Mexico, US ‘try new trade fix to win over Democrats’

Mexico is working closely with US Trade Representative Robert Lighthizer to close a loophole in the new North American trade deal, aimed at satisfying demands of US Democratic lawmakers for tougher labour and environmental provisions, a senior Mexican official said.The US, Mexico and Canada signed the United States-Mexico-Canada Agreement (USMCA) last November, to replace the North American Free Trade Agreement that governs more than $1.2tn of mutual trade, but implementation is subject to ratification by lawmakers in all three countries.Mexico’s deputy foreign minister for North America, Jesus Seade, said the proposal he was working on with Lighthizer was focused on closing a loophole in the trade deal’s dispute resolution mechanism.Democrats in the US Congress, largely in the Democratic-controlled House of Representatives, have threatened to stall on ratification until their concerns are met.The new trade deal to replace Nafta had come at the behest of Republican US President Donald Trump.Henry Connelly, a spokesman for House Speaker Nancy Pelosi, did not comment on the substance of negotiations.He said labour and enforcement provisions of the USMCA are a key concern of House Democrats. “The speaker continues to work with her caucus and the USTR to strengthen these critical areas of the proposed agreement,” Connelly said.Seade said as the deal now stands, the US could start a formal trade dispute if Mexico was exporting a product made under labour conditions it considered unfair and contrary to the rules in the pact.However, he said, a loophole meant Mexico could theoretically block a dispute panel from being created.“There is a gap in the dispute resolution system,” he said in an interview. “We are trying to find a way to plug that gap.”Earlier this year Mexico passed a law that strengthens the rights of trade unions, partly to comply with requirements in the USMCA.Mexico’s weak labour laws meant that for decades the country has had few independent unions, leading to low wages that both Trump and Democrats blame for excessive offshoring and a loss of USjobs under Nafta.Seade said Mexico did not want to, and was not going to, re-open USMCA.Instead, he said, the gap could be closed through supplementary measures, “to make sure that if the US government wants to initiate a panel against Mexico on labour standards,” it can do so.Canada also opposes reopening the deal.Last week, senior US Democratic lawmaker Earl Blumenauer said Canada and Mexico may be open to a limited renegotiation of aspects of the agreement to satisfy US lawmakers’ concerns.Blumenauer, who chairs the trade sub-committee of the House of Representatives Ways and Means Committee, said the trade agreement could be modified to address specific concerns, but he was sceptical about using side agreements, saying they had proven problematic in the current Nafta pact among the three nations.Lighthizer’s office did not immediately respond to a request for comment about the talks with Mexico.In June, Lighthizer told a Senate panel that he was willing to work with members “to make (USMCA) even better.” Time is short for ratifying the pact before the US Congress enters its summer recess on July 27. When Congress returns in September, some Mexican officials worry that politics around the US2020 presidential race will make it harder for Congress to agree. Canada’s parliament is seen as less of an obstacle.Mexico has already ratified the deal. Asked about Mexico’s plan, a Canadian government source noted that Prime Minister Justin Trudeau and others “have engaged with Democrats...to talk about the new Nafta and why it’s good for working people, which is what they care about.”Asked whether Canada would work with Democrats to include new guarantees, the source, who requested anonymity given the sensitivity of the situation, replied: “No, we are not looking to do that.”