Washington Insider-- Wednesday

New Focus on Trade Enforcement

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

House Panel Investigating Meat Packing Companies Over COVID-19

Smithfield Foods, Tyson Foods and JBS USA are being investigated by the House Select Subcommittee on the Coronavirus Crisis over COVID outbreaks at their facilities and what the panel said was a failure of the companies to protect workers.

The panel sent letters Monday to the companies and the Occupational Safety and Health Administration (OSHA) requesting information on their actions during the COVID pandemic relative to complaints from workers, how the companies track those complaints, all documents related to inspections by federal or state officials at facilities and a list of those inspections, the number workers that have contracted COVID or died from it, information on plant closures, implantation of COVID safety measures and more.

The panel is seeking similar information from OSHA, including a list of each COVID-related complaint received, a list of inspections and any documents linked to those inspections, the training and guidance OSHA gives to inspectors, and more. Meatpackers "have refused to take basic precautions to protect their workers, many of whom earn extremely low wages and lack adequate paid leave and have shown a callous disregard for workers' health," panel chair Rep. James Clyburn, D-S.C.

The companies issued statements in response to the investigation, with Smithfield countering they have invested "$200 million in health and safety interventions, more than $160 million in bonuses and permanent increased pay, and donated more than $50 million to support our local communities.” They also pointed to extra practices put in place in their plants relative to worker safety.

It's not clear what the results of the investigation will bring or the timeline given the volume of documentation the panel is requesting of OSHA and the companies in question.

Biden Administration Asks Courts to Pause Litigation Over Trump WOTUS Replacement

The Biden administration has filed requests in U.S. District Courts in Maryland and Washington, D.C., requesting a pause in litigation over the Navigable Waters Protection Rule put in place by the Trump administration as a replacement to the Obama-era Waters of the U.S. (WOTUS) rule.

The administration signaled immediately upon taking office that it was reviewing the Trump actions on the rule and has sought a six month delay in court actions, arguing that will allow the Biden administration “adequate time to review the rules and determine whether the rules should be maintained, modified, or otherwise reconsidered.”

The administration pledged to provide an update in 90 days and at the end of the six-month period, the parties are to provide a “joint status report proposing further proceedings.” In the wake of the court filings, Reps. Peter Defazio, D-Ore., and Grace Napolitano, D-Calif., called on President Joe Biden to immediately repeal the Trump administration rule, charging it is “fatally flawed proposal, with no basis in the law, no basis in the science, and a blatant giveaway to polluters.”

U.S. ag interests are monitoring the situation closely as many groups marshalled resources to get the WOTUS rule replaced due to their contention that it was a case of government overreach and would subject a large amount of area to federal regulation. Given the filings in court, it is clear the Trump administration rule will not be immediately repealed as requested by the lawmakers.


Washington Insider: New Focus on Trade Enforcement

Bloomberg is reporting this week that President Biden's administration is setting up its trade policy to prioritize enforcement of existing commitments by the U.S. partners over negotiating more deals to open new export markets.

This likely strategy for supporting American producers focuses on going after violations via dialogue, work with allies and use of dispute-resolution mechanisms in existing trade agreements rather than following the Trump administration's more blunt, unilateral tool of national-security tariffs, Bloomberg said. That could leave existing free-trade talks with the UK and Kenya in limbo for the foreseeable future.

Biden has signaled he won't immediately remove duties inherited from Trump, who enthusiastically dubbed himself “Tariff Man” for levying duties to pressure China, the European Union and even Mexico and Canada to address perceived injustices affecting American workers. Whether and how soon the President might remove the tariffs, and what he would seek in return, are open questions. But his approach to enforcement is likely to focus on negotiation, mediation and multilateral action rather than unilateral moves – more of a surgical than sledgehammer strategy, the report said.

The administration's starting point may be the U.S.-Mexico-Canada Agreement that went into force in July, replacing the North American Free Trade Agreement (NAFTA). Katherine Tai, Biden's nominee for U.S. Trade Representative, was instrumental in negotiating that deal's labor provisions. The AFL-CIO, the largest U.S. labor union and a traditional Democratic ally, has been promising since September to bring the first complaint over conditions in Mexico.

“We should expect action under the labor provisions of the USMCA pretty quickly,” said Jamieson Greer, a partner in the international trade practice at King & Spalding in Washington, who served as chief of staff to Trump USTR Robert Lighthizer. The new administration “is going to want to bring a case that's really targeted to a specific facility in Mexico that's as close to a slam-dunk case as you can get.”

The AFL-CIO and Democrats made strong labor rules and enforcement mechanisms for Mexico a key demand to win their support for the USMCA in 2019, reflecting concerns that the pact it was replacing lacked both. Cathy Feingold, the AFL-CIO's international department director, said she hopes the union will be a petitioner in a labor complaint under the USMCA within the first 100 days of President Biden's administration after COVID-19 and other factors complicated the process of documenting ongoing labor violations in Mexico last year.

U.S. labor unions have long complained that Mexican factories under NAFTA denied workers' rights in order to keep down salaries and unfairly undercut America on cost. The AFL-CIO has highlighted cases of alleged harassment, like the example of Susana Prieto Terrazas, an independent trade-union lawyer in Mexico who was jailed in the northern state of Tamaulipas last June after working to organize employees at an auto-parts plant.

The USMCA went into effect in mid-2020. In November, Rep. Richard Neal, D., Mass., and Chairman of the House Ways & Means Committee, criticized the Trump administration for a lack of enforcement action. He cited union leaders and labor lawyers in Mexico facing violence, saying workers were being denied their basic rights on a daily basis.

Under USMCA provisions, any member of the U.S. public can submit a petition alleging denial of rights at a facility in Mexico. An inter-agency U.S. committee then reviews to see if there's sufficient, credible evidence. If there is, the committee then requests that Mexico conducts its own probe. While there are a number of steps focused on remedying any violation, the U.S. ultimately can rescind duty-free treatment on products from a particular facility or even block imports altogether for repeated violations.

Tai is awaiting a hearing from the Senate Finance Committee as part of her confirmation process. In a speech last month, she mentioned the USMCA's “groundbreaking labor and environment provisions” and promised to work to make sure the deal “lives up to its potential.” Both Treasury Secretary Janet Yellen and Commerce Secretary nominee Gina Raimondo in their hearings discussed enforcement with regard to another top U.S. trade partner – China.

Tai was the chief lawyer for House Democrats seeking to strengthen the USMCA's labor provisions after President Trump's deal was initially reached with Mexico and Canada in 2018.

Tai has also learned from the examples of past U.S. failures, Feingold said. That includes Guatemala, where the first-ever labor complaint filed under a free-trade deal was brought by the AFL-CIO and local unions in 2008 over the nation's failure to ensure the right to organize and acceptable working conditions. The case dragged out for almost a decade, ending with an arbitration panel deciding that the evidence failed to prove Guatemala's behavior was “sustained or recurring” and “in a manner affecting trade.”

In the USMCA, Democrats negotiated to ensure that violations in Mexico would be assumed to affect investment unless proven otherwise, and the need to show “sustained or recurring” violation doesn't apply to workplace violence.

Tai “has a vision for what went wrong in the past,” Feingold said. “She was key to building that model of swift and effective enforcement.”

So, we will see. The Biden administration clearly has a more conventional trade policy orientation than the previous administration did, but it likely will be tested early and often by high stakes cases involving the EU, China and others. These are fights producers should watch closely as they proceed, Washington Insider believes.

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