Trade Subcommittee Chairman Says of USMCA Modifications: Act 'With Dispatch,' but Get It Right

Blumenauer, who is on the nine-member working group negotiating with U.S. Trade Representative Robert Lighthizer, said the new NAFTA "is stronger than the old NAFTA" but could use some more improvements. "And virtually everybody wants to do that. They don't want to go back to the old NAFTA or, God forbid, blow it up and withdraw. That's crazy talk. So I think that the areas of difference have been narrowed, and people are offering up suggestions and I think over the course of the next few months, we're going to make a lot of progress."

During the hearing, Rep. Terri Sewell, an Alabama Democrat who is also on the working group tasked with negotiating changes to the new NAFTA with USTR, said, "While I believe there are improvements to the old NAFTA, it is not this committee's job to rubber stamp the administration's deal." However, she also said she's "optimistic the U.S. trade representative will work with us to get this done."

Blumenauer said, in response to a question from International Trade Today, that the working group has not reached a consensus on exactly what they want to ask for on biologics, labor, enforcement and the environment. "People are bringing things to the party, and that is an ongoing process. I don't think that it's finalized, there's a lot of moving pieces," he said.

The members of the panel -- two professors from Mexico and the U.S. who study Mexico's labor market, as well as someone from the AFL-CIO and from a U.S.-based nonprofit that supports Mexican union organizing -- agreed that the Mexican labor law is a major improvement, and that implementing it over the next four years will be a major challenge. What they disagreed on was the likelihood of true reform, and how the U.S. should use its leverage to get the strongest reform possible. Joyce Sadka, a law professor at the Instituto Tecnologico Autonomo de Mexico's Center for Economic Research, pointed to how quickly the Mexican administration is moving, already setting up the coordinating council after 30 days, rather than the 45-day timeline in the legislation. The law was just enacted 54 days ago, she said, and there will be a public progress report every six months. "There are strong signs of willingness to implement," she said.

Sewell asked the panel how Congress can support the hand of Mexican reformers, and Gladys Cisneros, program director for Mexico at the international labor nonprofit Solidarity Center, said that Congress members should talk about labor disputes that started before the reform, such as: a suspended election at the PKC wire harness plant because of vandalism of a ballot box on the day of the election; a captive union negotiating at a Fiat Chrysler-owned parts plant that voted out that union a year ago and the firing of 57 workers behind a wildcat strike at a Goodyear plant. Cisneros wants the government to intervene in these cases, and said that in Colombia, where she has also worked on labor rights, there were many promises that were unfulfilled.

Cathy Feingold, the AFL-CIO's director of its international department, said that Congress should not ratify the U.S.-Mexico-Canada Agreement until it sees proof of progress in Mexico, because it will have no leverage after ratification. She said that the ability of countries to block the formation of a panel in state-to-state dispute settlement was solved in later trade deals, and that she doesn't understand why it was not fixed in the new NAFTA. Blumenauer, too, talked about the broken state-to-state dispute settlement system.

Rep. Suzan DelBene, D-Wash., a pro-trade Democrat on the subcommittee, said in a brief interview after the hearing that she's looking for the USTR to change his position on leaving a hobbled state-to-state dispute settlement structure in place and instead use Section 301 tariffs against trading partners if we're not satisfied they're complying with the terms of the agreement.

"I'm very concerned that 301 would be the enforcement mechanism. I don't think that's the appropriate enforcement mechanism," she said.

She said that needs to be changed, and called for the removal of footnotes 8 and 11, which both define "a sustained or recurring course of action or inaction" with regards to labor rights and violence against union organizers. The footnotes say: "A course of action or inaction does not include an isolated instance or case."

It was this issue of sustained and recurring actions that led to a defeat in the Dominican Republic-Central America Free Trade Agreement, or CAFTA, of a U.S. complaint about Guatemalan labor protections.

Kenny Marchant, R-Texas, told the panelists that his district "frankly loves NAFTA," and in fact, questioned the need to renegotiate it at all. He asked Sadka if the current NAFTA stayed for a couple of years while Democrats waited to see if Mexican labor reform is real, would that be a problem for Mexico.

Sadka said, "I don't think that delaying for several years is a good idea, and the reason is the Mexican government has been able to pass this one because of the pressure to pass USMCA. If the delay is too long, the Mexican government will lose credibility" with the forces that oppose labor reforms, such as the politically connected unions that were not chosen by workers.

Blumenauer said after the hearing that he found Sadka's answer very interesting, and said one of the reasons he's leading a delegation to Mexico during the July 4 work period is to find out how the Mexican administration sees the interplay of the congressional process and their labor reform process.

"This is a reforming administration. They have some financial challenges." he said. "So we want to move with dispatch, but we want to get it right."