December 10, 2019 / 11:39 PM / a month ago

Factbox: Labor, environment, drugs top changes to North American trade deal

MEXICO CITY (Reuters) - Stronger worker and environmental protections top changes to a new version of the North American trade deal signed by U.S., Mexican and Canadian officials on Tuesday that clears the way for a long-delayed vote in the U.S. Congress.

FILE PHOTO: Canadian Deputy Prime Minister Chrystia Freeland gestures as she speaks during a meeting at the Presidential Palace, in Mexico City, Mexico December 10, 2019. REUTERS/Carlos Jasso/File Photo

The full text of revisions has not yet been made public, but the following are some of the key changes, based on documents provided by House Democrats, industry executives and U.S., Mexican and Canadian officials for a deal that will underpin $1.2 trillion in annual trade and replaces the 26-year-old North American Free Trade Agreement.

LABOR

Democrats prioritized the stronger enforcement of worker rights in Mexico, even after Mexico passed a labor reform aimed at ensuring union independence, worker freedoms and higher wages. Mexico has agreed to increase its budget for labor enforcement.

The deal included a new mechanism under which the United States and Canada can create panels of labor experts to investigate union complaints at Mexican factories.

The experts will be able to impose penalties on the plant’s exports of goods and services if violations of the freedom to organize or collectively bargain are detected, Canada and the U.S. House Ways and Means Committee said.

Mexico’s chief negotiator, Jesus Seade, sought to play down the impact of such “rapid panels,” saying he had fended off U.S. union demands to place foreign labor inspectors in Mexican factories.

The rapid panels would be formed after three months and only in response to repeated complaints. They would be selected from a roster of experts, including one from each country involved in the dispute and one chosen by a third party, Seade said.

“These are not inspectors, they are not unilateral,” Seade said.

“Labor attaches” will be based in Mexico and will provide on-the-ground information about Mexico’s labor practices, the Democrats’ fact sheet said.

The United States also will establish an interagency committee that will monitor Mexico’s implementation of labor reforms and compliance with the pact.

ENVIRONMENT

A new U.S. interagency committee will oversee environmental protections in Mexico, helped by attaches based in Mexico City who will monitor environmental laws, regulations and practices.

The deal creates a presumption that an environmental violation affects trade and investment and will require the other governments to prove otherwise.

The deal also allows the 1987 Montreal Protocol, a global agreement to phase out production of ozone-depleting substances, to be included in the trade pact.

PHARMACEUTICALS

The deal aims to hold down drug prices by limiting some patent protections for pharmaceuticals. It eliminates a required 10-year data exclusivity period for biotech medicines, which U.S. Democrats feared would prolong higher prices for some of the priciest drugs on the market.

The deal also removes a provision that would require parties to confirm patents for new uses of known drugs, combating a process called “patent evergreening” that blocks generic competition.

STEEL AND ALUMINUM

In a last-minute request, the U.S. Trade Representative called for automotive rules of origin to include steel and aluminum that is “melted and poured” in North America, closing the door to the use of semi-finished metals from China and elsewhere.

Mexico and Canada agreed to a seven-year phase-in of the new standard for steel. The aluminum demand was dropped, but with the caveat that it would be reconsidered in 10 years.

INTERNET SERVICES, E-COMMERCE

U.S. Democrats lost their bid to remove a provision that grants big internet services providers liability protections for third-party content, House Speaker Nancy Pelosi said.

The Trump administration has agreed to drop language that would have allowed it to lower the $800 value threshold under which shipments can enter the United States tax free without an act of Congress, people familiar with the decision said.

The so-called “de-minimis” level benefits small business owners, but some Trump administration officials claim that it provides an unfair subsidy to Chinese firms selling goods to U.S. consumers through Amazon.com Inc, Ebay Inc and other online platforms.

Reporting by Daina Beth Solomon in Mexico City, David Lawder, David Shepardson and Andrea Shalal in Washington; Editing by Frank Jack Daniel, Nick Zieminski, Bill Berkrot and Christopher Cushing

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