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USMCA Update: Ratification of New Trade Agreement Possible in 2019

Posted November 20, 2019


With key Democratic lawmakers in Congress apparently on the verge of finally striking a deal with the Trump administration that would enable passage of the US-Mexico-Canada Agreement, possibly in the coming months, now seemed an opportune time for an update on the ratification process in Washington and for a brief refresher on key changes in the new trade pact from its 25-year-old predecessor.

USMCA Time

Background


Signed by the leaders of Canada, Mexico and the United States on November 30, 2018 following more than a year of intense negotiations, the revamped North American Free Trade Agreement has so far only been ratified by Mexico. In Washington, House Democrats have been negotiating with U.S. Trade Representative Robert Lighthizer on certain provisions in the USMCA implementing legislation since June.

Outstanding Issues


Among the unresolved issues that lawmakers in Washington have been wrestling with include: hammering out specifics of a labour inspection process to ensure that Mexican factories are upholding the USMCA’s new rules covering worker rights; the commitment of resources for new cross-border environmental provisions that, unlike NAFTA, have enforceable guidelines around water and air quality; and a compromise on intellectual property rights pertaining to biologics.

Throughout the talks, addressing the enforceability of labour provisions in the deal, as well as assurances that Mexico can fully implement its labour reforms, have proven the most difficult challenges to overcome.

Just recently, the heads of a dozen organized labour groups that comprise the AFL-CIO’s Industrial Union Council, which represents more than 4.5 million workers, urged lawmakers not to “waste this rare opportunity” to fix issues in U.S. trade policy, warning that after the “disastrous consequences of NAFTA” they would “not accept half measures.”

Latest Developments


AFL-CIO President Richard Trumka met earlier this week with House Speaker Nancy Pelosi and Ways and Means Chairman Richard Neal to hash out labour’s concerns in ongoing discussions over the renegotiated NAFTA deal. At an AFL-CIO event afterwards, the influential labour leader said that while progress was being made “slowly but surely” in negotiations with USTR Lighthizer, the Trump administration is “not there yet” on the NAFTA replacement deal.

In a brief joint statement yesterday, Pelosi and Neal said Lighthizer needs to agree to secure changes to make the labour provisions truly enforceable for a vote on the USMCA to occur.

“Today, we met with AFL-CIO President Richard Trumka and reviewed progress in House Democrats’ USMCA negotiations with the U.S. Trade Representative. We can reach an agreement on USMCA when the Trade Representative makes the new NAFTA agreement enforceable for America’s workers,” the senior Democrats said.

Looking Ahead


Opinion in Congress is divided as to whether the trade deal can reach a floor vote in December. Top Democrats hope a deal over the big sticking point of labour enforcement can be struck with the administration by Thanksgiving.

Other lawmakers, though, don’t feel there is sufficient time to pass a deal given the limited number of legislative days remaining this year. However, despite being at odds over timing and certain political considerations, most Democrats now say that it’s a matter of when — not if — USMCA will be passed.

 

Up Next: Recapping Key USMCA Provisions & Changes

 

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Should you have any questions about the various changes that will take effect once the USMCA enters into law and how they might affect your business, don’t hesitate to contact us – our trade experts are here to help.

 

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