MEMA Industry News Editor’s Note: MEMA supports the United States-Mexico-Canada Agreement (USMCA) and is urging the U.S. Congress to pass the agreement without delay. The USMCA will provide economic certainty and opportunity for manufacturing growth in the United States and throughout the region. This economic certainty is essential to preserve and enhance vital North American supply chains for the U.S. automotive sector. That in turn allow U.S. suppliers to be competitive in the global mobility marketplace. Please contact Bill Frymoyer and Leigh Merino for more information.
The three trade ministers from the United States, Canada and Mexico are set to meet in Washington on Wednesday to discuss the deal to replace NAFTA, seven people familiar with the plans told POLITICO.
The meeting involving U.S. Trade Representative Robert Lighthizer, Deputy Canadian Prime Minister Chrystia Freeland and Mexican Undersecretary for North America Jesús Seade comes as the Trump administration is nearing a compromise with House Democrats to make changes to the USMCA.
Lighthizer has been negotiating with a group of nine House Democrats to address four main concerns involving the pact’s labor, environmental, enforcement and drug pricing provisions.
Any changes to the text would have to be approved by Canada and Mexico before the Trump administration can finalize the agreement and send it to Congress for a vote. Canada is expected to accept changes to the text without issue.
But it’s not clear whether Mexico will accept new provisions that target how the nation enforces the agreement, particularly when it comes to labor standards. Some Mexican officials are increasingly concerned that Democrats and labor leaders are pushing for changes that would be a threat to the country’s sovereignty.
They also worry that any demands that go too far would force Mexico to reject a compromise between Democrats and Lighthizer, further holding up ratification of the pact.
Still, the upcoming meeting is the latest sign that talks between Democrats and Lighthizer are in the final stages. A meeting late last week between Lighthizer, House Speaker Nancy Pelosi and House Ways and Means Chairman Richard Neal (D-Mass.) ended in an impasse that left both sides discouraged, multiple people familiar with the meeting said.
But discussions continued over the weekend, moods have improved and the two sides have sketched out the outlines of a “shaky” agreement, these people said.
“People are looking to firm the grip with something in writing,” one of the people said.
Pelosi, for her part, put out a statement Monday night saying a deal was “within range” but that she wants to see “our progress in writing from the trade representative for final review.”
USTR did not immediately reply to a request for comment.
Labor enforcement has been the main issue holding up an agreement between House Democrats and the administration. AFL-CIO has been pushing for a major upgrade to the deal that would give the U.S. almost unilateral authority to block goods at the border suspected of violating the agreement’s labor rules, according to people briefed on the talks.
The labor group’s initial proposal would have been similar to the Lacey Act, a law passed in 1900 that allowed U.S. customs officials to seize imports of illegally harvested plants or animals.
Organized labor has been seeking a more direct way to hold countries accountable for violations of labor rules in trade deals after the U.S. lost its first — and only — formal labor trade dispute.
In that case, the AFL-CIO petitioned the U.S. to pursue action against Guatemala under the Central America Free Trade Agreement. But the slow-moving, nine-year dispute with Guatemala resulted in a defeat. Ever since, labor groups have advocated for an enhanced enforcement mechanism.
The Trump administration had tried to address some of those concerns in USMCA by changing the legal standard that resulted in the Guatemala loss and updating language in NAFTA so countries couldn’t block the formation of dispute panels. But unions complained that didn't go far enough.
USTR rejected the AFL-CIO’s initial proposal based on the Lacey Act as unworkable. Lighthizer is said to have agreed to have goods stopped at the border as a penalty, but he wanted it done as the result of arbitration between governments.
Mexico has insisted that it won't support any provision that would allow the U.S. to send inspectors inside its borders to look into facilities. Seade told Inside U.S. Trade last week that a process that would allow for Mexican goods to be blocked at the border is “just absurd.”
Seade has repeatedly told reporters during trips to Washington that he has made clear to Lighthizer what Mexico will and will not accept. A person close to the talks also confirmed to POLITICO that Seade has reminded Lighthizer as recently as this week that Mexico has already upheld its commitments under USMCA and will not accept “intrusive” enforcement measures.
“Certain sectors, including labor, are making certain statements sharing ideas that would be totally unacceptable for Mexico. So we’ve made clear: ‘It can’t go down that road,’” Seade said during a press conference with Mexican President Andrés Manuel López Obrador on Monday.
"Mexico has done a lot; it has done everything required," Seade said. "We’ve participated in a constructive way. Now, let’s turn the page and pass this."