On May 29, Canadian Prime Minister Justin Trudeau introduced Bill C-100, the "Canada-United States-Mexico Agreement Implementation Act," into the House of Commons. This paves the way for ratification in Canada, which could take place before the parliamentary recess on June 21st. A number of news reports in the United States have noted that this hasty ratification may put congressional Democrats in a bind over making some changes to the text of the agreement before it goes to a vote in the United States. However, as CBC reporter Janyce McGregor aptly noted, Bill C-100 leaves some important room for Democrats to allow for changes to specific obligations in Chapter 20 on Intellectual Property Rights. Here's the relevant part of the implementing legislation:
(2) Subsection 30(3) of the Act is replaced by the following:
Regulations — Canada–United States–Mexico Agreement and WTO Agreement
(3) Without limiting the power conferred by any other subsection of this section, the Governor in Council may make any regulations that the Governor in Council considers necessary for the purpose of implementing, in relation to drugs, Articles 20.48 to 20.50 of the Canada–United States–Mexico Agreement or paragraph 3 of Article 39 of the Agreement on Trade-related Aspects of Intellectual Property Rights set out in Annex 1C to the WTO Agreement.
As a reminder, Articles 20.48 to 20.50 covers the Protection of Undisclosed Test or Other Data, and Biologics. This has been a hot button issue for Democrats who want to lower the 10 year exclusivity period for new biologic drugs that was agreed to in the USMCA. Currently, Canada has an exclusivity period of 8 years, and implementation of the USMCA as it stands would require changes to domestic regulations. For reference, Mexico's exclusivity period is 5 years (which will change as part of the implementation of USMCA), and the United States is 12 years.
This is certainly a creative insertion into the implementing legislation, which essentially allows changes to be made after the agreement is ratified. But is this enough flexibility to address all the concerns Democrats have aired? On issues of enforcement, labor, and environment, no such flexibility is outlined in the implementing legislation. However, it is unclear whether this absence will limit the ability of congressional Democrats to reopen the entire agreement to tackle these issues.
On labor and environment, it is likely that Democrats are more concerned with Mexico than with Canada, so any changes Mexico agrees to with the United States bilaterally may not matter for Canada. However, what would happen if Chapter 31 (state-to-state dispute settlement) is reopened? Presumably there is enough legal flexibility for Canada to make changes post-ratification, since these changes would be limited to the USMCA and have no effect on domestic regulations. If that is the case, why are some Democrats so concerned about early ratification?
As Trudeau faces a challenging election this fall, it makes sense that he would want to push the agreement through parliament now instead of waiting for the results of the federal election. It is not entirely clear what would happen to USMCA if he loses his majority. But Mexico began the ratification process today as well, and this might be more of an issue for Democrats in the end. Getting the deal ratified in Mexico will require its Senate to take up a vote in an extraordinary session this summer. Though President López Obrador cannot force a vote, his party currently holds a majority and is likely to support him. He has also reiterated his reluctance to reopen the agreement.
Given all this, how reasonable is the chance that changes will be made to the actual text of the agreement if we are to expect ratification to take place this year in all three countries? Does this mean that side agreements are the only option? If so, can the Democrats address their enforcement concerns on labor and environment by including language in the side letters that makes them subject to Chapter 31? The answers to these questions will largely depend on how substantive the changes demanded by the Democrats are. But I think there's a lot of room for creativity to get USMCA passed in all three countries before the year's end, if the political will is there.
Of course, what Canada and Mexico do may not be relevant in the end if the Trump administration aggressively moves to push the deal through Congress. Today, the administration took the first step in that process, by sending a Statement of Administrative Action to Congress, which allows the implementing legislation to be submitted in 30 days. Stephen Claeys suggests that the earliest the draft USMCA bill can be sent to Congress is probably July 9th.
