Last week, U.S. Trade Rep. Katherine Tai spoke at the Aspen Security Forum and had the following things to say about U.S. enforcement of trade agreements:
In terms of trade enforcement, in order for our trade agreements, and our trade arrangements, to have integrity, we have to hold our partners accountable for the promises that they have made to us and to our stakeholders and to their stakeholders too. So we take the enforcement agenda extremely seriously. It is a very high priority.
A couple aspects of this I want to highlight. One is with respect to the USMCA, which is the renewed NAFTA. Now that renegotiation caught a lot of headlines while it was being renegotiated, and it's really a very, very interesting articulation of the basis for a modern new US trade policy.
One of the most important aspects of the USMCA in terms of what it does that the NAFTA didn't do, it has much stronger labor and environmental standards. It has stronger enforcement mechanisms. And it has, in particular, a labor specific enforcement mechanism that we call the rapid response mechanism for short. This is a mechanism that allows the United States and Mexico to work together to reach and pierce the veil of state to state interaction to focus on specific facilities within Mexico that are not respecting Mexico's laws on labor justice or the USMCA's rules. And we have activated this mechanism, I think the current count is 16 times, 14 times at the behest of petitioners, twice on our own initiative.
And in every one of those cases that we have seen through to the end, we have won rights. We have won real benefits for workers in Mexico. Why this matters: democracy and the democratization of economic opportunity. When Mexican workers have the ability, as they should under their own law, to advocate for themselves for better working conditions and higher wages, we are evening the playing field for American workers and we think it is not an accident that right now about 90% of the cases that we have brought have been in the auto sector.
I'll give you one specific example. Early on in the first year, one of the first three cases that we brought was related to a GM facility in Silao Mexico. As a result of our work on that, in partnership with the Mexican government, the workers at that facility were able to win a new vote for a union. They voted in a truly independent union to represent them. They voted on a collective bargaining agreement that that union negotiated for them, that they saw before they voted to approve it, and they won better benefits. They won the first wage increase that they had had in years, a 10% wage increase, and in the second year, that went up another 10%.
These are real wins. But the most significant part of this, which I want more people to know about is, what we are doing in the USMCA is relevant to everybody who is interested in trade because we have flipped the narrative, the strong criticism of US trade policy on its head. For the first time ever, we are offering workers a mechanism for their own advocacy and empowerment through a trade agreement. Without this trade agreement, they wouldn't have this mechanism. And I think that this is one of the cornerstones of what we call the worker centered trade policy, which is to drive a trade policy that more Americans feel like is going to champion their interests.
On the other hand, we're also doing a lot for our farmers, as we always have. And within the USMCA context, without leaving that agreement, I'll say that we've taken very seriously our corn producers' concerns around the Mexican decree that will impact our trading relationship. And we initiated a dispute settlement case in the middle of this year. And we are litigating it out right now
I have a couple reactions here.
First, the rapid response labor mechanism is part of a trade agreement, but does it have to be? Why not have this be an international labor agreement negotiated and primarily enforced by labor departments? I understand the politics of how trade policy-adjacent issues such as intellectual property or labor rights made their way into trade agreements, but I think there is still room for thinking about the appropriate scope of trade policy and where IP, labor and other issues best fit into domestic and international governance.
Second, as to trade enforcement, Tai mentions one USMCA dispute going on right now, but what about the WTO? Here's a table of WTO complaints (i.e. consultations requests) filed by the United States by year:
| Year | Number of Complaints Filed |
|---|---|
| 2019 | 1 |
| 2018 | 8 |
| 2017 | 3 |
| 2016 | 3 |
| 2015 | 2 |
| 2014 | 1 |
| 2013 | 3 |
| 2012 | 5 |
| 2011 | 1 |
| 2010 | 4 |
| 2009 | 2 |
| 2008 | 3 |
| 2007 | 4 |
| 2006 | 3 |
| 2005 | 1 |
| 2004 | 4 |
| 2003 | 3 |
| 2002 | 4 |
| 2001 | 1 |
| 2000 | 8 |
| 1999 | 10 |
| 1998 | 10 |
| 1997 | 17 |
| 1996 | 17 |
| 1995 | 6 |
I didn't forget to add the data after 2019; there were just no complaints filed by the U.S. in these years. It's probably obvious to this blog's readers that the U.S. blockage of Appellate Body appointments plays a role here, and the absence of recent U.S. complaints is, at least in part, tied to that. But I've always thought there were a range of compromises that could satisfy the U.S. concerns about the Appellate Body, and if the U.S. wants to enforce the WTO agreements in relation to the foreign trade barriers it has identified to the same extent other governments -- such as those signing on to the MPIA -- are able to, it would be good to embrace the possible solutions. Raising these issues in WTO committees can be helpful in a few cases, but sometimes you need to invoke formal dispute settlement to have an impact.
And what about China? The WTO is the best place to go for trade enforcement against China (broad obligations, formal adjudication mechanism), but if the U.S. doesn't want to enforce obligations at the WTO right now, there is also the Phase One deal. That agreement doesn't have an adjudication system, so I don't think it will be very effective, but it does at least have a mechanism to raise complaints. As far as I can tell based on public information, this mechanism has not been used, but it would be nice to hear more from USTR about any enforcement activity taking place under this agreement.
Trade lawyer Devon Whittle had additional comments on Tai's remarks here.
