Congressional Committee Leaders Tell Tai USMCA Enforcement Insufficient

The top Republican on the Senate Finance Committee and that committee's chairman, as well as the top Republican on the House Ways and Means Committee, urged the deputy U.S. trade representative to press Mexico and Canada on market access issues for the energy and agricultural sectors, and the senators also complained about barriers for the telecom, pharmaceutical and television industries in either Mexico or Canada. Deputy USTR Jayme White is meeting with Canadian and Mexican counterparts this week.

Finance Committee Chairman Sen. Ron Wyden, D-Ore., and Sen. Mike Crapo, R-Idaho, on Jan. 12 wrote, "We appreciate that USTR has initiated two cases under the Rapid Response Mechanism to address labor violations in Mexico and successfully litigated Canada’s failure to properly allocate its dairy tariff-rate quotas. Yet we remain concerned that Canada and Mexico continue to ignore many other critical USMCA obligations. To that end, we are highlighting a number of outstanding issues where USTR must ensure that the United States gets what it bargained for, including by taking enforcement actions if necessary."

They said that Mexico's implementation of its labor law is uneven "and in many cases not progressing rapidly enough." They also noted that CBP issued a withhold release order to stop the importation of certain tomatoes grown in Mexico, and they are quite concerned about the presence of forced labor in Mexico.

Both the Senate Finance leaders and Rep. Kevin Brady, R-Texas, identified Mexico's regulation of genetically modified agricultural products as a violation of the treaty. "Despite agreeing to swiftly consider approval requests for biotechnology products through a transparent and science-based process and ensure its food safety measures are supported by science, Mexico has failed to properly consider or approve applications for innovative U.S. biotech products," the senators wrote. They also said that Mexican regulators are delaying approval of U.S. pharmaceuticals.

Brady wrote in his own Jan 12 letter, "On October 20, 2021, following a meeting with his Mexican counterpart, [Agriculture] Secretary [Tom] Vilsack announced that Mexico would not move to block imports of GMO from the United States. We urge you to continue to press Mexico to confirm this commitment."

The senators said USTR must keep an eye on Canada's implementation of the panel decision on dairy TRQs (see 2201040041), as well as its milk pricing and export surcharge policies.

White reported after meeting with Canada's deputy trade minister, David Morrison, that they talked about the allocation of dairy rate quotas.

Brady complained that the Mexican Ministry of Energy canceled 1,866 permits for the import and export of gasoline, diesel, LP gas, jet fuel, fuel oil and crude, which hurts U.S. companies trying to operate or open gas stations in Mexico. Senators complained that Mexico is working on passing a constitutional amendment that would eliminate an independent regulator for telecommunications. They note that the treaty requires an independent regulator, which they say is critical to having a competitive market.

The senators complained that Mexico's government is preventing the use of trademarks for U.S. brands exporting food to Mexico that they say is unhealthy. The leaders from both chambers complained about a proposed digital services tax in Canada. The senators also complained that Canada has not followed through on its promise to allow home shopping networks from the U.S. to broadcast in Canada.

White said he expressed concern about Canada's proposed DST, and that it's important that Canada meets its USMCA commitment on home shopping broadcasts. White said both he and Morrison want to address climate change, fight forced labor and counter non-market practices. He said they discussed bilateral steel trade, and that they will collaborate on these issues.