Ratification of the USMCA trade deal in the Unites States continues to face strong opposition from congressional Democrats concerned about enforcement of the agreement’s labor and environmental provisions. This challenge has been made harder by the partisan rancor surrounding the recent government shutdown and increased tensions in the bilateral relationship.
Over the past few weeks the bilateral policy environment has been further complicated by disagreements over how to manage caravans of Central American migrants passing through Mexico on their trek to the United States, and how to respond to recent developments in Venezuela.
Ratification of the USMCA, already complicated by the Democrats’ victory in the November 2018 midterm elections, was set back further by the recent closure of the U.S. government. Shutting down the government for 35 days poisoned relations between President Trump and congressional Democrats, making them even less interested in giving Trump a win on the trade front.
It also furloughed workers at the U.S. International Trade Commission thereby potentially delaying their analysis of the pact, which is due to Congress by March 15. Key lawmakers from both parties in Congress have said that a vote should not occur prior to release of the report.
Beyond the consequences of the shutdown, Democrats continue to have strong reservations about the labor and environmental provisions of the agreement, the provisions related to intellectual property rights protection for biologic drugs, and the lack of a dispute resolution mechanism for labor and environment issues. Indeed, according to Inside Trade, the House Ways and Means Trade Subcommittee Chair, Earl Blumenauer (D-OR), has insisted the pact will not get out of his subcommittee until the biologic drug provisions are changed, and labor-backed lawmakers insist they will not approve the agreement without tighter labor provisions.
Canada and Mexico are highly unlikely to bring a treaty whose provisions might change to a vote in their respective legislatures. Both countries have made it clear that they will not consider any changes to the agreement.
In response to their concerns, U.S. Trade Representative Robert Lighthizer has proposed using section 301 of the 1974 Trade Act as an alternative mechanism to impose tariffs on Mexican exports to the United States should there be violations of the USMCA’s labor protections. Democrats in Congress seem unconvinced.
Canada and Mexico, meanwhile, are highly unlikely to bring a treaty whose provisions might change to a vote in their respective legislatures. They unsurprisingly will need to know what they are voting on. Further, both countries have made it clear that they will not consider any changes to the agreement.
At the same time, concerns about Mexico’s willingness to pass the labor reforms needed to adhere to the terms of the USMCA are misplaced. A representative of the AMLO government took part in the USMCA negotiations and AMLO has expressed satisfaction with the outcome. President López Obrador has an overwhelming majority in both houses of the Mexican Congress, and his party’s leaders in Congress have put labor reform on the agenda for this congressional term. Mexican approval of the needed reforms will not be an impediment to ratification.
Whatever assurances both the Trump and AMLO governments may make, it is clear that the newly emboldened Democrats in Congress will be key to the passage of the USMCA.
The biggest impediment to ratification of the USMCA is the section 232 tariffs on Canadian and Mexican steel exports to the United States. Canada, Mexico, and many key U.S. legislators have made it clear they will not take up the new agreement until this 25 percent tax is eliminated. That said, there are signs that this is on the horizon.
Negotiations have focused on capacity utilization in the U.S. and how to ensure that metals from countries still subject to the tariff don’t circumvent it by exporting through Canada and Mexico. After bogging down in January, talks seem to be progressing this month. In part this reflects the fact that the U.S. steel and aluminum industries are now over the 80 percent capacity utilization target set by the Trump administration.
In part, this reflects the timeline—the Mexican congressional session ends on April 30, and Trump is likely to meet with Chinese President Xi in late March and would like to have a ratified USMCA in hand by then. Finally, the director of Trump’s National Economic Council, Larry Kudlow, insisted on February 24 that the section 232 matter will be resolved: “We will get that done…to everyone’s satisfaction. Trust me.”
It is unclear how Mexico will manage a growing number of asylum seekers living and likely working in Northern Mexico. AMLO is making a conscious effort to prevent any increase in bilateral tensions that might hinder approval of the USMCA.
Meanwhile, Republican senators sent President Trump a message that his proposal to announce a U.S. withdrawal from NAFTA as a way to pressure Democrats to accept the USMCA would be a very bad idea. Rather than promoting an agreement, they argued it would undermine Republican efforts to get congressional approval.
Whatever assurances both the Trump and AMLO governments may make, it is clear that the newly emboldened Democrats in Congress will be key to the passage of the USMCA. Whether a strategy can be executed to get enough Democrats on board to get the USMCA passed is yet to be seen. Labor will obviously play an important role in all of this, and despite the strength of the labor provisions (the strongest ever included in any free trade agreement) the enforceability of the provisions remains an important issue.
Beyond trade, the caravans of Central American migrants passing through Mexico on route to the United States have dominated U.S.-Mexico relations. The Mexican government was determined to respect the human rights of the migrants by offering them renewable, one-year humanitarian visas that would allow them to live and work in Mexico. In the words of the director of Mexico’s National Migration Institute, however, the program was “too successful." It quickly threatened to overwhelm Mexico’s immigration system and had to be terminated in late January.
At the same time, the United States initiated the “Remain in Mexico” program that would force Central American asylum seekers to wait in Mexico for their day in U.S. court. Although Mexico sharply disagrees with this policy, it seems to have resigned itself to accepting the asylum seekers anyway, even in the absence of any bilateral agreement to house and feed the migrants, which has been elusive in the current context of bilateral relations.
It is unclear how Mexico will manage a growing number of asylum seekers living and likely working in Northern Mexico. Despite this, AMLO has refused to comment on the new U.S. policy. True to his U.S. policy objectives, AMLO is making a conscious effort to prevent any increase in bilateral tensions that might hinder approval of the USMCA or otherwise distract from his domestic policy priorities.
Illegal border crossings are at an all-time low, drugs overwhelmingly enter the United States at legal ports of entry, and crime on the U.S. side of the border is exceedingly low. Whatever happens, this is a fight that will not be over anytime soon.
The United States has not reciprocated, however. In an effort to drum up support for his border wall, President Trump took to Twitter once again in late January. He intentionally raised fears about the murder rate and a supposed humanitarian crisis in Mexico to justify the need for a wall. He also held a February 11 rally in El Paso to emphasize the need for a wall, weirdly doing so in one of the safest middle-sized cities in the United States.
Although Trump ultimately agreed to sign government funding bills that included just a fraction of the money he had demanded for the wall, he then took the unprecedented step on February 15 of declaring a national emergency on the southern border. In declaring the emergency, which will allow him to repurpose Department of Defense construction funds to the border wall, Trump pointed to a supposed “invasion” (a word he used seven times) from Mexico of drugs, human traffickers, criminals, and gangs.
Never mind the fact that illegal border crossings are at an all-time low, drugs overwhelmingly enter the United States at legal ports of entry, and that crime on the U.S. side of the border is exceedingly low. As we go to publication, Congress appears to be close to voting to invalidate the president’s use of his emergency authority. Whatever happens, this is a fight that will not be over anytime soon.
Mexico’s refusal to recognize Venezuelan opposition leader Juan Guaidó as the legitimate president of the country, defying the lead of the United States, the European Union, and most of Latin America, has ruffled feathers in Washington.
At the same time, Mexico’s refusal to recognize Venezuelan opposition leader Juan Guaidó as the legitimate president of the country, defying the lead of the United States, the European Union, and most of Latin America, has ruffled feathers in Washington. While some of AMLO’s followers support the Maduro government, AMLO does not. But he is wedded to the principle of non-intervention in the internal affairs of other countries which informs his effort to remain neutral.
This nuance is lost on Republican Senator Marco Rubio, one of the key authors of U.S. policy toward Venezuela. Rubio slammed Mexico in a tweet, saying he had hoped for a “strategic partnership” with the new Mexican government, but its “inexplicable support for Maduro has put all of that in doubt.” In addition, a late January visit by Secretary of State Mike Pompeo to Mexico City to meet with Mexican Foreign Secretary Marcelo Ebrard was quietly cancelled, reportedly because of tensions over Venezuela.
A version of this article was originally published by Monarch Global Strategies.
The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of the Pacific Council.