Ways and Means Committee Member Says Making Apparel ROO in CAFTA Easier to Meet Has Appeal
Rep. Jimmy Gomez, D-Calif., has visited Mexico many times both before and after NAFTA, since his parents were born there and he still has family there. Gomez, who served as the point person on labor in the Democratic Working Group that helped reshape the NAFTA rewrite, said during a July 21 interview hosted by the Washington International Trade Association that he always knew that creating independent unions in Mexico was going to be difficult, because there have been decades of unions that were really an arm of the political party that dominated Mexico, the PRI.
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So, Gomez said, he sees the first two rapid response mechanism complaints against Mexican firms as a good start toward building new institutions. "I applaud the Mexican government for investigating the allegations about ballot tampering," he said. "Some colleagues of mine thought [labor reform] could be done with a flip of a switch. It’s not that easy."
International Trade Today asked Gomez if the rules of origin for apparel should be made more liberal in the Dominican Republic-Central America Free Trade Agreement, or CAFTA-DR, so that Central American countries' exports grow, and there are more opportunities for would-be migrants to make money closer to home. Gomez drew on his experience in Mexico in answering. When he would visit Mexico in the 1980s and 1990s before NAFTA, he said, "you couldn't get any American products at all. And you saw the differences in quality, you saw the differences in price. It was stark."
Gomez said that after NAFTA, "the economy changed, more of the auto manufacturers' assembly went down to Mexico; some of the tech went down to Mexico." He said some members of his family got jobs in those sectors. "You no longer had the need to go to the United States. And now the net migration from Mexico to the United States is zero."
He said policymakers thought CAFTA-DR would have a similar effect, but it hasn't happened. "How do we use CAFTA as a way to build up their economies so people don’t need to leave? What else is going on in those countries that prevent that kind of growth?" He alluded to developments in Nicaragua and El Salvador, where presidential leaders interfered with the independent judiciary, and in Nicaragua, where political opponents have been jailed, preventing fair elections. He did not name the countries, but talked about interference with the judiciary and elections.
He said he's been told by companies that the current apparel rules of origin aren't attractive enough to manufacturers to expand production in CAFTA countries, and rewriting CAFTA to try to make it more conducive to foreign investment in those countries "is something I would be open to."
"I’ve been having some discussion [on changing them] but there's no consensus in [among fellow members of the House] Ways and Means [Committee] on that component," he said. "I agree, we have to have a different approach to the Northern Triangle countries to make sure their economies build up. Trade can be a transformative tool, if it's done right."
Gomez was asked about tariffs on China and steel and aluminum, and whether they should end. "We need to give the Biden administration the time it needs to do a thorough review of the tariffs," he said, but acknowledged he's been hearing from companies telling him that tariffs are making it difficult for them to recover from the pandemic. He also talked about the tariffs on Canadian softwood lumber as one of several factors making building affordable housing in his district more difficult. He said being able to build more housing is a top priority of his, but said he worries that if the tariffs on Canadian lumber were rolled back, it wouldn't make a price difference for building contractors because of other market forces, and that it could hurt U.S. timber workers.
He was also asked about the prospect of a carbon border adjustment tax, which would make carbon-intensive goods imported from countries with less aggressive greenhouse gas mitigation more expensive. He said the concept is interesting, but he has reservations. "Anytime we look at tariffs, we have got to think of what kind of impact it’s going to have on the prices of goods Americans are going to want to purchase. The people that end up paying the higher cost of those products are the American consumers." He asked: "Can we do it where it doesn’t hinder or cost the American taxpayer too much? Can it be done where it gives certain industries in the United States more of a competitive advantage because … they take into account the carbon emissions, they’ve already taken steps to mitigate that?"