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Katherine Tai on enforcing trade agreements

IELP | 11 October 2022

Katherine Tai on enforcing trade agreements

by Simon Lester

This is a question on the enforcement of trade agreements from an event at which U.S. Trade Rep. Tai spoke today:

“I’ve always been struck at the priority you place on enforcement of trade agreements. It’s always a tricky task for any administration. There have been several cases that have been brought up in the last few years since USMCA was finalized. How would you say the enforcement mechanisms and dispute settlement mechanisms have held up and are they setting any kind of precedent for trade outside of North America as well?”

And here was Tai’s response:

“So I think that the credibility of a trading system, whether it’s regional or multilateral, really goes to whether or not the rules are enforceable. Otherwise, the rules are just words on a page. And certainly in the renewal and the creation of the USMCA, at the late stage of the renegotiation, after the renegotiation with the parties, renegotiation between congressional Democrats and the Trump administration, there is a really strong focus on the enforceability of these rules. And no matter how high you dial the standards, no matter how modern the rules that you’ve brought in, if you can’t enforce them, then really it’s not worth very much. It’s really not worth very much to the members of Congress and their constituents.

So that’s been a particular focus. USMCA passing on the significantly large margins, 89% of the House and the Senate voting in favor, for us means that one of our highest priorities is making sure that the spirit and the letter of the USMCA are preserved and that we are investing in ensuring that the USMCA is meaningful.

That goes across the board. We have, in some of the more traditional trade areas, initiated, we are now on our second go round of enforcement proceedings with Canada on dairy market access. With Mexico, we have initiated a case on their energy market policies.

But in environment and labor, which if you follow the NAFTA story, you will know that these were particular criticisms of the original NAFTA, that they might have had labor and environment rules, which was a good thing, but they turned out that they were unenforceable and there were no teeth. And in fact, no case was ever able to be advanced from beginning to end under the NAFTA. And we have now initiated our first enforcement proceeding under the environment focused on conservation efforts for the Vaquita porpoise. And then also we have at this point initiated and concluded five rapid response mechanism cases. One that we self initiated, the other four in response to petitions, where by virtue of our using this mechanism in partnership with the Mexican government, which had finished its own labor justice reform as we were negotiating the USMCA, have actually enabled unions of five different facilities in Mexico, independent unions to represent the workers who elected them, resulting in real wage benefits, real benefits for real people.

And the labor and environment pieces are especially important to us because of the need for our trade practices, and frankly for the global trading system, to rebuild trust and confidence with our people, and with those who know the most and advocate for our planet. And I think that the implications are that this is an important innovation, if you will, for a correction for the direction of US trade policy that we are bringing to our other trading partners outside of North America and that we are trying also to bring to the multilateral system based in Geneva around the WTO."

For anyone who supports the rules-based trading system, this will probably be reassuring, but at the same time it doesn’t tell us where the U.S. is right now on WTO dispute settlement reform in the midst of the Appellate Body crisis.

 source: IELP