USMCA Ratification in House Looks Probable
Unions appear ready to endorse the changes Democrats won to the NAFTA rewrite, though the most radical change -- stopping goods at the border for labor violations -- isn't in the deal. On Dec. 9, AFL-CIO President Richard Trumka said to The Washington Post, “We have pushed them hard and have done quite well,” in getting changes to the U.S.-Mexico-Canada Agreement. The House Democrats pushed for changes to the USMCA on labor, the environment, the biologics data exclusivity period and overall enforcement. If the AFL-CIO endorses their changes -- as seems likely after Trumka's comment -- passage in the House could follow quickly.
Mexico's foreign minister said his country can accept a melted and poured standard for steel in the new auto rules of origin, as long as there is at least a five-year transition period. That proposal is one union steelworkers wanted, to cut down on semi-finished steel imports. There are some changes the unions were not able to achieve -- Foreign Minister Marcelo Ebrard said Dec. 8 that certain voices called for surprise factory inspections by American officials, and “obviously, this is unacceptable.” But Ebrard said that while he couldn't give details yet, expert panelists that are chosen as part of a state-to-state dispute settlement system are something that Mexico views very favorably. Under NAFTA, the dispute settlement has broken down, after the U.S. blocked appointments of panelists. A binding dispute settlement system would not be limited to labor enforcement, Ebrard noted.
Ebrard said that on the environment, Mexico had no problems with the edits, which reaffirm all three countries' commitments to international environment goals. With regard to biologics, he said, “Mexico proposed various alternatives” to the 10-year exclusivity period now in USMCA. “We will see what's adopted. So that it's more flexible, and the terms of [data] protection aren't so extended.”
Daniel Ujczo, an Ohio trade lawyer whose firm, Dickinson Wright, represents major Detroit automakers, said: “Labor can claim significant changes to the deal, including melted and poured, and other upgrades.” In an email interview with International Trade Today he said, “The North American auto industry will be able to meet the melted and poured standard with minimal disruption. However, there are concerns for individual suppliers that import slab from overseas and convert that into auto components. They may have to look for more domestic sources and, in turn, pay higher costs. It may be another hit to the suppliers downstream that are already facing challenging economic circumstances.”
“The supplier industry does not believe that the steel and aluminum requirement will directly impact the vast majority of suppliers,” a spokeswoman for the Motor & Equipment Manufacturers Association said. “However, we will continue to review the language with our members to assess the impact on the industry.”
Ujczo said that pro-business gains in the NAFTA rewrite “have been watered down,” so the business community sees ratification at this point as less than a big win. “While we still have to see the final implementing bill, the Trumpian bargain that business needs to accept new auto rules, labor, and enforcement measures in exchange for pro-business, [Trans-Pacific Partnership]-like gains in digital, [intellectual property], and customs procedures has been tilted as a result of the House Democrats changes,” he said. He said the business view at this point is more like “just a 'Whew, we survived this.'”