International Economic Law and Policy Blog

Tim Scott's Trade Plans

The second Republican presidential primary debate is tomorrow. It would be great if there were some questions about trade policy, and maybe because Fox Business is one of the hosts, economic issues such as trade will be on the agenda. In the meantime, here are a few more details on GOP presidential candidate Tim Scott's trade policy views, from his recently released economic plan:

- "I’ll stop China from buying up our farmland"

- "I will take back our vital supply chains from China and the six-figure jobs they’ll bring with them.

o Our nation has lost millions of manufacturing jobs and closed almost 100,000 plants and factories in just the last quarter-century.
o I will work with Congress to further expand “Made in America” requirements in targeted sectors that are crucial for our national security, and where government has a thumb on the scale anyway.
▪ Medical
▪ Microchips
▪ Minerals
▪ Military technologies and defense-industrial base"

- "I will avoid blunt trade wars with our friends and allies that hurt consumers and set us back in the mission of isolating China. If we want to isolate China, we need to hold our friends close and have free and fair trade with our allies that protects both our American jobs and our alliances at the
same time."

There was also this from an interview with the Washington Examiner:

Sen. Tim Scott (R-SC) said China should be stripped of its “developing nation” status, an international designation that grants it special privileges and flexibility over the United States, as a means of ensuring the U.S. is not put at a disadvantage in trade.

Scott, who is vying for the Republican nomination for president, outlined some of his economic vision during an interview this week with the Washington Examiner. In response to a question about what the trade and tariff policy of a Scott administration would look like, he noted that China is able to receive perks in the international economic system because it is still designated as a developing country.

“Their developing nation status allows them to have an unfair advantage over our economy,” the 57-year-old South Carolina senator said.

...

For instance, the WTO provides countries with the status longer periods of time to meet certain financial and trade obligations. Additionally, because of the designation, the World Bank gives Beijing billions of dollars’ worth of loans despite the country’s income level otherwise making it ineligible for such funds, according to the Wilson Center.

Scott mentioned stripping China's developing nation status as an alternative to 10% across-the-board tariffs, which former President Donald Trump has floated recently. Scott said to impose such a regime “is to actually tax the American people and increase the prices of everything that we need.”

...

Scott noted that targeted tariffs — that is, imposing tariffs strategically and not in the blanket sense like Trump has proposed — have been effective in the past.

Some Ideas for the Future of Trade

Many people consider the present of trade to be a bit unpleasant, so it's natural to look towards the future of trade. I was part of an effort to do so at the Baker Institute last October, and you can watch the event here. There's now a book with all of the contributions. The focus was on China, the WTO, and USMCA, and there was a good mix of perspectives and topics.

My contribution was entitled "Major threats to the WTO and the world trading system", and here's an excerpt where I tried to get creative in thinking about the problem of proliferating FTAs and how the WTO could do more here (some parts of it are more realistic than others!):

Defragmenting the System Through a Greater Role for the WTO

While the full range of political and economic problems with FTAs cannot be resolved as long as governments choose to pursue them, they can be lessened by enhancing the WTO's role here. As a variation of the old saying, "if you can't beat 'em, join 'em," what might be useful for multilateralism here is, "if you can't beat 'em, make 'em join you," i.e., incorporate them more fully into your own rules and institutions. The following are some specific suggestions for expanding the WTO's role.

            First, even with the improved transparency brought about by WTO oversight, it can be hard to track developments with these agreements after they are in effect. Some countries provide short readouts of meetings that have been held, but the details are limited. It is not clear if this means not much is happening under these agreements, or that governments are simply not telling the public what is happening. There are few formal complaints brought under these agreements, but does that mean they are not being enforced or that enforcement is being done in a more informal way? What is the extent of compliance with these agreements? Are FTA preferences even being utilized?[1] To what extent are the parties updating them over time? With some exceptions, such as the recent New Zealand-China FTA upgrade, we do not hear much about these issues and the gaps in public knowledge are quite large.

            The lack of transparency that has characterized these agreements can be ameliorated by relying on the WTO Secretariat to disseminate information about the activities of governments pursuant to these agreements.   The WTO should host FTA documents such as communications by governments and official meeting minutes in its DocsOnline database and translate them into the three WTO working languages. Access to these documents is crucial for allowing other governments, businesses, NGOs and the general public to understand the work that is being done under these trade agreements.

            Of course, a productive dissemination of documents would require governments to improve their efforts at promptly reporting on FTA activities. The short readouts that are the norm today should be replaced by publication of the full set of documents exchanged between governments during FTA meetings (to the extent that confidentiality concerns permit).

            Second, it is not clear to what extent regular meetings are actually held with some FTAs, and the WTO should try to facilitate this by providing space for meetings pursuant to FTAs. If China and New Zealand, for example, need to discuss something in their FTA, the WTO building should be an option. Geneva is host to the trade delegations of many governments. In at least some cases, it would make sense for government officials in the Geneva trade missions to meet in the WTO building rather than flying to each other's capital. This does not mean that the parties can't meet outside of Geneva on their own (or virtually, which we have all gotten better at during the pandemic), but it simply provides it as an option. Geneva is not convenient for everyone, of course, and it may be that the trade officials who need to meet are not in Geneva, but hybrid meetings taking place in Geneva with experts from the national capitals participating virtually is another option.

            A broader plan to enhance WTO oversight would be to set up smaller, branch Secretariat offices around the world that governments could utilize. Geneva is a long trip for some countries, and there are times when governments from a particular region need to meet and could do it more easily nearby. For example, there could be an Asia Pacific Secretariat branch, North and South America branches, an Africa branch, and a Middle East branch, possibly located in existing regional secretariats such as ASEAN and the ACFTA.

            Finally, the WTO could also provide administrative support for FTA disputes. Unlike with FTAs, there is a whole institutional process for dispute settlement at the WTO. FTAs use ad hoc FTA panels that have to work out a litigation process in each dispute with limited institutional support, and make use of one-time panel assistants. Instead of reinventing the wheel each time, FTA panels could rely on the WTO Secretariat and its existing process, which has been refined over many years of frequent use. Relying on the WTO Secretariat would also eliminate the need for each FTA to come up with a list of possible panelists, which has proven difficult at times.^[2] The WTO maintains an indicative list of panelists, and FTA parties could make use of it.

 

[1] Anna Jerzewska, "Preference Utilisation and Customs Data: The Missing Pieces of the FTA Puzzle," ECIPE, July 2019, https://ecipe.org/publications/preference-utilisation-customs-data-fta/ ("there is a pressing need to create a centrally-held, WTO-driven and standardised database of utilisation data for trade agreements. This would allow for a more systematic review of how current trade agreements have been implemented and are applied.")

[2] For problems with putting together NAFTA rosters of panelists, see: Simon Lester, Inu Manak, Andrej Arpas, "Access to Trade Justice: Fixing NAFTA's Flawed State-to-State Dispute Settlement Process," World Trade Review, Volume 18 , Issue 1 , January 2019 , pp. 63 - 79, https://www.cambridge.org/core/journals/world-trade-review/article/abs/access-to-trade-justice-fixing-naftas-flawed-statetostate-dispute-settlement-process/833E151474CD2198068A6EB094759545

Katherine Tai on Chinese Non-Market Practices and WTO Dispute Settlement Reform

At a CSIS event today with U.S. Trade Rep. Katherine Tai and WTO DG Dr. Ngozi Okonjo-Iweala, entitled "Why the Developing World and All of Us Need Trade and the WTO," Tai spoke about a number of issues related to the WTO. I'm going to focus here on two: (1) China's non-market practices and (2) WTO dispute settlement reform.

Non-Market Practices

Here's what Tai said about non-market practices in her prepared remarks:

Our next priority is continuing to rebuild the WTO’s ability to negotiate new rules for the new challenges that we face. 
 
This won’t be easy or comfortable.  But it is necessary to create the rules and mechanisms we need for the times through diplomacy and negotiation between Members, not through litigation between their hired guns. 
 
Let me explain what I mean.  For example, consider the massive global economic disruptions from non-market policies and practices that are contrary to the basic rules and norms that we all agreed to. 
 
Things like industrial targeting or discriminatory interventionist activities of state-owned enterprises.  This is how certain Members are continuing to skew the playing field, strategically and systematically. 
 
They seek to dominate key industrial sectors, promote national champions and discriminate against foreign competitors, massively subsidize key sectors, and manipulate cost structures. 
 
And as they become dominant suppliers for many important goods and technologies, they create supply chain concentrations and vulnerabilities—which in turn become levers for economic coercion. 
 
These practices are unfair and disadvantage workers in developing and developed countries alike, the very people the system should empower and lift up.  So, we need to have real conversations about how the WTO can address these issues.

During the discussion that followed, the moderator asked Tai this question: "You talked about, I heard in your remarks, you want to rebuild the ability for the WTO to address non market policies and practices. Could you say a little bit more about this?" Tai responded as follows:

I think that there needs to be a recognition when we are taking on, actually all of our efforts in trade right now, to understand what the current global economic situation is. And I think that if you've not been paying very close attention, I think that there generally can be an assumption that, well, there's a lot of trade going on, that therefore the system must be working the way that we envisioned it. And it must be very fair and even and free. But in fact, that's not the case. I really appreciated Dr. Ngozi's recitation of the history. I think that there's probably more of this that we need to do in terms of looking at what has happened in the trading system in the last 25-30 years. The entire global economy is different, just if you go through the numbers and you look at GDP around the world. But the balance of wealth is different as well. There are more members in the WTO today than there were when it was done in 95. And then the members themselves have gone through quite a bit of evolution. The United States economy today is very different from what it was in 95.

Similarly, let's take non market practices. We are talking about China. The Chinese economy is very, very different today than it was in 1995. And I think it's a mixed picture. There's some incredible poverty elimination, but the externalities and the impacts of these Chinese economic policies on the rest of the world, including on our economy, including on the pressures and the norms of the WTO, are things that we need to be looking at. And I think that a large part of this reform agenda is about actually committing and investing our energy, to be honest with each other, to look at the facts honestly, to come to the conversation with an open mind. And then to actually grapple with, how do we restore those foundational principles and values, which ... we still very much stand by in terms of the international rules based order, an order that is based on rules and law rather than might and power. But I think that where we are today, we've actually deviated quite a bit from what we were trying to build. And it's understanding that delta and having the conversations about it that is actually going to lead us to a constructive process around that.

In reaction, I want to point to paragraph 46 of China's Accession Working Party Report, which states:

46. The representative of China further confirmed that China would ensure that all state-owned and state-invested enterprises would make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability and availability, and that the enterprises of other WTO Members would have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions. In addition, the Government of China would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises, including on the quantity, value or country of origin of any goods purchased or sold, except in a manner consistent with the WTO Agreement. The Working Party took note of these commitments.

If I were drafting a WTO provision on these issues that had general principles to be applied to all, I would probably do it differently than it was done in paragraph 46. But in the context of a specific provision that applies only to China, I think it was done pretty well. Of course, to see how it actually works in practice, somebody would have to test it out in a complaint against China, and I'm not sure why that hasn't happened yet. The U.S. could do this, but so could the EU or Canada or someone else, or a whole group could do it together. While new rules in this area could be useful, I think it's a mistake to ignore the existing rules that were designed specifically for the Chinese non-market practices problem, or at least one aspect of that problem.

Dispute Settlement

Here's what Tai said about dispute settlement in her prepared remarks:

Finally, I want to highlight dispute settlement reform. 
 
The goal here is not restoring the Appellate Body or going back to the way things used to be.  It is about providing confidence that the system is fair.  And revitalizing the agency of Members to settle their disputes. 
 
The system was meant to facilitate mutually agreed solutions between Members.  But over time, it has become synonymous with litigation—costly and drawn out, and often only accessible to Members who have the resources to foot the bill. 
 
The system has also suffered from a lack of restraint.  The Appellate Body systematically overreached to usurp the role of Members themselves to negotiate and create new rules.  And in so doing, it undermined the ability of all Members to defend their workers from harmful non-market policies.
 
For the last year, we’ve been actively participating in innovative and constructive discussions with WTO Members of all sizes—including developing country Members—to hear their concerns and solutions for a better system. 
 
We are thinking creatively and have come forward with concrete ideas that could promote fairness for all Members.  For example: 

• We should make practical and appropriate alternatives to litigation—like good offices, conciliation, and mediation—real options for the entire WTO membership.

• We should ensure that dispute panels address only what is necessary to resolve the disputes and resist the urge to pontificate.  And any corrections to reports or decisions must be limited to addressing egregious mistakes.

• We should end judicial overreaching and restore policy space so that Members can regulate and find solutions to their pressing needs, such as tackling the climate crisis or defending their workers’ interests from non-market policies. 

And we urgently need to correct WTO panel reports that have asserted that the WTO may second-guess Members’ legitimate national security judgements, something none of us ever intended.  This calls into question foundational principles of how far-reaching trade rules should be. 

She was then asked two questions about this issue during the discussion. The first question was: "What should the WTO dispute settlement system look like?" Tai responded as follows:

So let me say a little bit more about the process that is happening in Geneva. So we've described it in turn as an informal process, but I feel like that takes away from the importance of the process. So I don't really like that description. It's a, perhaps we can describe it as an organic process. We tried describing it as bottom up, but then you know, it's member driven and we said well, but you know, the members aren't at the bottom of this organization. So bottom up doesn't seem like quite the right term either.

I guess what I would say is, it's a pragmatic, organic and a constructive process that we are participating in, that we are supporting. ... We are asking, and we ourselves are asking of ourselves, for members to come to the table and to advance what we're calling an interests based negotiation and discussion. And that's as opposed to a position based or an end result based negotiation.

And I want to call attention to this process also because I think that this is a really important experiment and innovation that we are trying at the WTO. Usually what happens at the WTO, and we lived this at MC12, you show up, you've got all of these papers. They're all negotiating positions that have been put down. Imagine you've got 164 of them, and then you have to arrive at some kind of an agreed solution. And everybody's smart. And so they're all gaming, if this thing is what I'm aiming for, and what I can live with, and actually what I think is pretty good, in order to get that I'm gonna have to dial it all up by 100 and put that on the table and hope that survives the negotiation with 163 other members, right? When it's not positional, it's a very uncreative, a very constipated process. We don't think that we can afford to do that. And so that's the process, that's the kind of process that we're advancing, which is an interests based conversation.

So that's a long way of answering your question, which is to say, I don't have for you a picture that I can paint that this is the endpoint that I want to get to. Instead, what I'm endorsing is a process that is inclusive, so that when we get to the end of it, all of us, the US included, but our developing country partners, the big ones, the small ones, the frequent users, the members of the WTO who have never used the system, can look at the result and see their interests reflected in it.

The second question came from Gabe Cabañas of CFR, who asked:

Quick question for Ambassador Tai, prior to your time [at USTR], you had worked on the trade agreement within North America, USMCA. And I was just curious, looking at how the United States is using USMCA, specifically Chapter 31 for state to state dispute resolution systems, do you see this as, from the US perspective, as a potential model for dispute settlement within the WTO ... or even looking at other trade agreements within the world itself?

Tai responded as follows:

So Chapter 31, which is ... the formal dispute settlement procedures in USMCA, could they be a model for a revived WTO or reinvigorated WTO dispute settlement system? You know, you've hit on a really interesting aspect of the conversation that I think only the geekiest of the geeky lawyers ... will know but yes, we are using the USMCA dispute settlement procedures. Did you know that in all of our FTA dispute settlement chapters, there is no second tier? That we're able to resolve our disputes just with one tier? Now, I say that in a bit of a cheeky way knowing how attached the rest of the WTO membership is to that second tier, but you know, I just wanted to say I think that, let's think about what the purpose of dispute settlement is, right? It's right there in the name, you're helping the parties to the agreement resolve something between them that is creating friction and is creating a disagreement. And ultimately, because we are sovereign parties, what these mechanisms should be doing is helping to move us to the point where there is political will to address the problem.

And so in that sense, then, a dispute settlement system could look almost any way. I think it is really key to make sure that the form of dispute settlement fits the fuss and the relationship. And so we're very open, again, I don't have a specific template that I'm trying to impose on the conversation at the WTO, but I really want to endorse what Dr. Ngozi also mentioned which is, dispute settlement is still ongoing at the WTO. We are still getting sued, quite a bit. And our lawyers are still working long, long hours defending the United States and also looking at how we can use this system to help us motivate our partners to address our concerns. And that, at the end of the day, is what we need to have.

I can see the argument that, as a general matter, negotiations may struggle when too many countries present position papers, and each one is trying to game the negotiations to get to a desired outcome. But the negotiation on the WTO dispute settlement impasse right now is a bit unique, in that only the U.S. was so upset with the functioning of the system that it blocked appointments to the Appellate Body, which is the direct cause of the impasse. In these circumstances, I'm not sure how progress can be made until other WTO Members understand what exactly the U.S. wants, so these Members can decide whether they can live with the U.S. demands. Thus, I think we may need a concrete U.S. proposal here before we can get to a conclusion.

Would U.S. Dirty Steel Tariffs Be WTO-"Kosher"?

At the Atlantic Council's Transatlantic Forum on GeoEconomics event today, economics correspondent Stephanie Flanders asked U.S. Trade Rep. Katherine Tai about possible unilateral U.S. tariffs on dirty steel:

I think the issue has been for the EU, and I think Vice President Dombrovskis has made it clear, is that what you were looking for seems to go against WTO rules because you have been discriminating against a certain number of countries and you don't have a similar mechanism that the EU has for how it applies to its own companies. So I think this gets us to one of the discussions that we've had all through the day, there's a sort of disquiet in Europe with a US policy which seems to undermine the concept of a global rule based order. There's even a feeling that you can't do all the things that you're talking about within the WTO or even within the spirit of the WTO. Is that fair?

Tai responded as follows:

I appreciate the opportunity to explain the US point of view because I know that Brussels has been very effective in transmitting its side of the story. ... What I want to really emphasize is, I really bristle at this narrative that the United States would put forward a proposal that is WTO-inconsistent, because that calls into question ... our good faith as a WTO member. Let me put it this way, because I think that ... many people talk about the WTO, [but] not a lot of people have been to the WTO or participated at the WTO or represented their governments at the WTO.

The fact of the matter is that there is no WTO rabbi who sits and pronounces whether or not a measure that's being advanced by a WTO member is kosher or not. I think that when we put forward measures, we all try to ensure that we are working within the rules based order. In fact, I know that the Europeans are very, very proud of their carbon border adjustment mechanism and that it is a culmination of a lot of European based work and compromise in negotiations. But I also want to acknowledge and recognize that Europe's confidence that the CBAM is WTO consistent is indicative of the work that Europe has put in to design the system and Europe's confidence in terms of how it will defend the CBAM if challenged at the WTO, and we all know that there are members of the WTO right now who are looking at preparing to challenge the CBAM and the WTO. So whether or not you feel confident about the work you've done to design your system, [that] doesn't mean that it's not going to be challenged or you wouldn't have to defend it.

And so, I give you that background because I want to emphasize and make clear that the proposals that we have on the table and shared with Brussels are ones that we also we have designed to withstand WTO scrutiny, that we have our reasons for believing that we have abided by the WTO rules.

At the end of the day, in our negotiations, it became very clear that our levels of tolerance or our comfort level with different types of defenses are different on a Washington and Brussels basis. And that's very natural. We have adapted in the negotiations, as you must in negotiations, to try to come towards Europe in terms of its WTO argumentation and defense comfort.

On the EU CBAM, my take has always been that if you implement a CBAM in conjunction with equivalent domestic measures, it can be done consistently with WTO rules (or justified under an exception), although whether it actually will be consistent with the rules depends on the specifics of the implementation. In practice, the way this may play out is that the EU will adopt a measure, it will then be challenged successfully in a WTO complaint, and then the EU will modify it in a way that makes it consistent.

With regard to U.S. tariffs on dirty steel, while it is good to hear that the U.S. is trying to do this consistently with WTO rules, I'm not sure I see how it could be done consistently (or how it could be justified under an exception), and I'd want to hear more from Tai or someone at USTR on the specifics. Of course, it's easy to think of possible arguments that could be made, such as a defense under GATT Article XX(g). It's just hard, based on what we currently know about the potential measures, to imagine those arguments succeeding, although it would be great if we could hear more details about the current shape of the measures that are being discussed in the negotiations. I feel like Tai's explanations above perhaps suggests a "tolerance" for arguments that many people would reject, but maybe I'm reading too much into that.

Defending Globalization

Cato has a new project on "Defending Globalization," with a number of contributions so far and more coming. Here's the description:

Globalization faces renewed attention—and criticism. Like any market phenomenon, the free movement of people, things, money, and ideas across natural or political borders is imperfect and often disruptive. But it has also produced undeniable benefits—for the United States and the world—that no other system can match. And it’s been going on since the dawn of recorded history.

Scott Lincicome's introductory essay on the project is here: https://www.cato.org/publications/introducing-defending-globalization-new-cato-institute-project

And there are seven subject matter essays so far:

• Comparative Advantage, by Don Boudreaux: https://www.cato.org/publications/comparative-advantage
• Globalization Creates a Global Neighborhood, Benefiting All, by Deirdre McCloskey: https://www.cato.org/publications/economics-history-globalization
• The Dangers of Misunderstanding Economic Interdependence, by Dan Drezner: https://www.cato.org/publications/dangers-misunderstanding-economic-interdependence
• The Misplaced Nostalgia for a Less Globalized Past, by Daniel Griswold: https://www.cato.org/publications/misplaced-nostalgia-less-globalized-past
• U.S. Immigration Policy Lags Behind a Globalizing World, by David Bier: https://www.cato.org/publications/us-immigration-policy-lags-behind-globalizing-world
• Why Do We Need Trade Agreements At All?, by Simon Lester https://www.cato.org/publications/why-do-we-need-trade-agreements-all
• Globalization Isn’t Going Anywhere, by Scott Lincicome: https://www.cato.org/publications/globalization-isnt-going-anywhere

My contribution is directed towards the libertarians who are pro-free trade but anti-trade agreement. Some of you may be unfamiliar with that type of thinking, but this statement from Ron Paul in 2008 is a good example:

I consider myself the strongest advocate of free trade. I don't want any tariffs and I don't want any barriers. I want to really trade. But I just don't like the international government organizations, because that becomes managed trade for the benefit of some companies. So I'm not much into nor do I support WTO [the World Trade Organization] and NAFTA [the North American Free Trade Agreement] and all these agreements, because those are only tools for when you're being undermined, you go there to get your tariffs put on, to try to get fair trade, so to speak. But that's managed trade.

My piece tries to explain to this kind of free trader that trade agreements are, on balance, trade liberalizing.

How To Design a Subsidy Rule Carveout for Carbon Reduction Measures

Jennifer Hillman and Inu Manak have a new paper out called "Rethinking International Rules on Subsidies." In a nutshell, they argue that all the new subsidies being thrown around are likely to create difficulties in international economic relations, and some revised rules might help with that. One key aspect of their paper is figuring out how to distinguish "good" and "bad" subsidies, and making clear that certain "good" subsidies are permitted under the rules. For example, subsidies that "genuinely contribute to fighting climate change," such as "subsidies for renewable energy, carbon capture and sequestration, electric vehicles, and clean cooking stoves," would be permitted.

In terms of how to carve out these subsidies from the rules, they say:

Increased transparency should begin with making the notification process as easy and understandable as possible, with clear incentives for fulsome and timely notices. The WTO secretariat has begun that process through its shift to online tools, but more needs to be done, in conjunction with the SCM Committee, to ensure that all countries understand what they are required to notify and into which boxes their subsidies fall. A further incentive to notify immediately those subsidies that a country believes fall into the green box as non-trade-distorting (i.e., funds for basic research and development or disaster relief or the like) would be an agreement that subsidies notified as within the green box cannot be challenged at all or after a certain period of time, or until concerns over such subsidies have been raised and discussed at a meeting of the SCM Committee.⁸¹ That safe harbor from challenge could be agreed upon as part of the notification process even without an agreement on overall caps on industrial subsidies.

---------------------

81. This could be structured similarly to the now expired Article 8 provisions of the SCM agreement, which were considered nonactionable.

Footnote 81 refers to Article 8 of the SCM Agreement, which carved out several kinds of subsidies, including certain environmental ones:

8.2 Notwithstanding the provisions of Parts III and V, the following subsidies shall be non-actionable:

...

(c) assistance to promote adaptation of existing facilities to new environmental requirements imposed by law and/or regulations which result in greater constraints and financial burden on firms, provided that the assistance:

(i) is a one-time non-recurring measure; and
(ii) is limited to 20 per cent of the cost of adaptation; and
(iii) does not cover the cost of replacing and operating the assisted investment, which must be fully borne by firms; and
(iv) is directly linked to and proportionate to a firm's planned reduction of nuisances and pollution, and does not cover any manufacturing cost savings which may be achieved; and
(v) is available to all firms which can adopt the new equipment and/or production processes.

If we want to apply the Article 8 approach to carbon reduction subsidies, a key aspect is how to identify the subsidies for which legal challenges are to be limited. Here's a drafting suggestion from me for a basic Article 8-style environmental provision that identifies certain subsidies as non-actionable:

"Notwithstanding the provisions of Parts III and V, the following subsidies shall be non-actionable:

Subsidies that are designed, structured, and expected to operate with a primary purpose and impact of achieving a reduction in carbon emissions, and which do not have elements that are applied so as to afford protection to domestic production."

It's difficult to get the balance right here. I think you need some degree of scrutiny of the purpose and impact of a measure, so that it is not used as the basis for disguised protectionism, but exactly how much scrutiny is needed? I took a bit of language from the case law and a bit from GATT Article III to achieve the balance in a way that I think is reasonable, but I'm open to alternatives. One alternative is to try to get more specific about some of the details of the subsidies, but I thought relying on general principles might work better.

The IPEF Supply Chain Agreement: Commitments, Institutions, Labor, Monitoring, Security, and Consultations

I haven't been following the Indo-Pacific Economic Framework for Prosperity (IPEF) negotiations as closely as some other people have, but I see that the text of the IPEF's Supply Chain Agreement was released yesterday. I don't have any hot takes on all this, but here are a few things that jumped out at me.

Commitments

The parties make a lot of statements about what they intend to do in order to strengthen supply chains, including the following:

Article 2: Collaborating to Strengthen IPEF Supply Chains

...

2. The Parties intend to explore new ways and enhance existing efforts to improve the attractiveness of investment opportunities in IPEF supply chains.

3. The Parties intend to promote, facilitate, and encourage investment in: critical sectors; the production of key goods; the development, maintenance, and upgrading of physical and digital infrastructure; and transportation and workforce projects.

This may include:

(a) organizing investment missions and encouraging public-private joint efforts and other business matching activities to help enterprises identify potential partners in the economies of the Parties; and

(b) sharing expertise on project scoping, structuring, and implementation.

4. The Parties intend to foster improvements in logistics services and logistics infrastructure, as well as in the development of multimodal transport corridors, including by exploring the development, upgrading, or digitalization of ports, logistics hubs, roads, and freight railways.

5. The Parties intend to align guidance, procedures, and policies related to trade facilitation to the extent possible, and to share best practices to help enterprises benefit from such guidance, procedures, and policies.

...

The part about investments seems difficult to monitor and evaluate. I suppose we'll hear announcements about some new investments, and we can assume that the IPEF might have had something to do with them, but I'm not sure how much transparency there will be in relation to how the investments came about.

Institutions

The IPEF will involve some new institutions, such as the following on supply chains and labor:

Article 6: IPEF Supply Chain Council

1. The Parties hereby establish an IPEF Supply Chain Council composed of a relevant senior official from the central level of government of each Party.

...

8. The IPEF Supply Chain Council may, as decided by the Parties:

(a) explore opportunities to develop best practices in relation to policies, measures or actions impacting trade in critical sectors or key goods; or

(b) discuss any possible collaboration in relation to policies, measures, or actions to enhance the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity of IPEF supply chains.

9. The IPEF Supply Chain Council shall consider areas in which technical assistance and capacity building could increase the resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity of IPEF supply chains.

...

 

Article 7: IPEF Supply Chain Crisis Response Network

1. The Parties hereby establish an IPEF Supply Chain Crisis Response Network composed of a relevant senior official from the central level of government of each Party.

2. The IPEF Supply Chain Crisis Response Network shall:

(a) serve as an emergency communications channel to rapidly disseminate relevant information among the Parties during a supply chain disruption;

(b) facilitate cooperation on responses to supply chain disruptions, including the actions described in Article 12;

(c) consider the use of table-tops, stress tests, or similar exercises simulating a range of possible supply chain disruptions to provide the Parties with an opportunity to prepare and test strategies for responding to supply chain disruptions, and may share any conclusions from those exercises with the IPEF Supply Chain Council;

and

(d) assess past experiences and existing policies and procedures to facilitate preparedness for, and responses to, supply chain disruptions and to minimize any negative impact of supply chain disruptions on IPEF supply chains, and may share any conclusions from those assessments with the IPEF Supply Chain Council.

...

Article 8: IPEF Labor Rights Advisory Board

...

2. The Parties hereby establish an IPEF Labor Rights Advisory Board composed of three representatives for each Party: (a) a senior official from the central level of government who is responsible for labor matters; (b) a worker representative; and (c) an employer representative. Each Party shall invite, consistent with its domestic laws and regulations, worker and employer organizations in its territory credentialed al the most recent ILO International Labour Conference to select the Party's worker and employer representatives, respectively, for the Board. Such worker and employer representatives may participate in the Board only if they are subject to appropriate confidentiality requirements consistent with the requirements set out in Article 13.

Labor

The labor provisions mirror the USMCA in the sense of dealing with labor practices in specific facilities, but they don't have the USMCA's enforcement mechanisms:

Article 9: Addressing Facility-Specific Labor Rights Inconsistencies

1. For the purposes of this Article, subject facility means a facility that is located in the territory of a Party and operated by an enterprise that is not a microenterprise.

2. The Parties recognize that labor rights inconsistencies in the economy of one Party can affect supply chains in the economy of another Party and recognize the critical role business practices play in protecting labor rights across IPEF supply chains.

3. Each Party intends to establish or maintain, consistent with its domestic law, a reporting mechanism to receive, including through electronic means, allegations of labor rights inconsistencies at subject facilities located in the territory of another Party, in accordance with this Article.

Monitoring and discussion

The commitments that have been made will be subject to monitoring on the basis of self-reporting:

5. Each Party shall provide to the IPEF Supply Chain Council, annually or as otherwise decided by the Council, a written report on its efforts lo implement Articles 2 through 5 and 11.

These reports will then be discussed in the institutions:

7. The IPEF Supply Chain Council shall meet in person or virtually on an annual basis, or as otherwise decided by the Council, to:

(a) review and discuss each Party's written report provided pursuant to paragraph 5;

(b) establish teams to develop Action Plans providing recommendations to increase the resilience and competitiveness of critical sectors or key goods from among those notified by at least three Parties in accordance with Article 10;

(c) review and discuss Action Plans submitted to the IPEF Supply Chain Council;

(d) review and discuss any labor rights concerns and recommendations of which it is informed by the IPEF Labor Rights Advisory Board pursuant to Article 8.7; and

(e) discuss opportunities to support skills and workforce development activities.

A key thing they are looking for with all this monitoring is "vulnerabilities":

Article 11: Monitoring and Addressing Supply Chain Vulnerabilities

1. Each Party intends to employ an evidence-based and data-informed approach to consider its supply chain vulnerabilities and to monitor import dependencies, prices (where appropriate and feasible), and trade volumes of its critical sectors or key goods.

...

Article 12: Responding to Supply Chain Disruptions

1. In the event of a supply chain disruption, or in the event that a Party expects an imminent supply chain disruption, a Party may request an emergency in-person or virtual meeting of the IPEF Supply Chain Crisis Response Network, which should meet as soon as practicable but no later than 15 days after the date when the Party requests such a meeting.

The only exceptions are security exceptions

While the obligations do not seem particularly burdensome, there are security exceptions that can get you out of them:

Article 15: Security Exceptions

Nothing in this Agreement shall be construed to:

(a) require a Party to furnish or allow access to any information the disclosure of which it determines lo be contrary to its essential security interests; or

(b) preclude a Party from applying measures that it considers necessary for the fulfillment of its obligations with respect to the maintenance or restoration of international peace or security or for the protection of its own essential security interests.

Dispute settlement is just consultations

There is no dispute settlement chapter, but there are provisions on consultations:

Article 19: Consultations

1. If at any time a Party has concerns with another Party's implementation of a provision of this Agreement, the concerned Parry may request consultations through a written notification to the other Party's contact point, and shall set out the reasons for the request, and the other Party shall respond promptly in writing.

2. The concerned Party shall immediately provide a copy of the request to the other Parties' contact points.

3. If the concerned Party's request and the other Party's response do not resolve the concerns that are the subject of the request, consultations shall commence on a mutually decided date no later than 60 days after the date of receipt of the response.

4. The consulting Parties shall attempt to arrive at a mutually satisfactory resolution as soon as practicable.

Based on what I see in the obligations, including the existence of the security exceptions, I'm not sure there is anything too burdensome in the obligations, so we may not see a lot of concerns about compliance. If governments do have concerns, they can talk about it in consultations, but any resolution is going to be more power-based than rule-based because there is no adjudication mechanism. It's also not clear how transparent any of this will be. Will the request for consultations and response documents be made public? That would be nice, but I'm not counting on it.

--------------------------

So what will be the impact of this IPEF agreement (and other IPEF pillars still being negotiated)? How much investment will be generated? Will labor rights be improved? Will supply chain vulnerabilities be addressed? That's very hard to say, and at this point I'm not at all sure how assessments of these questions will be done.

Post by Joel Trachtman: Remaking Trade for Sustainable Development

Joel was having trouble posting, so despite my name as the author of the post, this is actually from him:

Some readers of this blog are old enough to remember when I resisted arguments to apply international environmental law in WTO dispute settlement.  My position then was based on a reading of the positive law of the DSU.  I was always open to changing the positive law.  If it was not clear then, it is clear now that it is urgent to do so—to incorporate more sustainable development (broadly understood) in the trade system.  More accurately, and importantly, to harness the trade system to address pressing global problems, including but not limited to climate change and biodiversity destruction.  I still believe that this is largely not properly a judicial task, especially under current law, but is an urgent “legislative”—treaty-making—task.  During the past couple of years, along with my wonderful partners, Dan Esty and Jan Yves Remy, I have been seeking to educate myself on the ways in which sustainable development may be advanced through the trade system, through The Remaking Trade for a Sustainable Future Project.  We have conducted 10 workshops and commissioned over 60 white papers, with hundreds of colleagues.  I have been reading your work on these topics, but also spending a lot of time engaging with people who work in other areas and apply other disciplines.  We consciously wanted to include people from different areas of sustainable development, to hear their views and understand their language—and then translate it into trade.  The record of that education is The Villars Framework for a Sustainable Global Trade System.  Have a look and let us know what you think.  We’re open to corrections and suggestions.  We’re open to help in advancing this agenda, and I know many of you have been working on this longer and more assiduously than I have.  (The clickable document has internal links that will only work if you download the PDF.  Google docs disables the links in the cloud for cybersecurity reasons.)

We’ll be presenting this project at the WTO Public Forum on Thursday, and more extensively seeking feedback in a meeting at the Villars Institute next weekend, with over 30 WTO ambassadors, and kick-off remarks by the WTO’s Ngozi Okonjo Iweala, UNCTAD’s Rebeca Grynspan and the ITC’s Pamela Coke Hamilton.  We are hoping that the zeitgeist is now with us, so that we can help make trade a tool for sustainable development, although I regret that it has taken so long to get here.   

The First CPTPP Panel Report

The first CPTPP panel report, in the Canada - Dairy TRQs case, was just circulated. A case on similar issues has already been litigated under the USMCA, and a new USMCA case is currently being litigated.

At this point, I have just two small things to note about the panel report.

First, there was some disagreement about the role that the prior CUSMA (i.e. USMCA) panel report on similar issues should play here:

49. ... New Zealand contended that the decision by the Canada-United States-Mexico Agreement (CUSMA) panel in Canada –Dairy TRQ Allocation Measures is “highly pertinent” to this Panel’s determination, given the nearly identical provisions on limiting access to an allocation to processors (the “Processor Clause”) in the CUSMA and the CPTPP.³² Canada responded that the CUSMA dairy panel determination is both not relevant to this Panel’s interpretation of the CPTPP Processor Clause and is flawed.³³ Australia, as a third-party participant, agreed with New Zealand that the CUSMA decision is highly pertinent because the obligation with respect to processors is identical in the two treaties, and because of the need to avoid contradictory decisions.³⁴ Another third party, Japan, cautioned the Panel to ensure that its decision was made in reliance on VCLT Articles 31 and 32.³⁵

50. The Panel took note of the CUSMA panel report and found it to be informative, but notes that the CUSMA report is not binding on the Panel, nor have any of the provisions in CUSMA been incorporated into the CPTPP. The Panel conducted its own assessment of the claims made under the CPTPP following the requirements of Article 28.12(3) of the CPTPP to render determinations in accordance with Articles 31 and 32 of the VCLT. ...

So you have New Zealand and Australia saying the CUSMA panel report is "highly pertinent"; Canada saying it is "not relevant"; and Japan saying rely on the VCLT. Out of that mix, the panel reached what seems like a middle ground by finding that the CUSMA report was "informative," although "not binding."

Second, there was a separate opinion/dissent in this report, with one of the panelists saying he/she would have found violations under two additional provisions.

What if the Clinton Administration Hadn't Agreed to China's WTO Accession?

In recent years, I've frequently heard the argument that the Clinton administration made a mistake by allowing China to join the WTO. The specific actions here are the Clinton administration's completion of a bilateral deal with China in 1999 (which paved the way for other governments to sign their own bilateral deals with China) and the U.S. legislation in 2000 to grant permanent normal trade relations to China. This all led to China's WTO accession in December 2001.

As to whether this was a policy mistake, I think much of the surge in imports from China in the 2000s was coming regardless of WTO accession, as China continued to develop; and the reduction of China's tariffs and other protectionist barriers as part of its WTO accession was extremely valuable to U.S. producers and service suppliers. But let's put that aside, because I want to raise a practical point about the timetable of China's WTO accession, by thinking about the counterfactual in which the Clinton administration didn't reach a deal with China and China's accession was still up in the air at the end of Clinton's term in office.

How would this counterfactual have played out? A key factor here is an unrelated foreign policy event that took place around this time: the 9/11 terrorist attacks. After 9/11, the Bush administration focused its foreign policy attention on the Middle East, and often needed to get China's support (or non-objection) for its actions there related to the Iraq invasion and the war on terror.

As to its trade policy, the Bush administration was looking for trade liberalizing opportunities, including through the launch of the Doha Round and its "competitive liberalization" initiative that involved bilateral FTAs; and towards the end of Bush's second term, the administration launched negotiations to join the agreement that would become the TPP.

With all that in mind, what I wonder is this: If China were not already in the WTO by 2001, wouldn't the Bush administration have been very supportive of China's WTO accession in the post-9/11 period? And therefore, regardless of the Clinton administration's position and actions on the issue, isn't it likely that China would be in the WTO now, either on its current terms or on some other terms?

To be clear, I'm not suggesting there are any policy or political implications from any of this. This is not an argument in defense of the Clinton administration's approach (although as I hinted at above, I do think they made the correct decision). It's just something that occurred to me and I thought it was interesting, and was curious to see if others had thoughts.

ADDED:

To add support to my argument, as Ben Heath pointed out to me, during the 2000 presidential campaign Bush supported the Clinton administration's China trade efforts:

''This is not a Republican or Democratic concern,'' Mr. Bush said. ''It is an American concern. This trade agreement is the work of 13 years and three administrations. We cannot let that work be undone.'"

The U.S. “Worker-Centered Trade Policy” is helping some workers in Mexico but not in America

This Labor Day post seeks to shed light on the Biden administration’s “worker-centered” trade policy.  It argues that the United States-Mexico-Canada trade agreement (USMCA) misses a critical opportunity to strengthen workers’ rights in America.  The agreement’s provisions exclude protections for the most vulnerable workers in U.S. trade sectors and they erroneously protect employers in the U.S. transportation sector.  This post urges amendments to the USMCA to protect workers – not just their employers – under a worker-centered trade policy.

On August 30, as workers in Europe began to emerge from well-deserved August slumber and workers in America began to look forward to an extra day of rest in celebration of workers’ historic achievements, the Biden administration announced it was seeking a review under the USMCA’s Labor Rapid Response Mechanism (LRRM) concerning the rights of pilots at a Mexico-based airline.  

President Biden claims that workers’ fundamental rights represent the heart, or center, of its domestic and foreign policies.  Although the USMCA is a Trump-negotiated trade agreement, current U.S. Trade Representative Katherine Tai was influential in pushing for the labor provisions in her previous position as chief trade counsel for the House Ways and Means Committee.  The Biden administration’s Office of the U.S. Trade Representative (USTR) has invoked the LLRM numerous times to ensure respect for fundamental collective bargaining and associational rights in private facilities in Mexico.  Recently, it initiated the first formal panel to litigate those rights.  

My work points out myriad ways the administration’s worker-centered trade policy risks undermining rather than fortifying workers’ rights abroad.  It traces how that policy deprives foreign actors of fundamental due process rights in the name of fundamental labor rights and leaves workers vulnerable to retaliation.  On this Labor Day, I shift the focus to workers in the United States.

A well-known story by now, the USMCA resulted from fierce bargaining between the President, his executive office, and a Democrat-controlled Congress.  Somewhat less known is that, at the midnight hour, as pens hovered in Mexico, Canada, and the United States to put to bed an emotional and lengthy NAFTA renegotiations process, the U.S. administration advanced an amendment quietly nestled in the form of a footnote to an Annex.  It has received little attention.

That footnote, in Annex 31-A of the USMCA’s Dispute Settlement Chapter, narrows the scope of applicable U.S. facilities subject to enforcement of collective bargaining and freedom of association rights in the United States.  It reads as follows:

With respect to the United States, a claim can be brought only with respect to an alleged Denial of Rights owed to workers at a covered facility under an enforced order of the National Labor Relations Board.

To the uninitiated, that footnote looks innocuous.  In theory, domestic legal processes should be exhausted before international mechanisms weigh in.  Otherwise, one risks inconsistent findings, fragmentation, and interference with national juridical decisions.  The National Labor Relations Board (NLRB) is the U.S. federal agency that administers federal labor law in private facilities.  Its findings are not self-executing and thus are not legally final unless and until a Court of Appeals enforces them.  Although the expression “enforced order of the National Labor Relations Board” is not defined under U.S. labor statutes, the footnote’s intention to ensure legal finality at the national level before opening the door to international intervention appears relatively straightforward.

Nevertheless, until the powers-that-be delete this footnote, workers in America will lack the same fundamental rights protections that USTR provides workers in Mexico.  Below, I offer three reasons.

1. The footnote leaves millions of workers in trade sectors in the U.S. without hope of labor improvements

As I have pointed out before, the footnote excludes the vast majority – if not all – of the facilities in the United States.  That exclusion leaves millions of workers in the U.S. private sector without hope of economic pressure under the USMCA.

That exclusion is important.  U.S. labor law, as interpreted by the NLRB and courts, has long been the subject of international scrutiny.  The U.S. administration has proven disinterested in, if not immune to, criticisms by the International Labor Organization (ILO).  U.S. representatives at the ILO sometimes respond that the ILO does not understand international labor law as well as do U.S. authorities.  Their position is unsurprising given the U.S. government's longstanding refusal to bend to international law or norms concerning workers’ rights.

Meanwhile, workers at auto facilities and other trade-related sectors in the United States face sub-optimal rights. Their employers fire them for seeking to unionize, threaten them with discharge, and manipulate U.S. labor law to avoid entering into collective bargaining agreements.  Those workers do not benefit from the ILO’s protection.  While the USMCA could have lent economic teeth to the ILO’s reputational sanctions, the Trump administration’s footnote cleverly protected corporate America.  

2. The footnote imposes significant remediation delays

Even workers at facilities that arguably fall under the NLRA cannot benefit under the LRRM.  Recall that a significant objective of the mechanism is that it is rapid.  Rather than wait years for litigation, workers should be able to benefit from immediate injunctions and remedial action.  However, under U.S. labor law, cases may take years to wind through the courts.  Even if Mexico were to bring a case against a facility in the United States, the case must first go before an NLRB administrative law judge, then the NLRB in Washington, D.C., and then to an appeals court.  

Section 10(j) of the NLRA “authorizes the National Labor Relations Board to seek temporary injunctions against employers and unions in federal district courts to stop unfair labor practices while the case is being litigated before administrative law judges and the Board.”  Those cases acknowledge that time is of the essence.  However, they do not produce a Board order for the appeals court to enforce.  Consequently, 10(j) injunctions do not qualify as an “an enforced order of the National Labor Relations Board.”  Even workers facing significant and immediate threats to their fundamental labor rights cannot benefit from protections under the USMCA.

3. Not all workers in the United States fall under the National Labor Relations Act

America’s most vulnerable workers are also her most important.  They labor in our agricultural fields, fix our roofs in scorching summers, clean our houses, and watch our children.  Yet, owing to institutionalized racism that carries into our statutory protections today, agricultural workers, undocumented workers, domestic workers, and day laborers are excluded from the NLRA’s coverage.  Notwithstanding the significant labor and human rights violations in agriculture and other invisibilized sectors, their facilities will never face a court-enforced Board order.  Those violations either directly implicate trade sectors (agriculture) or indirectly benefit trade sectors (childcare).  Excluded when the NLRA’s drafters sought to ensure that racialized minorities could not threaten property owners, those workers are re-excluded and thus re-prejudiced under contemporary trade protections.  Policymakers should take notice of how the USMCA reifies racial inequality in America.

USTR’s most recent, dawn-of-Labor-Day announcement sheds additional light on the USMCA’s inarticulate and improper footnote.  That announcement expresses concern over the bargaining rights of pilots in Mexico’s airline sector.  Under the USMCA’s procedures, those workers may soon benefit from international scrutiny, inspections, and prescriptive plans drawn up by American bureaucrats.

On the other side of the border, however, workers in the airline sector fail to benefit from equal protections.  Under the terms of U.S. labor laws, those workers, too, are excluded from the scope of the NLRA.  A separate law, the Railway Labor Act (RLA), covers them.  Specifically, it covers freight and commuter railroads, airlines, companies directly or indirectly controlled by carriers who perform services related to the transportation of freight or passengers, and the employees of these railroads, airlines, and companies.

Deemed “essential,” workers under the RLA cannot exert their right to engage in a spontaneous work stoppage.  Instead, a different Board, the National Mediation Board (NMB), conducts mediation.  While a Presidential Emergency Board may review the NMB’s decisions, those reviews are discretionary.  In other words, the NMB’s findings do not suffer from the same intermediacy as the NLRB’s decisions.

The ILO has expressed concerns with the RLA’s restrictive approach to bargaining.  It has also found that national laws like the RLA stipulating compulsory dispute settlement interfere with workers’ fundamental right to bargain.  While international labor standards are lenient concerning restrictions on public sector strikes, the ILO clarifies that the government may restrict a strike:

in the case of disputes in the public service involving public servants exercising authority in the name of the State or in essential services in the strict sense of the term, namely those services whose interruption would endanger the life, personal safety or health of the whole or part of the population.

In 2022, railway workers in the United States sought to bargain hard to improve their collective bargaining agreement.  Under the international labor standards above, they should have been able to do so as long as their actions did not endanger “the life, personal safety or health” of the U.S. population.  Although inconvenient, their work stoppage would not have been life threatening.  President Biden faced criticism within the labor community when he intervened and passed a law imposing a contract agreement that the majority of America’s freight rail workers had voted down.  As a result of that agreement, railway workers may benefit from a hefty raise but they lack paid sick days in a compromise they never agreed to and should have been able to protest.   

Airline workers in the United States face a bleaker situation.  They cannot strike despite dwindling crew members and abysmal pay and leave benefits.  Notwithstanding their hostile legal environment, airline workers are staging careful pickets to raise public awareness of America’s abusive airline sector.  Under the RLA, they may not protest their working conditions during work hours; they can only carry out those concerted activities during the hours they should be resting and spending with family.  They cannot rely on the ILO to persuade an otherwise deaf U.S. administration that the RLA deprives them of fundamental labor rights under international law.  And they cannot rely on the USMCA’s LRRM because their employers, by statute, will never be the subject of an NLRB order. 

A Litmus Test?

USTR’s recent invocation of the LRRM in the airline sector offers the Mexican government an opportunity to fight for the equality it (perhaps) unknowingly relinquished during the final hour of the USMCA’s negotiations.  Following USTR’s recent lead, it could invoke the LRRM to protest the freedom of association and collective bargaining violations in U.S.-based airline companies.  The Mexican government has manifold U.S.-based airline companies from which to choose.  

The Biden administration’s worker-centered trade policymakers should take such allegations seriously and collaborate to ensure an equitable solution.  If the USMCA’s torrid labor negotiations (beginning during the TPP negotiations) teach us anything, it is that Congress cares about international standards governing collective bargaining.  After all, it demanded that Mexico adopt radical changes to Mexico’s Constitution and labor laws to protect the rights of workers in Mexico to form and join unions and associate freely.  The ILO, as mentioned, has aired concerns over how U.S. legislation fails to protect those rights in America.  If Congress and the Biden administration refuse to consider the same types of legislative reform in the United States that they demanded in Mexico, their stated intentions to advance a worker-centered trade policy should be critically questioned.

Inu Manak reminds me that the parties will soon revisit the USMCA’s provisions as part of its six-year review.  Given that Mexican negotiators were given little advanced notice or explanation of the USMCA’s restrictive LRRM scope, and given the Biden administration’s efforts to strengthen workers’ bargaining rights at home, this review offers ample opportunity for the parties to make the agreement more equitable.

Workers in America should not have to rely on the Mexican government to champion their rights.  The Biden administration and Congress have promised to protect them.  The USMCA offers U.S. policymakers the opportunity to turn promises into action.  On this Labor Day, let’s hope they seize it.