTR, Labor Department moving ahead on USMCA implementation
March 18, 2020 at 12:57 PM, Inside US Trade
Efforts to ensure a host of labor and enforcement commitments required by the time the U.S.-Mexico-Canada Agreement enters into force -- which could be as soon as June 1 -- are picking up speed, according to government officials.
The Office of the U.S. Trade Representative announced this week it was pushing ahead with the establishment of dispute settlement rosters, a key part of a mechanism that will serve as the deal’s primary enforcement provision, as well as panels dedicated to a so-called rapid response mechanism, which provide facility-based enforcement of the agreement’s labor obligations within stringent timelines.
According to a Federal Register notice <https://insidetrade.com/sites/insidetrade.com/files/documents/2020/mar/wto2020_0113.pdf> set to be published on March 19, USTR wants applications from those interested in serving on state-to-state dispute settlement panels and specialized labor panels to be submitted by next month.
The Trump administration is pushing for the deal’s entry into force by June 1, a date by which parties are required to establish and maintain dispute settlement rosters of up to 30 panelists. Each party shall designate up to 10 individuals, according to the protocol of amendment <https://insidetrade.com/sites/insidetrade.com/files/documents/2019/dec/wto2019_0393.pdf> agreed to by the countries last December. Senior U.S. lawmakers and a broad coalition of auto groups, however, have balked at the June 1 date.
After months of negotiations between House Democrats and USTR, the parties last year agreed to remove controversial <https://insidetrade.com/node/166337> language held over from NAFTA that allowed a responding party to block the formation of a dispute settlement panel. “The Parties shall endeavor to achieve consensus on the appointments. If the Parties are unable to achieve consensus by one month after the date of entry into force of this Agreement, the roster shall be comprised of the designated individuals. The roster shall remain in effect for a minimum of three years or until the Parties constitute a new roster,” the protocol says.
USTR’s notice also calls for labor panels to be established under the deal’s novel rapid-response tool. Specifically, the parties are required to “establish and maintain” three lists of panelists. By the date of USMCA’s entry into force, each party is required to appoint three individuals to one list each and “appoint, by consensus, three individuals to a joint list. The individuals in the joint list shall be nonnationals of either Mexico or the United States,” the protocol continues.
The panelists, which are required to submit reports every four years on the mechanism’s effectiveness, shall be appointed for at least four years or until the countries create new lists. A party may ask a labor panel to “request that the respondent Party allow it an opportunity to verify the Covered Facility’s compliance with the law in question and to determine whether there has been a Denial of Rights.”
In addition to the specialized labor panels, the U.S. committed to establishing labor attachés to facilitate the implementation of and compliance with Mexico’s labor reform. According to the U.S. implementing bill <https://insidetrade.com/sites/insidetrade.com/files/documents/2019/dec/wto2019_0398_0.pdf>, the Labor Department is required to hire up to five additional full-time officers and “detail or assign such officers or employees to the United States Embassy or a United States Consulate in Mexico.” The attachés will be tasked with assisting an Interagency Labor Committee to “monitor and enforce the labor obligations of Mexico” and to submit quarterly reports to the committee on the “efforts undertaken by Mexico to comply with its labor obligations.”
A Labor Department spokesperson told Inside U.S. Trade the agency “has identified two candidates for initialattaché positions and expects that they will be in place at the U.S. Embassy in Mexico City this summer.” Calling USMCA’s implementation an economic priority, the spokesperson added that the department intended to publish a job announcement and seek applications for a third position in Mexico City in coming weeks.
“Moving forward, the Department will closely follow developments in Mexico in making decisions regarding the location and portfolios of up to two additional attaché positions in the U.S. Embassy or Consulates in Mexico,” the spokesperson continued.
In addition to the Interagency Labor Committee, which has not yet been formally announced, and the other requirements, the U.S. implementing bill calls for robust capacity-building via the creation of a 12-member independent labor-expert board. Such a board would monitor and evaluate the implementation of Mexico’s labor reform and compliance with its labor obligations as well as advise the committee “with respect to capacity-building activities needed to support such implementation and compliance.” The board must be composed of 12 members -- four appointed by the Labor Advisory Committee and four each appointed by the House and Senate, with Democrats and Republicans in both chambers each choosing two members.
One source told Inside U.S. Trade U.S. labor groups have been creating a list of qualified candidates, reaching out to them informally and gauging their interest. The source said the process of forming the expert board was “moving ahead.”
Senate Finance Committee leaders Chuck Grassley (R-IA) and Ron Wyden (D-OR) this week urged the administration to show some flexibility and re-evaluate <https://insidetrade.com/node/168406> its June 1 entry-into-force goal. Grassley backed the case made this week by the U.S. auto industry, which lamented what it called a compressed timeline to develop uniform regulations that would be further complicated by the global pandemic. Wyden, meanwhile, said the deal should not enter into force until “facts indicate” that the countries are complying with obligations outlined in the deal.
Asked whether the rest of the USCMA-related labor requirements could be met by June 1, the source was optimistic. “I don’t think there is anything here that can’t be done before June 1. If people move forward and focus on it, there is nothing here you look at and say ‘No way’ as long as folks are focused on it and keep moving ahead,” the source said.
Alejandro Gomez Strozzi, a former Mexican trade official now working as a partner at the law firm Foley & Lardner, said he believed the countries were making progress on USMCA implementation efforts.
However, he said he doubted whether negotiations on uniform regulations needed to implement new automotive rules of origin outlined in the deal would be completed by June 1. As outlined in the U.S. implementing legislation, the regulations must be issued before USMCA enters into force.
A coalition of U.S. auto groups this week called on the administration to ensure an “adequate adjustment period” that would allow more time <https://insidetrade.com/node/168401> for the regulations to be developed. The groups requested that “uniform automotive ROO regulations occur after an adequate adjustment period is provided.”
“I doubt that there can be a consensus obtained by June 1,” Gomez Strozzi told Inside U.S. Trade, adding if there was an agreement it would likely be forged “without a full grasp as to how those rules will work on the production line level.”
He contended there was “no need to rush,” adding the U.S. and Mexican auto industries were in lockstep in agreeing that the governments should be focused on coming up with the best rules possible “and not rush it for political reasons.”
Gomez Strozzi said work remained to be done on defining the flow of auto manufacturing information throughout the regulation process, adding “there are a lot of cracks as to how each national authority will consider information sufficient.” He also lamented what he called a lack of clarity about a provision requiring <https://insidetrade.com/node/167820> that 70 percent of the steel and aluminum purchased by vehicle assemblers qualify as originating in North America, as well as severe “disruption” caused by the coronavirus outbreak.
“I don’t see the need for rushing into decisions without all of the corners sanded,” he concluded.
Kenneth Smith Ramos, Mexico’s chief NAFTA negotiator under former president Enrique Peña Nieto, on Wednesday said technical-level meetings on the uniform auto regulations and “procedural rules on dispute resolution” were being delayed due to the coronavirus “crisis <https://twitter.com/KenSmithramos/status/1240278558616018945>.” On Twitter, he called such delays a “major challenge” for the three countries as they move forward with implementation. -- Isabelle Icso (iicso at iwpnews.com <about:blank>)
Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20200318/dcc665b0/attachment.html>