Trade Rep Details Law Changes to Implement USMCA

February 7, 2019

U.S. Trade Representative Robert Lighthizer has sent Congress a list of required changes to U.S. law needed to bring the country into compliance with the new United States-Mexico-Canada Agreement (USMCA). Most changes affect customs laws, including lowering certain tariffs and providing for new tariff rate quotas.

Notably, the changes include an amendment of “rule of origin” for products, including certain chemicals, steel, and glass. USMCA allows importers to certify North American origin to receive tariff preferences, compared to the former NAFTA that generally required exporters file documentation to validate production location for tariff treatment purposes.

The USMCA will add several new provisions to U.S. law, such as a “Labor Value Content” rule, requiring the manufacture of a set amount of automobile parts by North American workers earning at least $16 per hour average.

The USTR’s list of law changes is an obligation under the Trade Promotion Authority (TPA) statute that must be completed before the Trump administration submits its USMCA implementation bill to Congress. Under the TPA, consideration of the USMCA is subject to specified deadlines and does not allow for amendments once introduced. As a result, the Trump administration is working with lawmakers to ensure that congressional concerns are included in the bill.

The International Trade Commission (ITC) is expected to submit a report to Congress by mid-April on the USMCA’s likely economic impacts; however, the Trump administration is not required to wait for submission of the ITC report before delivering its implementing legislation to Capitol Hill.

In addition to the statutory deadlines for congressional consideration of the USMCA, the implementing legislation will be scrutinized by the Democrat-controlled House. Speaker Nancy Pelosi (D-CA) has said that Democrats want to ensure enforceability of provisions in the USMCA, such as labor, before a vote takes place.