Dear Members and Friends:
July 1 brought finality with the legal start of USMCA. But are things really final? After close to two years of getting NAFTA to USMCA, we now have a more modern, inclusive, and transparent trade agreement. But did USMCA resolve all the problems that were persistent with NAFTA? Probably not!
USMCA and Labor Enforcement
Although the new Rules of Origin regarding autos and auto parts appeared to be the largest and most followed change from the industrial side, there likely will be many upcoming petitions and challenges – especially on labor enforcement matters in Mexico. USTR has named six panelists for the Rapid Response Labor Mechanism, a key tool for the enforcement of the USMCA labor protections. The US national panelists are Janice Bellace, Lance Compa, Peter Hurtgen, Ira Jaffe, Kevin Kolben, and Ed Potter. Their backgrounds can be found here.
Also, the USTR issued “Interagency Labor Committee for Monitoring and Enforcement Procedural Guidelines for Petitions Pursuant to the USMCA.” On June 17, USTR Bob Lighthizer testified before Congress that the government is willing to take action “early and often” to challenge violations of the new agreement when it takes effect. His insistence on the inclusion of labor attaches in the US embassy in Mexico City to monitor the implementation of Mexico’s new, more stringent labor laws show how important this issue is to both the Trump administration and Democrats in Congress. Definitely we will see petitions early in this area.
Tariffs on Canadian Aluminum?
Prior to July 1, there had been some warnings from the Trump Administration that 232 tariffs on aluminum imports from Canada might be put back on. The US is pressing for Canada to impose quotas to slow the surge of its exports of the metal, or else it will reimpose a 10 percent tariff on aluminum imports. Lighthizer brought the matter up during a June 17 Senate Finance Committee hearing on the Administration’s 2020 Trade Policy Agenda.
The US and Mexico's Bilateral Relationship
A new document just released by the Wilson Institute, well worth the reading, is the summary of a convocation of six former US ambassadors to Mexico and six former Mexican ambassadors to the United States to discuss the bilateral relationship. The ambassadors engaged in an intensive and strategic dialogue concerning the future of US-Mexico relations in critical areas, including economic competitiveness, public security, migration, and borders. The participants also discussed the importance of cultural issues, public opinion, and soft power to the bilateral relationship.
China
On China, the phase I trade agreement is still moving forward – although very slowly, with both sides accusing the other of not following through more quickly on commitments. The President indicated last week that he would not be in the mood for any discussion of a phase II until after the elections in November.
Related to the future of the relationship, on May 28, the President said that the US would initiate the process of revoking Hong Kong’s favorable treatment under US law. This began on June 30. On July 2, the Congress passed the Hong Kong Autonomy Act (HKAA) by unanimous consent, providing for mandatory sanctions against individuals, entities, and financial institutions in response to China’s National Security Law for Hong Kong. The legislation was signed by the President last Tuesday with his announcement that “Hong Kong will now be treated the same as mainland China, no special privileges, no special economic treatment, and no export of sensitive technologies.” Fitch Solutions released a report with some analysis of the possible impact on consumers and retailers.
Webinars Coming Soon
Finally, our Chapter will be starting our webinar series shortly. You will all receive announcements with plenty of time to register. In the meantime, you can see our upcoming events here. Plus, see more on our work and resources at www.usmcocma.org.