This week, the U.S. House of Representatives will consider and vote on the legislative vehicle to implement the recently finalized U.S.-Mexico-Canada Agreement (USMCA). The vehicle is H.R.5430, United States-Mexico-Canada Agreement Implementation Act, and it will first be marked up in the House Ways and Means Committee on Tuesday, Dec. 17 at 11:00 a.m. The full House is then expected to vote to ratify the trade pact on Thursday.
This morning, it briefly appeared as though the process had hit a snag; after receiving the final text of the pact this weekend, Mexican trade officials pushed back against the USMCA’s labor enforcement provision, which they said would allow Labor Department officials stationed at the U.S. Embassy in Mexico to inspect labor facilities, in violation of Mexico’s sovereignty. Mexican officials said they did not agree to the provision during the negotiations and would not ratify the pact as written. This issue was resolved this morning, however, after Mexico’s Undersecretary for North America Jesús Seade met with the head of the U.S. Trade Representative (USTR) Robert Lighthizer, who clarified the labor attachés would not act as inspectors.
The USMCA is expected to easily pass the House and Senate, although Senate Majority Leader Mitch McConnell (R-KY) announced last week that the Senate will not take up the USMCA until early next year, after the chamber has voted on the articles of impeachment against President Trump.
For over a year, the USTR and House Republicans and Democrats have been working with envoys from Canada and Mexico to iron out the details of the new pact and negotiate solutions to disagreements over various provisions. In recent months, most of the negotiations have taken place between the nine-member working group of House Democrats led by Ways and Means Committee Chair Richard Neal (D-MA), officials from the USTR led by Ambassador Lighthizer, and Mexican trade officials led by Seade. The parties were primarily working toward agreements on enforcing labor protections for workers in Mexico, market protections for biologic drugs, establishing stronger environmental health and safety protections, and crafting an overall enforcement mechanism for the pact. Ultimately, the provision offering 10-year market protections for biologic drugs was removed from the trade pact, and negotiators came up with a review and arbitration process to address allegations of labor rights violations in Mexican factories.
Other key provisions of the USMCA include:
- Stronger patent and trademark protections for the biotech and financial services industries, as well as for domain names;
- Tariff-free energy exports to Canada and Mexico and more flexibility in rules of origin requirements for oil and gas transported between the three countries;
- Rules governing and protecting digital trade, including crackdowns on data localization, consumer data privacy protections, prohibition of tariffs on digital products, and liability protections for internet platforms regarding harmful content posted by third parties on their sites;
- Increased U.S. access to Canada’s dairy markets;
- New rules of origin requirements for cars and auto parts manufactured in North America, and a guarantee from the United States that it will not impose tariffs on autos from Canada or Mexico; and
- A requirement that Mexico reforms its labor laws to allow workers to unionize more easily, as well as penalties if Mexico fails to hit key labor reform benchmarks.
More information can be found in the following issue-specific fact sheets published by USTR:
The full text of the USMCA can be found here, and the list of amendments (“Protocol of Amendments”) made to the original language of the trade pact can be found here.
This document is intended to provide you with general information regarding the USMCA. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.