House Agrees to Amended USMCA

House Agrees to Amended USMCA

On Tuesday morning Dec. 10, 2019, House Democrats and the Trump Administration announced an agreement to move forward with the U.S-Mexico-Canada Trade Agreement (the USMCA). The announcement comes after more than a year of deliberations over the trade deal that is set to replace the North American Free Trade Agreement (the NAFTA). The last few months in particular have seen extensive negotiations over the USMCA as Democrats' sought improvements in certain areas including enforcement, labor rules, environmental protections, and prescription drugs.
 
Enforcement
The Democrats had long expressed concern over perceived weaknesses and possible delays in the original USMCA's enforcement mechanism. The agreement announced Tuesday morning removes the language that allowed a responding party to block the formation of a dispute settlement panel. The new deal also contains, for the first time ever in a trade agreement, rules of evidence, which will be helpful to participating countries when litigating fact-intensive disputes.
 
Labor Rules
House Democrats also demanded more progressive labor rules before letting the USMCA come to a vote. The changes made by Democrats to the USMCA's labor rules are intended to strengthen rules that have historically proven difficult or nearly impossible to enforce. Certain language has been removed that hampered U.S. efforts to prove trading partners are not fulfilling on their commitments to protect workers from violence. Furthermore, the USMCA now contains a presumption that a labor violation affects trade and investment; a Party defending against an alleged labor violation will be required to prove otherwise.
 
In addition to strengthening labor rules, Democrats have also successfully championed the need for mandatory, robust monitoring of those rules. The USMCA now provides for an interagency committee that will monitor Mexico's labor reform as well as the country's compliance with labor obligations. In addition to the monitoring committee, the USMCA has established labor attachés that will be based in Mexico to provide information about the labor conditions in Mexico. The Democrats also successfully steered the USMCA away from the ineffective state-to-state dispute settlement system for conflicts regarding a state's failing labor practices. Instead, the revised agreement contains provisions for a more robust labor-specific enforcement mechanism.
 
Environmental Protection
The revised USMCA advances Democratic insistence on strong, high-standard rules for environmental protection. Like the rules regarding a labor violation, the USMCA now contains a presumption that an environmental violation affects trade and investment and a challenging government will have the burden of proving otherwise. All parties are now required to adopt, implement, and maintain seven multilateral environment agreements (MEAs), and those MEA commitments are to be prioritized when meeting other trade agreement obligations.
 
 
Prescription Drugs
One of the biggest contentions of Democrats with the original USMCA was a provision that worked to shield so-called biologic drugs from cheaper generic competitors for 10 years. Democrats tended to perceive this provision as dangerous to innovation and harmful to consumers. The revised agreement has removed the 10 years of exclusivity provision as well as a provision that would have legitimized the practice of "patent evergreening" in which pharmaceutical companies acquire hundreds of patents that relate to a product so as to maintain commercial advantage on that product.
 
The revised agreement also eradicated a provision that required three additional years of exclusivity for clinical information submitted in connection with news uses of previously-approved pharmaceutical products.
 
While the Democrats fought hard in the last months of negotiation to push amendments to the USMCA, Democrats and Republicans alike prepared to be satisfied with the revised trade deal, which is expected to be signed by all three countries Tuesday. House Speaker Nancy Pelosi described the agreement as "a victory for America's workers," President Trump described the deal on twitter as "Good for everybody," and U.S. Trade Representative Lighthizer believes the deal to be "historic," and will serve as a "model for American trade deals going forward."