Back to General Resources

SFC USMCA Hearing

Senate Finance Committee

Implementation and Enforcement of the United States – Mexico – Canada Agreement: One Year After Entry into Force

Tuesday, July 27, 2021

Witnesses

Opening Statements
Chairman Ron Wyden (D-Oregon)
In his opening statement, Wyden stated that the Trump administration passed the United States – Mexico – Canada Agreement (USMCA) very prematurely. He continued that the Biden Administration has worked to enforce the agreement, protect workers’ rights in Mexico, and uphold environmental protections. He highlighted current areas in the agreement that are not being implemented and enforced, including developments related to Canada blocking U.S. dairy products, Mexico not implementing reforms to their labor laws, and Canada discriminating against innovative American industries.

Ranking Member Mike Crapo (R-Idaho)
In his opening statement, Crapo praised the agreement’s innovations to help meet challenges of the 21st century technological demands. He urged the Biden Administration to be more transparent in their actions and enforcement of the agreement. He also highlighted that the Administration is not upholding standards on agricultural biotechnology and electricity companies within the USMCA.

Testimony
Benjamin Davis, Director of International Affairs, United Steelworkers
In his testimony, Davis focused on the importance of the labor provisions in USMCA. He described the enforcement of labor law under the USMCA, specifically its work to protect Mexican worker rights. He stated that there has been some progress on USMCA implementation, and highlighted areas for improvement. He also described problems with the implementation of the USMCA, including issues with transparency, contract legitimation, enforcement, budget and staffing, and U.S. technical assistance. 

Allan Huttema, Chairman, Northwest Dairy Association
In his testimony, Huttema discussed the role of trade in the American dairy industry. He emphasized that American dairy products are sought after across the world. He praised the U.S. government for passing the agreement, as it is critical to the dairy industry. He urged Congress to continue to create trade agreements to counter competition with international trade partners.

Michelle McMurray-Heath, MD, PhD, President and CEO, Biotechnology Innovation Organization
In her testimony, McMurray discussed the role of the biotechnology industry in the enforcement of the USMCA. She praised the agreement for its thoughtful and creative trade strategies to enforce biotech standards. She discussed how Mexico is not implementing USMCA agricultural biotechnology standards, which is consequential for global innovation. She recommended that the U.S. government act against the Mexican government’s failure to implement agricultural biotechnology components of the USMCA and that industry and government need to work together to remove industry barriers to innovation.

Beth Lowell, Deputy Vice President of U.S. Campaigns, Oceana
In her testimony, Lowell focused on the impact of the USMCA on fisheries, specifically illegal, unreported and unregulated (IUU) fishing. She praised the enforcement of the agreement for promoting transparency and creating publicly available resources on fishing. She stated that it is critical that the programs are enforced and documented. She posed two issues on the implementation of the agreement’s focus on fishery subsidies, including that no country has complied with the mandate for additional reporting as well as the fact that methods to address non-enforcement have not been drafted.

Question & Answer
USMCA Comments
Sen. Pat Toomey (R-Pa.) stated the trade deficit with Mexico has only increased since the USMCA, and that outside of the digital trade provisions, there is little evidence the USMCA’s new provisions will be good for U.S. workers. He said trade liberalization helps create high paying jobs, and if the Biden Administration wants to pursue a worker-centered trade policy, they should focus on lowering tariff barriers and expanding export markets.

Sen. Debbie Stabenow (D-Mich.) asked about the most important export market considerations to be aware of when thinking about future trade agreements. Huttema said market access is number one, noting that especially when it came to Mexico, zero tariffs were important to go after and that the second key factor is to establish a resolution process.

Sen. John Cornyn (R-Texas) said he is continuing to encourage the Administration to reconsider the Trans-Pacific Partnership (TPP) in some form and asked what it would take for organized labor to support a regional trade agreement in the Pacific. Davis said from labor’s point of view, it will require very strong enforcement outside of places like Mexico there is a longer history of established relationships.

USTR Chief Agricultural Negotiator
Sen. John Thune (R-S.D.) asked about the importance of having a Chief Agriculture Negotiator at USTR to engage Canada and Mexico and how it benefits U.S. workers. McMurray-Heath said it is important to hold all trade partners accountable to our trade agreements and that a Chief Agriculture negotiator would have the most pivotal influence over all trading partners.

Presidential Trade Promotion Authority (TPA)
Thune asked about the importance of renewing TPA. McMurray-Heath said the biotech industry is fully supportive of renewing TPA, adding that it is important to modernize U.S. trade policy and pay close attention to intellectual property.

Central American Free Trade Agreement
Sen. Bob Menendez (D-N.J.) asked if there are any USMCA provisions that should be included or expanded upon in an updated Dominican Republic-Central American Free Trade Agreement (DR-CAFTA). Davis said the USMCA currently is a floor for enforcement and noted that Central American countries have weak labor enforcement and weak laws, arguing that it raises concerns as to whether it would be effective at all.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Menendez asked about the TRIPS waiver and engagements with USTR. McMurray-Heath said they have met with USTR and made it clear that while well intentioned, the TRIPS waiver will not solve the issue of getting more COVID vaccines around the globe.

Product Dumping in Foreign Markets
Sen. Bill Cassidy (R-La.) asked about China sending steel and aluminum through Mexico as a passthrough to our nation and how USMCA addresses that. Davis said they have tried to address it with various legislation addressing antidumping and other circumventing behaviors, adding the belief that the Administration continues to combat this.

Sen. Sherrod Brown (D-Ohio) mentioned his Leveling the Playing Field Act 2.0 to update trade remedy laws against trade cheats including those who use Canada and Mexico to move products and bypass American laws.

Environment and Pollution
Sens. Sheldon Whitehouse (D-R.I.) and Maggie Hassan (D-N.H.) asked Lowell for Oceana’s view on the USMCA agreement sections addressing marine plastic waste. Lowell said that in 2019, single use plastic was a major pollutant in our waters, and as such, the U.S. needs to slow down production of single use plastic.

Sen. Tom Carper (D-Del.) said trade policy is one of the best tools to protect the environment and asked about areas of progress between Canada and the U.S. Lowell said she was pleased to see that environment had its own chapter in USMCA and highlighted a few examples of reports in Mexico and Canada where the general public was able to raise concerns that the countries need to do better.

Biotechnology
Crapo asked is there is a scientific basis behind Mexico’s treatment of U.S. biotech crops. McMurray-Heath said no and that the behavior of Federal Commission for the Protection against Sanitary Risk (COFEPRIS) is unusual in the global stage.

Stabenow asked about delays in the approval of biotechnology, and what the impact is on producers and future innovation. McMurray-Heath said biotechnology can lead to improvements by addressing climate change and pest resilience. She said China’s opaque trade practices have created a difficult path for American companies and said they have every reason to believe Mexico will behave similarly to China.

Sen. Chuck Grassley (R-Iowa) asked what benefits come from using genetically modified organism (GMO) crops. McMurray-Heath said they can create pest resistant crops, which reduces the need for pesticides and increases crop yields.

Canada and Dairy Trade
Crapo asked Huttema about Canada attempting to circumvent the agreement. Huttema said that if we can get those issues resolved, the actual terms of the USMCA with regards to dairy would result in significant benefits to American dairy farmers. He added that getting access into Canada would certainly raise prices, but the spirit of the agreement is not being upheld and is hurting families by keeping the U.S. from accessing markets.

Grassley asked if USMCA adequately protects American made dairy products. Huttema said if the spirit of the trade deal is upheld, it could, but Canada continues to circumvent the agreement. He also argued that more enforcement is needed and that USTR should take more action with Canadian exports.

Hassan asked Huttema how he expects Canada to respond to increased U.S. dairy exports given issues with Canadian progress in implementing dairy reforms. Huttema said if history repeats itself, he expects them continue to export. He also said the dairy system in Canada is very regulated and noted that we are not against Canadian dairy farmers, more so just maintaining their market from interfering with ours. He added that they have a history of trying to push more products into America. Hassan also asked how the passage of the USMCA and de-escalation of trade tensions helped U.S. dairy exports to Mexico, and how the trade restrictions have affected U.S. dairy exports since passage of the deal. Huttema explained that before the deal, trade tensions were hurting our exports and farmers, and that the agreement has certainly helped ease tension and raise prices.

For more information on this hearing, please click here.