USMCA Working Group Says It Has Made Its Proposals, Awaits Administration's Response

Five years of data exclusivity for biologics, an end to panel blocking and undefined "mechanisms and resources" to monitor and enforce labor and environmental laws in Mexico are the core of what the House Democrats have asked the Trump administration to change in its NAFTA rewrite. The House Democrats' working group revealed more of what it is asking for in a report sent to the Speaker's office and released publicly July 26. In that report, they wrote, "It is time for the administration to present its proposals and to show its commitment to passing the new NAFTA... ."

How quickly the new NAFTA could get a vote in the House is dependent on how the administration negotiates on these changes, they said. But staff will be working with the Office of the U.S. Trade Representative "to make further progress in completing a full draft of the implementing bill" during August, the report said.

The Democrats say that the new pact must reflect the May 10 agreement's approach to intellectual property -- recognizing that developing countries should not be held to the same standards as rich countries, and not granting automatic patent extensions for delays in getting the patent in the first place.

The working group held its fourth meeting with U.S. Trade Representative Robert Lighthizer on July 26, and discussed enforcement. Ways and Means Committee Chairman Richard Neal, D-Mass., said as he exited the meeting: "Enforcement, enforcement, enforcement is the cornerstone, I think, of where we are."

Neal said there will be conference calls through August "to talk about the bumps and how we smooth them out."

Rep. Jimmy Gomez, D-Calif., said that it was the best meeting yet. "There's a lot of agreement that enforceability is a big component of getting this right. We're trying to figure out what that means...." He said that Brown-Wyden (see 1906180046) has been on the table, but he said that bill has principles laid out "but it's not that specific. Some meat has to be put on those bones."

Gomez said that ending panel blocking to make the agreement more enforceable "is something that's been continuously brought up. USTR acknowledged that is something we can discuss. He hasn't said if we can resolve it or not."

Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said: "Bottom line for me, it's been a productive three months. The charge we all share is to make sure that every Democrat feels that his or her interests have been heard. They may not all be satisfied -- we're Democrats, after all -- but the notion that they have been heard, and there's been an effort to address them." He said Democrats want to make sure that after this rewrite, the country doesn't find itself "in the situation we're in after NAFTA 1.0."

Democrats have consistently said that their changes must be found in the text if they are to be effective. "Every trade agreement except one was reopened, very surgically and specifically," Blumenauer said, so he doesn't think the protests that this deal can't be reopened are a true red line for Mexico, Canada or USTR. He said some concerns could also be addressed through the implementing legislation, the passage of another law, and through how money is dedicated to various issues. Side agreements, on the other hand, "they actually make things worse because they give the illusion of solving the problem."

Blumenauer said he has an idea to make access to the American market conditional for companies with locations in Mexico on those companies complying with Mexican law -- that they had union elections with secret ballots, for instance. He said the companies would be required to certify they are complying. When asked by International Trade Today whether he meant those imports would not receive the tariff benefit, or whether they would be barred entirely, he said he didn't want to get into details, as he's still forming the idea.

The working group will be sharing concrete text with USTR next week on their requests for changes, the report said.

Gomez said that in addition to staff work and possible conference calls during August, the working group will meet with Lighthizer the first week they're back. At that point, the working group will see if the Ways and Means majority staff and the USTR staff have made progress, "and if they haven't, that's when we jump in to see if we can push the issue one way or the other."

International Trade Today asked if it's realistic that the House Democrats could get satisfaction on their four core issues in September. "Maybe," he replied. "If they say 'no mas,' and they give it to us all, then we're done. But I wouldn't hold my breath on that one." After that quip, he added that there's definitely been "positive movement."

In addition to communicating with the administration, Gomez said he's talking to other members of Congress, especially those who came after the last trade vote, and asks them: "What is their 'red line'? What is it that gives them the angst that they won't be able to vote for it?"

Gomez said members who aren't on Ways and Means or in the working group are paying attention to the question. "They know I lost this many jobs from NAFTA in my region before I ever got elected, and people still come and complain about how this factory closed. Or if their districts are dependent on trade. Or if their farmers are complaining about it. They may not know all the specifics, but they know this is a big deal. We gotta make sure that we get it right."

Blumenauer said the discussion within the Democratic Caucus is different than during the Trans-Pacific Partnership and the passage of "fast track" authority, officially known as Trade Promotion Authority, or TPA.

During those debates, he said the different opinions on trade were "a chasm, and I don't sense that here."

He said that even the debate to pass fast track "was World War III," but what's different here, he believes, is that left and center, no one would prefer to keep NAFTA, and no one wants to exit NAFTA.

"I think that there are some very specific differences, but they are not ones that cannot be bridged with some hard work, some flexibility, some creativity, and I'm looking forward to coming back in the fall." He said he hopes that would be the home stretch, and that Democrats and USTR can have an agreement that will address Democrats' concerns.