Trade Groups From Mexico, US Lobby for USMCA Ratification, Worry Threatened Tariffs Will Become Reality

Trade groups that are lobbying House members to ratify the new NAFTA say they are trying to talk through concerns, and the National Association of Manufacturers' representative said she's seeing positive momentum.

"We believe this can and absolutely will get done this year," said Linda Dempsey, NAM's vice president of international economic affairs policy.

"We definitely failed to communicate the success of NAFTA," said Sergio Gomez Lora, CEO of Mexico's Business Coordinating Council's U.S. operation. "We are paying the price today."

Gomez Lora and Dempsey were speaking on a panel called "Slowdowns, Tariffs, and the USMCA: Growing Cross-Border Trade in a Dynamic Environment" at the Wilson Center's Mexico Institute program June 20 on building a competitive U.S.-Mexico border.

Gomez Lora said his group has spent a lot of time this last month talking to Congress members who are concerned about how the new NAFTA, known as the U.S.-Mexico-Canada Agreement, will be enforced. He said they've had more than 70 meetings with House member offices "explaining the level of ambition in the labor reform."

"Enforcement, by the way, is a very logical concern," he said. However, he said, if the parties are able to "correct the couple of flaws" in the way the state-to-state dispute settlement system worked under NAFTA, the agreement will be enforceable. "If a future administration in Mexico would like to backtrack from the labor reforms and the USMCA in enforcement, it would not be possible."

Gomez Lora said the state-to-state dispute resolution system could be solved if countries agree to fill their panel rosters and agree that once a country complains, the system is engaged automatically. He said this could be done without reopening the text.

With regard to biologics, another area where Democrats say the text needs to be amended, he said: "This is a battle Mexico lost at the negotiating table. We are very attentive of what Congress decides to do." However, he said, it's very important not to unravel the core text, because there would be a lot of stakeholders in Mexico who would raise their hands for fixes if the text were reopened.

Panelists talked about other aspects of the administration's trade policy that are as significant as -- or more salient than -- the rewrite of NAFTA.

Gomez Lora said the specter of tariffs on Mexican exports to the U.S. over migration "attacks the heart of USMCA. One of the main elements this agreement does for us is the certainty." He added: "At some point, this issue of the tariff threats has to be addressed, because if not, we will not be able to reap the full benefits of USMCA."

Fellow panelist Lance Jungmeyer, president of the Fresh Produce Association of the Americas, said that while there is some good news at the border -- new cold facilities and additional capacity for non-intrusive inspections -- his industry is facing higher costs because of the end of the suspension agreement on Mexican tomatoes. Since May, importers are paying 17.5 percent duties on Mexican tomatoes. Moreover, the specter of tariffs on Mexican imports in response to immigration issues is a cloud hanging over everyone.

Panelist Gerry Schwebel, executive vice president of Laredo, Texas-based International Bank of Commerce, said Congress needs to clarify that the president does not have the authority to implement tariffs on countries under overly broad national emergency and national security guidelines. If that isn't fixed, he said, "nobody will want to do business with us."