Quick Breakdown on NAFTA/USMCA Protocol

Todd Tucker
Dec 11, 2019 · 5 min read

I’m gradually making my way through the second take on the second take on NAFTA. I’ll post some thoughts on this thread as I go through it. (ustr.gov/trade-agreemen…)

The first change is to add in reference to the 7 multilateral environmental agreements that became part of the standard US template under Bush and Obama. Trump had initially listed just 1, while enviros had called to go beyond the 7. (sierraclub.org/sites/www.sier…)

The second change is the tighter definition of how much North American content steel products have to have to get duty-free benefits. Another win for one of Trump’s favored industries. (reuters.com/article/us-usa…)

The third change is a set of rollbacks of additional monopoly protections for Big Pharma that Obama had sought to put in the Trans-Pacific Partnership and Trump tried to put into his first version of NAFTA 2.0. The absolute expert on these matters is @burcuno, along with @mayburduk and their team at Public Citizen. Their report gets into the granular detail of comparing all the versions of NAFTA to the TPP, to domestic law.

Burcu Kilic@burcuno

Pharma-related patent provisions look good, very similar to #CPTPP suspended IP provisions with a few more giveaways to generic industry. For more information on #USMCA #Pharma related #patent provisons, check https://www.citizen.org/wp-content/uploads/nafta-2.0-pharmaceutical-related-patent-provisions.pdf … https://twitter.com/mmcassella/status/1204789779445035009 …

Megan Cassella✔@mmcassella

Good news for policy wonks: USTR releases a 27-page list of changes between the USMCA that was signed a year ago, and the updated version signed yesterday: http://bit.ly/2PzQ93F

By my quick read, one of the 2.0 changes from 1.0 that 2.2 doesn’t roll back is the specification that fraud, misrepresentation, and inequitable conduct are grounds for revoking patents. It’s not clear that adds any protection for generic competition, but it’s more specific.

Another 2.0 change from 1.0 (this time that will inhibit competition) that Dems did not ask or did not get removed is patent extension caused by perceived regulatory delays. Here’s that provision and @burcuno’s analysis.

Another competition-limiting 2.0 rule relative to 1.0 is the hard requirement of five years’ data exclusivity, which in 1.0 was softer.

So the access to medicine crowd succeeded in holding concessions to what was already in NAFTA. But it should be noted that the intellectual property rules in NAFTA were already really restrictive and anti-developmental. Here’s Lori Berg at the time. (heinonline.org/HOL/LandingPag…)

Indeed, the original NAFTA rules — with their extensive requirements of activist government and courts proactively protecting the rights of patent holders and trademarks — show that the effort was more about REGulation than DEREGulation… but for the benefit of elites.

Fourth, the 2.2 version goes further than 2.0 (and certainly than NAFTA) in creating theoretically enforceable labor rights. Moreover, there is some attempt to nudge labor rights panels towards making it easier to qualify for protections by changing legal presumptions.

It’s hard to know how powerful this will be in practice. In the only litigated case in this area, the requirement that the rights violation be made in a “in a manner affecting trade” was a fatal hurdle. Unclear how the presumption alone shifts things (rooseveltinstitute.org/independence-d…)

There’s similar presumptions for the environmental rules. Fifth, there’s changes to how state-state panels are convened. @snlester and @inumanak have been doggedly following this issue, and say it’s fine, so I’ll trust them. (ielp.worldtradelaw.net/2019/12/the-na…) Sixth, and finally, the big change: the Facility Specific, Rapid Response Labor Mechanism, or FaSpeRaRLaM. (Please gawd let’s not call it that.)

In instances where the Trump administration believes collective bargaining rights are being violated at a specific facility in Mexico, there’s a process for making a government to government complaint. If the issue isn’t resolved, a rapid response labor panel of exports goes in.

Yay experts! (That’s what I meant). They write a thing up about the site, what it can do better, and then their written thing gets made public.

If the site doesn’t get better, then there can be tariffs placed on specific companies! (This seems very hard to administer — tho it does get around the problem of complainant countries footdragging on the tariffs on a whole trading partner just #BecauseWorkers).

Here’s Burcu with a clarification on my earlier point on exclusivity

Burcu Kilic@burcuno

Plus, the scope of #Nafta 1.0 exclusivity is limited to new chemical entities, 2.0 extends it to pharmaceutical products, which cover new chemical entities & biologics. https://twitter.com/toddntucker/status/1204875838170312704 …

So, my overall assessment is that the thing that is the biggest change from the status quo ante — the Labor Avengers Squad — seems to rely a lot on governments being willing to act for the benefit of workers overseas. I’d love to believe that will happen, but call me skeptical.

(Taken from this thread.)

Todd Tucker

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I write about democracy, political economy, and trade. Fellow at the Roosevelt Institute and Roosevelt Forward.

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