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House Announces USMCA Agreement

Dec. 10, 2019


Earlier today (December 10, 2019), the Speaker of the House Nancy Pelosi and Chairman of the House Committee on Ways & Means announced support for the USMCA, the U.S.-Mexico-Canada Free Trade Agreement, popularly known as the new NAFTA or NAFTA 2.0. The agreement overcomes largely Democratic opposition to the pact by improving the enforcement mechanisms built into the text. These include the removal of language that would have allowed a party to block the formation of a dispute settlement panel and new rules of evidence to be used in dispute settlement.

The revised agreement also includes stronger rules on the enforcement of labor laws. One important point is that the agreement creates a presumption that a labor violation affects trade. This was a sticking point after the U.S. failed in its effort to enforce the labor provisions of the CAFTA-DR in a dispute with Guatemala. The new text also includes a provision for labor compliance verification by independent experts.

On the environment, the text creates a similar presumption that a violation affects trade. The agreement also contains a commitment that the members adopt and implement seven multilateral environmental agreements with the understanding that others may be added. Finally, the House announced a new verification mechanism to ensure that flora and fauna are legally harvested and taken in Mexico, which may affect the ongoing trade dispute over the extremely endangered vaquita.

Finally, the House removed several provisions that required additional protections for prescription drugs, including a requirement for at least 10 years of exclusivity for biologics, which are described as "some of the most expensive drugs on the market."

The Ways & Means announcement is available here.

Before the USMCA can become law, the Administration must present to Congress an implementing bill. House Ways & Means may mark up the bill before a vote by the full House. If the House approves, the bill will go the Senate, where it is expected to pass after review by Senate Finance Committee. Once passed in the Senate, the bill will go to President Trump for his signature. 

Shortly after passage, Customs and other affected agencies will have to publish proposed regulations.