LDN - Business

Democrats cool toward NAFTA replacement, question labor standards

[March 14, 2019] By David Lawder

WASHINGTON (Reuters) - Democrats in the U.S. House of Representatives gave a cool reception to the replacement for the North American Free Trade Agreement on Wednesday as the top U.S. trade negotiator opened a campaign to win broad support for the accord in Congress.

Several Democrats said a closed-door meeting between United States Trade Representative Robert Lighthizer and their caucus failed to ease their concerns about the new U.S.-Mexico-Canada Agreement's (USMCA) provisions on labor, biologic drugs and some other issues.

A USTR spokeswoman declined to comment on the meeting.

The support of Democrats, who control the House, is considered important to passage of the USMCA, and Wednesday's meeting at the U.S. Capitol signaled that the Trump administration has a lot of work to do to address the party's concerns.

Democrats questioned whether new labor standards aimed at ensuring workers have the right to organize can be adequately enforced, as this depends partly on Mexico passing new labor laws.

"What you're hearing is that a lot of people don't think it's good enough," Representative Pramila Jayapal said of USMCA after the meeting, adding that she was concerned the new pact would not solve the biggest shortcoming of NAFTA, which allowed Mexican wages to stagnate.

"We know that when you don't have strong enforcement provisions, you are essentially facilitating the outsourcing of jobs and bad worker protections and undercutting of U.S. workers," said Jayapal.

NAFTA dealt with labor provisions in an unenforceable side-letter, allowing unions in Mexico to remain weak and wages low, drawing factories from the United States and Canada.

While USMCA's labor chapter is part of the trade agreement itself and requires Mexico to adhere to International Labor Organization standards, Democrats questioned whether this could be adequately enforced through a state-to-state dispute settlement mechanism.

The Mexican government expects its Congress to pass a labor bill by the end of April that it says will strengthen the rights of unionized workers and fulfill its commitments under USMCA.

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Rep. Pramila Jayapal (D-WA) speaks at a press conference about a House resolution designed to prevent President Donald Trump from firing Special Counsel Robert Mueller on Capitol Hill in Washington, U.S., July 27, 2017. REUTERS/Aaron P. Bernstein

Mexico "could say they passed the laws, but the laws could be very weak," said Representative Judy Chu, a Democrat on the House Ways and Means Committee.

She said Lighthizer told Democrats that he believed that Mexico's labor law would meet the terms of the agreement and that any enforcement issues could be resolved through a subsequent agreement following ratification. Jayapal added that Lighthizer said this could be addressed through implementing legislation.

Some Democrats said that Lighthizer listened closely to their concerns and that he would work to address them.

"He understands the concerns of our caucus and he knows we're not there yet," said Representative Bill Pascrell.

Other Democrats raised concerns about the prospect for higher drug prices resulting from the USMCA's provision for 10 years of data exclusivity for biologic drugs. The United States allows 12 years currently and negotiated a five-year exclusivity period in the Trans-Pacific Partnership trade deal, which President Donald Trump declined to join in 2017.

Representative Rosa DeLauro, a Democrat who opposed several previous trade deals, called this an "absolutely unbelievable giveaway to the pharmaceutical industry."

House Ways and Means Committee Chairman Richard Neal, whose panel will handle the USMCA legislation, said the meeting did not provide any further clarity on the timing of the Trump administration's submission of implementing legislation to Congress, or when a vote might occur.

(Reporting by David Lawder; editing by Grant McCool)

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