This is a guest post from law prof Kathleen Claussen:
The USTR fact sheet released in late August previewed that the USMCA labor provisions would be the “strongest of any trade agreement.” To evaluate this statement, rather than look at the agreements in force or the status quo on the NAFTA (the North American Agreement on Labor Cooperation (NAALC), which was a side agreement to the NAFTA), the better point of comparison is the TPP Labor Chapter.
Putting to one side the widely-discussed increase in wages for certain auto workers in the Rules of Origin chapter, the draft USMCA labor text closely tracks the TPP with a small handful of notable exceptions. The most widely anticipated change is the addition of several footnotes to respond to the U.S.-Guatemala labor case panel report, the release of which post-dated the TPP negotiations. The U.S.-Guatemala panel report was criticized by Democrats and Republicans for having misunderstood some of the key language found in recent U.S. trade agreements, particularly the phrases “through a sustained or recurring course of action or inaction” and “in a manner affecting trade between the Parties.” USMCA adds “for greater certainty” footnotes each time those phrases appear:
8 For greater certainty, a “sustained or recurring course of action or inaction” is “sustained” where the course of action or inaction is consistent or ongoing, and is “recurring” where the course of action or inaction occurs periodically or repeatedly and when the occurrences are related or the same in nature. A course of action or inaction does not include an isolated instance or case.
9 For greater certainty, a “course of action or inaction” is “in a manner affecting trade or investment between the Parties” where the course involves: (1) a person or industry that produces goods or provides services traded between the Parties or has investment in the territory of the Party that has failed to comply with this obligation; or (2) a person or industry that produces goods or provides services that compete in the territory of a Party with goods or services of another Party.
The same footnotes appear in the environment chapter, although they do not appear in all chapters that use the “manner affecting trade” phrase (see, e.g., Article 27.8 on Anticorruption) – perhaps that will be changed in the scrub.
It is unsurprising that negotiators sought to clarify rather than change these politically delicate (May 10) phrases, especially since those phrases appear in TPA. It remains to be seen whether this additional language will help if any disputes materialize under this chapter. At least the “manner affecting trade” clarification should help claimant parties reach the necessary evidentiary threshold more easily than the U.S.-Guatemala panel permitted.
Apart from some small changes in the labor chapter on the process for consultations in potential labor disputes, as Simon noted, the state-to-state dispute settlement chapter, applicable also to labor disputes, looks pretty much the same as in the past. Improvements to the dispute settlement mechanism could enhance the enforceability of labor and other trade-plus provisions – a central outstanding criticism of Democrats. There may still be an opportunity to make important procedural modifications in the drafting of rules of procedure down the road.
In addition to these “for greater certainty” footnotes, three new articles feature prominently covering violence against workers, migrant workers, and sex-based discrimination in the workplace. The article on forced labor was also strengthened from the version in the TPP draft text to say that the parties “shall prohibit” (rather than “shall . . . discourage”) importation of goods produced by forced labor. Presumably, these changes were facilitated in part by the limitation of the agreement to Mexico and Canada and the exclusion of the Asian partners that were the focus of considerable labor-related attention in TPP (e.g., Vietnam, Malaysia). Not all is new, though; for example, the USMCA labor chapter does not include a corporate social responsibility article like that which appeared in TPP. (It appears that article may have just been moved to the end of the Investment chapter - Art. 14.17).
A final notable feature is the annex requiring Mexico to make a series of labor law reforms by January 1, 2019, or risk delaying the entry into force of the agreement. Still, just as the problem in the U.S.-Guatemala case was not the law on the books but rather its successful implementation and enforcement, it will take more than the passage of legislation to make these provisions effective in achieving the goals of labor advocates.