Labor, environment, drugs top changes to North American trade deal
Stronger worker and environmental protections top the changes to a new version of the North American trade deal signed by top U.S., Mexican and Canadian officials on Tuesday that clears the way for a long-delayed vote in the U.S. Congress.
The full text of revisions has not yet been made public, but the following are some of the key changes, based on documents provided by House Democrats, industry executives and U.S., Mexican and Canadian officials for a deal that will underpin $1.2 trillion in annual trade and replaces the 26-year-old North American Free Trade Agreement.
Democrats prioritized the stronger enforcement of worker rights in Mexico, even after Mexico passed a labor reform aimed at ensuring union independence, worker freedoms and higher wages. Mexico has agreed to increase its budget for labor enforcement.
The new deal establishes a labor-specific enforcement mechanism that provides for facility-based enforcement of labor obligations in the agreement, along with verification of compliance by independent labor experts, according to a fact sheet published by the U.S. House Committee on Ways and Means on Tuesday.
“Labor attaches” will be based in Mexico and will provide on-the-ground information about Mexico’s labor practices, the Democrats’ fact sheet said. Goods and services that are not produced in compliance with freedom to associate and collective bargaining obligations will be subject to penalties.
The United States also will establish a new interagency committee that will monitor Mexico’s implementation of labor reforms and compliance with the pact.
A new U.S. interagency committee will oversee environmental protections in Mexico, helped by attaches based in Mexico City who will monitor environmental laws, regulations and practices.
The deal creates a presumption that an environmental violation affects trade and investment and will require the other governments to prove otherwise.
The deal also allows the 1987 Montreal Protocol, a global agreement to phase out production of ozone-depleting substances, to be included in the trade pact.
The deal aims to hold down drug prices by limiting some patent protections for pharmaceuticals. It eliminates a required 10-year data exclusivity period for biotech medicines, which U.S. Democrats feared would prolong higher prices for some of the priciest drugs on the market.
The deal also removes a provision that would require parties to confirm patents for new uses of known drugs, combating a process called “patent evergreening” that blocks generic competition.
STEEL AND ALUMINUM
In a last-minute request, the U.S. Trade Representative called for automotive rules of origin to include steel and aluminum that is “melted and poured” in North America, closing the door to the use of semi-finished metals from China and elsewhere.
Mexico and Canada agreed to a seven-year phase-in of the new standard for steel, industry sources familiar with the deal said. The aluminum demand was dropped, but with the caveat that it would be reconsidered in 10 years.
INTERNET SERVICES, E-COMMERCE
U.S. Democrats lost their bid to remove a provision that grants big internet services providers liability protections for third party content, House Speaker Nancy Pelosi said.
The Trump administration has agreed to drop language that would have allowed it to lower the $800 value threshold under which shipments can enter the United States tax free without an act of Congress, people familiar with the decision said.
The so-called “de-minimis” level benefits small business owners, but some Trump administration officials claim that it provides an unfair subsidy to Chinese firms selling goods to U.S. consumers through Amazon.com Inc Ebay Inc and other online platforms.