White House on collision course with Democrats over labor issues in new NAFTA

  • March 13, 2019

Source: https://www.iisd.org/library/usmca-nafta-environment

White House on collision course with Democrats over labor issues in new NAFTA

The Trump administration is stepping up efforts to get House Democrats to support the new North American trade pact — but for now, the White House appears content to let the deal’s fate on Capitol Hill depend on Mexico’s willingness to improve its labor laws.

U.S. Trade Representative Robert Lighthizer met with the House Democratic caucus on Wednesday, kicking off a process House Speaker Nancy Pelosi established for members of her conference to voice their criticism of the new U.S.-Mexico-Canada Agreement.

One of the Democrats’ top concerns is to ensure Mexico implements labor law reforms required under the new trade pact — and to guarantee the deal’s high labor and environment standards can be enforced. Democrats also have reservations about provisions they say could lock in high prescription drug prices.

After the meeting, several Democrats praised Lighthizer for his accessibility, but the administration and House Democrats seem to be on a collision course over how to enforce Mexico’s labor commitments.

Lighthizer “knows we’re not there yet. Mexico has to make some moves beforehand, to show good faith,” said Rep. Bill Pascrell (D-N.J.). “We need that, first of all. If they don’t act, there’s no chance of getting the votes.”

Some House Democrats, including Pelosi, have said they will wait for Mexico to pass a law to make necessary labor changes — a commitment it made as part of the deal to replace the North American Free Trade Agreement. That law would overhaul Mexico’s labor structure, ensuring that workers have a right to collective bargaining and that secret votes are held when a labor pool considers whether to unionize.

The so-called USMCA specifies ratification could be held up if Mexico doesn’t follow through on the promised changes.

“The enforceability of it all depends on the Mexican government changing its laws,” said Rep. Judy Chu (D-Calif.). “We don’t actually have direct punitive actions in the agreement itself if these provisions do not change. My question was: What if they don’t pass the laws? What are the consequences?”

Some lawmakers remain worried Mexico will backpedal on its commitments, which the Mexican Senate had initially been set to pass last year. However, the administration of Mexico’s new populist leader, President Andrés Manuel López Obrador, has said the Mexican Senate, which is led by his party, is now likely to pass the necessary legislation in April.

“With USMCA or without USMCA, President López Obrador has labor reform and labor justice and labor democracy at the center of his agenda,” Luz María de la Mora, Mexico’s trade undersecretary, said last month. “I will find it extremely difficult to believe that [Pelosi] will not understand that what Mexico is doing is substantive — it’s major.”

Regardless of Mexico’s domestic actions, Democrats continue to raise concerns that the trade deal’s rules make it hard to enforce any violation of its provisions. They also are skeptical about how the administration might address the larger issue of enforceability.

Labor unions and other groups have said the deal maintains provisions from the original NAFTA that allow a country to block dispute settlement panels, a mechanism that allows countries to hold a party to the agreement accountable if that nation violates terms of the agreement. NAFTA critics say the loophole has rendered the existing state-to-state dispute settlement process meaningless.

Lighthizer told lawmakers on Wednesday, as he has said previously, that concerns over enforcement could be addressed through forthcoming legislation to implement the agreement rather than by reopening the deal to further negotiation.

“He said we’re going to address it in the implementing bill, and you could see Speaker Pelosi shaking her head because that’s not the way we’re going to do this,” said Rep. Pramila Jayapal (D-Wash.).

Jayapal, a co-chair of the Congressional Progressive Caucus, said there is precedent for renegotiating trade deals in order to get them passed in Congress. The Obama, Bush and Clinton administrations all made changes to pacts after they were negotiated to garner necessary support on the Hill.

“We can do that again, and I think that is what it will require,” she said.

But even if the USMCA were to be reopened, Lighthizer indicated to another group of lawmakers this week that he doesn’t support a move that would ditch the ability of the U.S. to block dispute-settlement panels. In a meeting, Tuesday with members of the New Democrat Coalition, a group of more moderate Democrats who support free trade, Lighthizer said that flexibility is important for U.S. sovereignty, according to sources in the room.

But the administration’s trade chief also stressed that the implementation process could include language that would limit the blocking of panels only in cases of national importance, sources told POLITICO.

Chu said Lighthizer mentioned on Wednesday that implementation of the deal may include some kind of “enforcement agreement” that could be invoked if Mexico doesn’t uphold its labor commitments.

“I would rather have enforcement provisions in the agreement itself,” she said.

Lighthizer has also used López Obrador’s government as part of his reasoning against reopening the pact. The U.S. trade chief has said in various meetings with Democrats that renegotiating USMCA could prompt Mexico’s populist leader to ask for big changes to the deal.

Mexico and Canada have both expressed an unwillingness to renegotiate USMCA.

“It’s take it or leave it,” de la Mora said. “Mexico is not considering any renegotiation of any kind. This is what we have and this is what we’ll have to learn to live with.”

Some lawmakers disagree with Lighthizer’s assessment on why revisiting provisions of the deal is not the best course to take.

“Honestly, the provisions we want to change, the new Mexican government is more progressive. So, when it comes to enforcement for workers in Mexico … I think their administration would be very accepting to [that issue],” said Rep. Mark Pocan, co-chair of the Congressional Progressive Caucus.

But in spite of their concerns with elements of the deal, several lawmakers praised Lighthizer for his willingness to listen to Democrats, a departure from the rancor that has largely defined the party’s relationship with the Trump administration.

“The one thing that was interesting about it was that everyone applauded his accessibility. His availability to answer questions,” said Rep. Richard Neal (D-Mass.), chair of the House Ways and Means Committee. “I think there was a broad agreement that, of the trade reps, he has been the most available.”

Some lawmakers went even further: “I really trust him,” Pascrell said.

The credibility Lighthizer has developed in many Democrats’ eyes could be an asset as he looks to meet an ambitious goal to gain overwhelming support for the deal.

“Ambassador Lighthizer said he doesn’t just want 218 votes, he wants 318 votes,” Jayapal said. “Well if he wants 318 votes, he is going to have to make some changes because I’m not clear we can get to 218.”