Democrats' Complaints About USMCA Enforcement May Not Predict Future Conflicts
Oregon Democratic Sen. Ron Wyden's harsh words on USMCA (see 2010300046) would have even more significance if the Democrats are able to take the majority in the Senate with the Nov. 3 election. Dan Ujczo, a close USMCA watcher and partner at Dickinson Wright in Ohio, said lawyers from his firm were talking about Wyden's letter with people in both Mexico and the U.S. He said he sees it more as a political document at the moment. “It’s pretty amazing that USMCA hasn’t been a large factor in the election,” Ujczo said. He said he thought both Democrats and Republicans would claim victory on the NAFTA rewrite, but instead, the election has barely touched on trade, and has been focused mostly on the COVID-19 pandemic and President Donald Trump.
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And, Ujczo said, as he talked to other traders, his conclusion is that COVID-19 issues will overshadow USMCA enforcement.
Late on Nov. 2, House Ways and Means Committee Chairman Richard Neal, D-Mass., and Trade Subcommittee Chairman Earl Blumenauer, D-Ore., released their assessment of USMCA so far, and they complained that the Labor Department and the Office of the U.S. Trade Representative were supposed to be proactive on enforcing the labor chapter. “We’re still waiting on the first enforcement action of any kind, and the preparation of a complaint has largely been left to organized labor and the private sector, even though we know that workers in Mexico are being denied their basic rights on a daily basis,” they wrote, printing the sentence in bold for emphasis.
Nicole Bivens Collinson, director of the Sandler Travis international trade and government relations practice, said she was surprised that the AFL-CIO didn't follow through on its promise to bring a case by Sept. 30.
“I don’t know what that means. I don’t know what to make of that. I don’t know if that’s a political issue,” she said. “I don’t know if it were something that potentially the administration worked with them to not do something. Or if maybe the AFL-CIO made a calculation it might be better to wait until after the election.” She speculated that the Solidarity Center, a U.S. nonprofit that advances workers' rights around the world, including in Mexico, could have used the threat of a rapid response case behind the scenes to move a company to allow an independent union to have access to its workers.
The rapid response mechanism in USMCA allows for a withdrawal of tariff benefits from a specific exporter if officials decide workers at that factory were not given collective bargaining rights. Bivens Collinson said that if the Senate majority flips and Joe Biden wins the presidency, Wyden will not push on USMCA at first, maybe even for the first six months. “If, for whatever reason the Senate were to flip, but Trump were to win, the likelihood would be that Wyden would push quickly to use the enforcement mechanisms,” she said.
Ujczo said he believes labor unions would be more focused on appointments at the Labor Department and the National Labor Relations Board, and in getting the Occupational Safety and Health Administration to take a more assertive stance on protecting workers during the pandemic. “We won’t be talking so much about unionization in Mexico,” he said. He said that U.S. unions have not been able to travel to Mexico to gather evidence for a potential complaint because of the COVID-19 pandemic.
Wyden's letter complained that the auto rules of origin are unclear, but Ujczo, who has several automakers and auto parts makers as clients, disagrees. “It is a masterful agreement,” he said. “How it stitches together actually makes a lot of sense.”
But he said that some companies have not spent this period of informed compliance getting ready, and he expects to see some enforcement by CBP in 2021. “USMCA’s right now’s like a 2020 wedding,” he said. “We’re formally hitched, but we’re not seeing the big party.”