As someone who has spent much of his career working on trade remedies in the context of goods, I am always intrigued when I see the concepts or language of trade remedies used in new and different context. Hence, when I stumbled on what appear to be trade remedy provisions regarding cross-border trucking in the USMCA, I could not help but be interested.
The provisions are found in Annex II to the USMCA, and allow the United States to limits grants of authority to Mexican persons to offer cross-border trucking services outside the border commercial zones “if the United States determines that the limitations are required to address material harm or threat of material harm to US suppliers, operators or drivers”. A footnote clarifies that “material harm” means a significant loss in the share of the US market for long-haul truck services held by US persons caused or attributable to persons of Mexico.(link here)
This is of course a trade remedy in respect to services, which makes it fundamentally different from traditional trade remedies. WTO Members tried to negotiate trade remedies in the services sector (See GATS Article X) but failed to agree. More specifically, this appears to be a safeguard measure, as imposition of a remedy does not depend upon the existence of unfair practices such as dumping or subsidization.
On its face, the language in this provision, such as “material” harm, “threat”, and causation, looks similar to that of WTO trade remedies. But the standard is very different. Here, a significant loss in US market share to Mexican suppliers is in itself a basis for relief. By contrast, increased imports and declining US market share would be only the starting point in a serious injury determination under the Agreement on Safeguards, which would ask whether there was a “significant overall impairment” to the US domestic industry, looking at numerous factors concerning the state of the industry.
An interesting aspect of the provisions is the definition of industry. In a traditional safeguards investigation, one would look at harm to the domestic industry producing a like or directly competitive product to the imported product. Here, the US implementing legislation (link here), which is more detailed than the USMCA language, limits the “US long haul trucking services industry” to US cross-border trucking, rather than looking at the state of US trucking as a whole. Further, it allows injury to be assessed in relation to a “specific submarket” of the US market. It is not clear to me whether this refers exclusively to geographic submarkets, or whether it might also cover product-associated markets (e.g., tankers, livestock carriers, etc).
If the substantive conditions for measures differ from safeguards provisions in the goods sector, the procedural provisions are more familiar. Investigations are conducted by the US ITC on the basis of a petition from the domestic industry (including labor unions), or can be self-initiated by the Executive, but also by the House Ways and Means or Senate Finance Committee. There is public notice, information gathering, APO treatment for confidential information, a hearing, and a report and recommendations to the President, who must provide relief in the face of an affirmative determination unless he determines it is not in the national economic or security interest to do so. Relief involves denying, revoking or limiting grants of operating authority.
It will be interesting to see how often, and how soon, this provision will be used, and how the US ITC will deal with this new responsibility.
