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116th Congress   }                                  {    Rept. 116-358
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                  {           Part 1

======================================================================



 
        UNITED STATES-MEXICO-CANADA AGREEMENT IMPLEMENTATION ACT

                                _______
                                

 December 19, 2019.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Neal, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 5430]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 5430) to implement the Agreement between the United 
States of America, the United Mexican States, and Canada 
attached as an Annex to the Protocol Replacing the North 
American Free Trade Agreement, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
        A. Purpose and Summary...................................     2
        B. Background............................................     2
 II. LEGISLATIVE HISTORY.............................................13
III. EXPLANATION OF THE BILL.........................................14
        TITLE I--APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, 
            THE USMCA............................................    15
        TITLE II--CUSTOMS PROVISIONS.............................    19
        TITLE III--APPLICATION OF THE USMCA TO SECTORS AND 
            SERVICES.............................................    27
        TITLE IV--ANTIDUMPING AND COUNTERVAILING DUTIES..........    29
        TITLE V--TRANSFER PROVISIONS AND OTHER AMENDMENTS........    30
        TITLE VI--TRANSITION TO AND EXTENSION OF THE USMCA.......    34
        TITLE VII--LABOR MONITORING AND ENFORCEMENT..............    36
        TITLE VIII--MONITORING AND ENFORCEMENT RELATING TO THE 
            ENVIRONMENT..........................................    42
        TITLE IX--USMCA SUPPLEMENTAL APPROPRIATIONS ACT, 2019....    50
 IV. VOTES OF THE COMMITTEE..........................................50
  V. BUDGET EFFECTS OF THE BILL......................................50
        A. Committee Estimate of Budgetary Effects...............    50
 VI. Statement Regarding New Budget Authority and Tax Expenditures 
     Budget Authority................................................50
VII. Cost Estimate Prepared by the Congressional Budget Office.......50
VIII.OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......53

        A. Committee Oversight Findings and Recommendations......    53
        B. Statement of General Performance Goals and Objectives.    53
        C. Information Relating to Unfunded Mandates.............    53
        D. Congressional Earmarks, Limited Tax Benefits, and 
            Limited Tariff Benefits..............................    53
        E. Duplication of Federal Programs.......................    53
        F. Hearings..............................................    53
 IX. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........53

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    H.R. 5430, the United States-Mexico-Canada Agreement 
Implementation Act, as ordered reported by the Committee on 
Ways and Means on December 17, 2019, implements the United 
States-Mexico-Canada Agreement.

                             B. Background

    The North American Free Trade Agreement (NAFTA) was signed 
by the United States, Mexico, and Canada in 1992. The NAFTA 
Implementation Act was enacted by Congress and signed by the 
President in the following year. In the decades following its 
implementation, Members of Congress raised numerous concerns 
regarding the NAFTA's impact on the U.S. economy, particularly 
its failure to raise labor and environmental standards in 
Mexico. Many also noted that the NAFTA had become outdated.
    In 2017, the Administration notified Congress of its intent 
to renegotiate the NAFTA. After negotiations concluded, the 
United States, Mexico, and Canada signed the United States-
Mexico-Canada Agreement (hereinafter ``USMCA'' or ``the 
Agreement''), on November 30, 2018. Chairman Neal sent a letter 
to the Administration on April 9, 2019, regarding his concerns 
with the Agreement.\1\ Committee Democrats sent letters to the 
Administration highlighting specific concerns in four key areas 
of the Agreement: labor (April 11, 2019),\2\ environment (April 
17, 2019),\3\ enforcement (April 25, 2019),\4\ and access to 
medicines (May 3, 2019).\5\
---------------------------------------------------------------------------
    \1\April 9, 2019 letter from Chairman Richard Neal to Ambassador 
Robert Lighthizer. Available at: https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/files/documents/
2019.04._Ltr_%20from_%20Chairman_%20Neal_%20to_%20Amb._%20Lighthizer_%20
re  %20NAFTA_%20Replacemen....pdf.
    \2\April 11, 2019 letter from Chairman Richard Neal to Ambassador 
Robert Lighthizer. Available at: https://waysandmeans.house.gov/sites/
democrats._waysandmeans.house.gov/_files/docu-  ments/
_2019.04.11_%20WM_%20Dem_%20Ltr_%20to_%20Amb_%20Lighthizer_%20re_%20NAF-
  TA%20Labor.pdf.
    \3\April 17, 2019 letter from Chairman Richard Neal to Ambassador 
Robert Lighthizer. Available at https://waysandmeans.house.gov/sites/
_democrats.waysandmeans._house.gov/files/docu-  ments/
_2019.04.17_%20WM_%20Dem_%20Ltr_%20to_%20Amb_%20Lighthizer_%20re_%20NAF-
  TA_%20Environment.pdf.
    \4\April 25, 2019 letter from Chairman Richard Neal to Ambassador 
Robert Lighthizer. Available at: https://waysandmeans.house.gov/_sites/
democrats.waysandmeans._house.gov/_files/docu-  ments/
_2019.04.25%20WM_%20Dem_%20Ltr%20to_%20Amb%20Lighthizer_%20re%20NAFTA-  
_%20Enforcement.pdf.
    \5\May 3, 2019 letter from Chairman Richard Neal to Ambassador 
Robert Lighthizer. Available at https://waysandmeans.house.gov/sites/
democrats.waysandmeans.house.gov/_files/documents/
_2019.05.03_%20WM%20Dem_%20Ltr%20to_%20Amb%20Lighthizer_%20re%20NAFTA_%2
0Me-  dicines.pdf.
---------------------------------------------------------------------------
    In response to these concerns, Speaker Pelosi appointed a 
Working Group of House Democrats, led by Chairman Neal, to lead 
negotiations with the Administration on these issues. The 
Working Group issued a progress report to Speaker Pelosi 
regarding negotiations with the Administration on July 26, 
2019.\6\
---------------------------------------------------------------------------
    \6\July 26, 2019 Chairman Neal Letter to Speaker Pelosi. Available 
at: https://waysandmeans.house.gov/sites/
_democrats.waysandmeans._house.gov/files/documents/_20190726  
_Ltr_from_Working_Group_to_Speaker_Pelosi_re_NAFTA_Status_Report.pdf.
---------------------------------------------------------------------------
    As a result of these negotiations, the USMCA was amended on 
December 10, 2019 to incorporate changes to the Agreement 
achieved through the Protocol of Amendment (``the Protocol'') 
to the USMCA, which, together with an accord between House 
Democrats and the Administration, comprise the ``December 10th 
Agreement.''\7 8\ The December 10th Agreement achieves 
transformative changes to the USMCA that bolster the U.S. 
economy, strengthen enforcement and the enforceability of the 
Agreement, protect workers and the environment, and improve 
access to affordable prescription medicines.
---------------------------------------------------------------------------
    \7\The December 10th Agreement is reflected in the Protocol, the 
Environment Cooperation and Customs Verification Agreement between the 
United States and Mexico, dated December 10, 2019, and the United 
States-Mexico-Canada Agreement Implementation Act Title III, Subtitle 
c--United States-Mexico Cross-border Long-haul Trucking Services; Title 
VII--Labor Monitoring and Enforcement; Title VIII--Monitoring and 
Enforcement Relating to Environment; and Title IX--USMCA Supplemental 
Appropriations Act, 2019.
    \8\See Protocol of Amendment to the United States-Mexico-Canada 
Agreement, available at: https://ustr.gov/ sites/ default/ files/files/ 
agreements/FTA/USMCA/ Protocol-of- Amendments-to- the-United-States-
Mexico-Canada-Agreement.pdf.
---------------------------------------------------------------------------
    The U.S. International Trade Commission (``USITC'') issued 
a report on the likely impact of the USMCA on the U.S. economy 
in April 2019.\9\ Based on two key assumptions, the USITC 
estimated that the USMCA would have a positive economic effect. 
First, the USITC assumed that the Agreement would be fully 
enforced; and second, it assumed that some of the Agreement's 
provisions would reduce uncertainty and spur economic activity. 
The December 10th Agreement has made these theoretical 
assumptions a reality for American workers and families. The 
December 10th Agreement makes key changes to the USMCA in the 
areas of (i) enforcement; (ii) labor; (iii) environment; and 
(iv) access to medicines. The following are key aspects of the 
USMCA, beginning with the improvements obtained under the 
December 10th Agreement.
---------------------------------------------------------------------------
    \9\USITC, ``U.S.-Mexico-Canada Trade Agreement: Likely Impact on 
the U.S. Economy and Specific Industry Sectors,'' Publication No. 4889, 
April 2019.
---------------------------------------------------------------------------

                     I. THE DECEMBER 10TH AGREEMENT

a. Enforcement

    Without enforceability and enforcement, any agreement is 
just words on a page. Given the lacking enforcement record in 
the NAFTA, the December 10th Agreement fixed procedures in the 
NAFTA's and original USMCA's state-to-state dispute settlement 
mechanism that have allowed parties to block the formation of 
an arbitral panel and frustrate formal enforcement of all 
obligations. It also established enhanced enforcement 
mechanisms to secure compliance with the new labor and 
environmental rules. The December 10th Agreement includes the 
following enforcement-related improvements:
            1. Prevent panel blocking and improve the efficiency of the 
                    state-to-state dispute settlement mechanism
    The December 10th Agreement removes the requirement for the 
Free Trade Commission to convene before a panel is established 
and allows the complaining party to appoint the panelists if 
the defending party refused to participate in or does not show 
up to the choosing by lot procedure. The Agreement thus fixes 
procedural loopholes to help ensure that the USMCA is fully 
enforceable.
            2. Create enhanced enforcement for labor and environment 
                    provision
    As detailed below, the December 10th Agreement creates 
enhanced mechanisms to assist in the full enforcement of these 
provisions.
            3. Require the development of rules of evidence for use in 
                    all enforcement mechanisms
    The December 10th Agreement requires the development of 
rules of evidence for use in all enforcement mechanisms. The 
rules of evidence will allow disputing parties to submit 
anonymous testimony, redacted evidence, testimony in person, 
via declaration, affidavit, report, teleconference, or 
videoconference. In addition, the Panel will be permitted to 
accept evidentiary stipulations in advance of the hearing, 
request the production of documents, and take an adverse 
inference for non-responses. The revised USMCA will be the 
first U.S. trade agreement to require the development of rules 
of evidence for use in dispute settlement proceedings--an 
important step in ensuring that trade agreements are fully 
enforceable.

b. Labor

            1. Strengthening Rules
    The labor rules in U.S. trade agreements have proven 
difficult, if not impossible, to enforce. Five key changes 
strengthen the rules with a view to improving their 
enforceability.
           Create a presumption that violations occur 
        in ``a manner affecting trade or investment between the 
        Parties. As decisions under previous trade agreements 
        have demonstrated,\10\ the ``manner affecting trade . . 
        .'' language has created a hurdle to labor enforcement. 
        The December 10th Agreement includes a provision that 
        creates a presumption that violations affect trade and 
        requires that the other Party demonstrate otherwise:
---------------------------------------------------------------------------
    \10\See In the Matter of Guatemala--Issues Relating to the 
Obligations Under Article 16.2.1(a) of the CAFTA-DR, Final Report of 
the Panel, June 14, 2017. Available at: https://www.trade.gov/industry/
tas/Guatemala%20%20%E2_%80%93%20Obligations_%20Under_%20Ar-  
ticle%2016-2-1(a)%20of_%20the%20CAFTA-DR%20%20June%2014%202017.pdf.
---------------------------------------------------------------------------
           Strengthen language in the Forced Labor 
        provision to make it effectively enforceable. The 
        December 10th Agreement removes the phrase ``through 
        measures it considers appropriate'' and the USMCA 
        footnote regarding potential inconsistencies with other 
        international obligations.
           Remove ``sustained or recurring course of 
        action or inaction'' from the provision on violence. 
        Acts of violence and intimidation should not need to be 
        repeated in order to be actionable as a denial of 
        freedom of association or the right to collective 
        bargaining.
           Strengthen steel rules of origin in the 
        automotive sector to support U.S. manufacturing. After 
        a transition period, the December 10th Agreement 
        ensures that steel used in the automotive sector will 
        only receive preferential treatment under the USMCA if 
        it is melted and poured in the region.
           Create a new enforcement mechanism to 
        address unfair trade in trucking services. Building on 
        the exception negotiated in the Services chapter of the 
        USMCA, and consistent with the December 10th Agreement, 
        the implementing bill will establish a new process at 
        the USITC that will protect U.S. truckers and companies 
        from surges in trucking services from Mexico that cause 
        material harm to the U.S. industry.
            2. Establishing a robust monitoring program
    The United States has failed to effectively monitor the 
labor provisions in trade agreements. Pursuant to the December 
10th Agreement, the USMCA implementing bill will establish an 
interagency committee with devoted funding that will be 
responsible for actively monitoring Mexico's compliance with 
the labor chapter, including the following activities:
           Establish an Independent Review Body. The 
        implementing bill will establish an independent review 
        body that will make determinations regarding whether 
        Mexico is satisfactorily implementing its labor reform 
        and general labor laws based on objective benchmarks. 
        Negative determinations will lead to dispute settlement 
        actions.
           Devote Robust Resources. The interagency 
        committee will receive funding for staff from USTR and 
        the U.S. Department of Labor (``DOL'') devoted to 
        monitoring and enforcement, including multiple labor 
        attaches based in Mexico.
           Engage with Key Stakeholders. The 
        interagency committee will be required to consult 
        regularly with key stakeholders, including the Labor 
        Advisory Committee. The committee will also coordinate 
        with other key stakeholders, including the 
        International Labour Organization (``ILO''), the Inter-
        American Development Bank (IDB), Mexico, and Canada.
           Link Monitoring with Enforcement. The 
        interagency committee's monitoring work will be 
        directly related to enforcement actions taken by USTR, 
        including the establishment of priority sectors and 
        facilities. The committee will also review petitions 
        submitted by outside stakeholders.
            3. Creating labor-specific enforcement tool
    State-to-state dispute settlement by itself has not 
provided sufficient leverage to ensure that U.S. trading 
partners live up to their labor commitments. In recognition of 
this concern, the December 10th Agreement establishes an 
enforcement mechanism in the dispute settlement chapter that:
           Takes immediate effect upon entry into force 
        of the Agreement;
           Provides for facility-based enforcement of 
        labor standards with a rapid timeline;
           Covers manufactured goods and services 
        traded between the United States and Mexico as 
        described in the Protocol;
           Requires verification of compliance by 
        independent labor experts; and
           Leads to the imposition of penalties on 
        goods and services--which includes suspension of 
        liquidation during the course of the verification--that 
        are not produced in compliance with the December 10th 
        Agreement's labor standards. In the case of repeat 
        offenders, the United States can block entry of those 
        goods.
    The renegotiation of the NAFTA was premised on the 
recognition that the original agreement failed to raise wages 
and working conditions in Mexico, hurting American workers, 
especially in our industrial manufacturing sector. The NAFTA 
does not formally incorporate labor provisions. It addresses 
labor commitments through the North American Agreement on Labor 
Cooperation (``NAALC''), a separate cooperative agreement.\11\ 
Despite the fact that findings of non-compliance have been made 
pursuant to the NAALC's mechanisms, sanctions or penalties have 
never been authorized as a result of those cases.
---------------------------------------------------------------------------
    \11\See North American Agreement on Labor Cooperation, available 
at: https://www.dol.gov/agencies/ ilab/trade/agreements/naalcgd.
---------------------------------------------------------------------------
    The USMCA as signed in November 2018 incorporated labor 
commitments in the Agreement itself and subjected those 
commitments to the Agreement's state-to-state dispute 
settlement mechanism. However, some of those obligations 
remained soft, and responding parties have been able to 
frustrate the NAFTA's state-to-state mechanism, as noted above. 
In the December 10th Agreement, Democrats obtained improvements 
in the following areas: strengthening rules; new mechanisms and 
resources to ensure that the U.S. government effectively 
monitors compliance with the Agreement's labor obligations 
specific to Mexico; and a new and enhanced labor-specific 
enforcement mechanism.
            4. Committing robust resources for implementing and 
                    enforcing the labor provision
    The obligations in trade agreements are valuable only if 
they are actively monitored and enforced. Pursuant to the 
December 10th Agreement, the implementing bill will provide 
increased funding to monitor and enforce the USMCA, as well as 
provide significant capacity building resources to support 
Mexico's labor reform, including $240 million over four years, 
including:
           $30 million for USTR to monitor and enforce 
        the labor obligations in the USMCA;
           $30 million for DOL to monitor and enforce 
        the USMCA, including funding for five labor attache 
        positions in Mexico; and
           $180 million in capacity building for grants 
        issued by DOL to support the implementation of Mexico's 
        labor reform, which will go a long way toward ensuring 
        the potential of Mexico's labor reform. The Ways & 
        Means Committee expects at least $100 million of these 
        funds to support capacity building projects in Mexico 
        that are designed to train workers so that they can 
        realize their collective bargaining and freedom of 
        association rights in the workplace.

c. Environment

    Twenty-five years under NAFTA have shown that a failure to 
comply with and enforce environmental standards in Mexico has 
had negative economic consequences and undermined American 
competitiveness. The NAFTA does not formally incorporate 
environmental provisions. It addresses environment commitments 
through the North American Agreement on Environmental 
Cooperation (``NAAEC''), a separate cooperative agreement. No 
sanctions or penalties have ever been authorized as a result of 
petitions filed pursuant to the NAAEC.\12\ The USMCA, as signed 
in November 2018, incorporated environment commitments in the 
Agreement itself and subjected those commitments to the 
Agreement's state-to-state dispute settlement mechanism. In the 
December 10th Agreement, House Democrats obtained improvements 
in the following areas: strong and high-standard rules that are 
clear and enforceable, new mechanisms and the allocation of 
additional resources to monitor whether environmental 
protections are being applied, and new mechanisms to hold 
partners and actors accountable to the Agreement.
---------------------------------------------------------------------------
    \12\See North American Agreement on Environmental Cooperation. 
Available at: https://www.epa.gov/sites/production/files/2018-11/
documents/us-mxca_eca_-_final_english.2.pdf.
---------------------------------------------------------------------------
            1. Strong and high-standard rules that are clear and 
                    enforceable
    Similar to the labor rules, the December 10th Agreement 
creates a presumption that an environmental violation affects 
trade and investment and requires the responding Party to prove 
otherwise during dispute settlement. Further, House Democrats 
restored key obligations achieved in the NAFTA and under the 
May 10, 2007 Agreement (``the May 10th Agreement'') between 
House Democrats and the Administration in connection with trade 
agreements with Peru, Panama, and Colombia. The May 10th 
Agreement required the Parties to ``adopt, maintain and 
implement'' seven key multilateral environment agreements 
(MEAs).\13\ House Democrats were able to secure a similar 
commitment in the December 10th Agreement. The obligation also 
includes additional language that allows the Parties to agree 
to add additional environment or conservation agreements to the 
listed MEAs. House Democrats had hoped to secure the addition 
of an eighth MEA, the Paris Agreement under the United Nations 
Framework Convention on Climate Change, to the list of covered 
MEAs; however, House Democrats were unable to secure the 
outcome from the Trump Administration. House Democrats intend 
that a future Administration, which recognizes the global 
climate change crisis, will immediately work with Canada and 
Mexico to amend the obligation accordingly. The December 10th 
Agreement also restored a provision that appears in the NAFTA 
that allows a Party to prioritize their obligations under the 
seven covered MEAs over the trade agreement obligations. 
Lastly, the December 10th Agreement removed language to ensure 
that trade in all substances controlled by the Montreal 
Protocol can be covered by the USMCA, including all existing 
and future amendments to the Montreal Protocol (such as the 
Kigali amendment covering HFCs, which contribute to global 
warming).
---------------------------------------------------------------------------
    \13\See Art. 24.8(4) of the USMCA.
---------------------------------------------------------------------------
            2. New mechanisms and the allocation of additional 
                    resources to monitor environmental protections
    Under the December 10th Agreement, House Democrats secured 
the creation of the Interagency Environment Committee for 
Monitoring and Enforcement (``Interagency Environment 
Committee''). The Interagency Environment Committee will 
include all federal agencies with the necessary expertise and 
functions to fully enforce the USMCA environment obligations, 
including the Department of Interior (``DOI'') (U.S. Fish and 
Wildlife Services), the Department of Commerce (National 
Oceanic and Atmospheric Administration (``NOAA''), and the 
Environmental Protection Agency (``EPA''). First, the 
Interagency Environment Committee will conduct a thorough 
assessment of Canada and Mexico's current environment laws, 
regulations and enforcement practices. The Interagency 
Environment Committee will develop a report that will create a 
roadmap for full compliance with the USMCA environment 
obligations and will submit the report and assessment to 
Congress.
    The Interagency Environment Committee will continuously 
monitor Canada's and Mexico's implementation of the USMCA 
environment obligations. Monitoring will include reviewing and 
recommending enforcement actions in response to factual records 
and submissions of the Commission for Environmental Cooperation 
(``CEC''), a U.S.-Mexico-Canada cooperation body set up under 
the NAFTA. Since the NAFTA was implemented, the CEC has 
developed factual records showing that the NAFTA Parties are 
failing to effectively enforce their environment laws. No 
action has been taken based on these findings. Under the 
December 10th Agreement, the Interagency Environment Committee 
will be required to review the factual records and their 
underlying submissions to determine if an enforcement action 
should be taken. The Interagency Environment Committee must 
submit a written justification to Congress if it recommends 
that no action be taken.
    Further, with respect to Mexico, the Interagency 
Environment Committee will implement, review public comments, 
and fully utilize all enforcement tools under the Cooperation 
and Customs Verification Agreement between the United States 
and Mexico (``Customs Verification Agreement'') and will review 
quarterly update reports from the three new environment 
attaches in Mexico. The December 10th Agreement includes the 
establishment of three new environment attaches who will be 
detailed to USTR from NOAA, U.S. Fish and Wildlife Service, and 
EPA and stationed in Mexico to assist the Interagency 
Environment Committee with monitoring and enforcing Mexico's 
efforts to live up to their USMCA environment obligations. The 
Interagency Environment Committee will provide a platform for 
better coordination, utilization and funding of U.S. Government 
efforts to strengthen environment practices in North America.
    House Democrats secured additional resources to fulfill 
these functions. Pursuant to the December 10th Agreement, the 
implementing legislation includes an additional appropriated 
$20 million over four years for USTR to lead the Interagency 
Environment Committee in monitoring and enforcing the 
environment obligations in the USMCA, including funding for the 
three environment attaches assigned to Mexico. Moreover, the 
December 10th Agreement secured $40 million over four years for 
the Trade Enforcement Trust Fund to be used for environment-
focused enforcement efforts. Further, the December 10th 
Agreement included additional funds, beyond what is typically 
appropriated for each program per year, to the EPA, NOAA, U.S. 
Department of Agriculture--Animal and Plant Health Inspection 
Service (``APHIS'') and U.S. Fish and Wildlife Services. 
Specifically, $4 million over four years will be appropriated 
to the EPA to assist in its work on the CEC; NOAA will receive 
an additional $8 million over four years to combat illegal, 
unreported, and unregulated fishing and to enhance 
implementation of the Seafood Import Monitoring Program; and 
U.S. Department of Agriculture (APHIS) and DOI (U.S. Fish and 
Wildlife Services) will each receive an additional $4 million 
over four years to implement the Lacey Act.
            3. New mechanism to hold partners and actors accountable to 
                    the agreement and resources to address pollution
    In addition to fixing the state-to-state dispute settlement 
mechanism, the December 10th Agreement includes a new 
environment-specific enforcement mechanism. Additionally, the 
Customs Verification Agreement is a binding agreement signed 
between Mexico and the United States on December 10, 2019, 
which allows for the United States to request customs 
information from Mexico to verify the legality of a shipment of 
fauna or flora. Mexico is a known source and transshipment hub 
of illegally-taken wild fauna and flora. This new mechanism 
will allow the United States to hold Mexico accountable and 
will deter the shipment of these illegal goods in Mexico.
    The December 10th Agreement also included significant funds 
to address environment-focused infrastructure needs on the 
U.S.-Mexico border and pollution in U.S.-Mexico shared waters. 
The December 10th Agreement includes a capital increase 
authorization for the North American Development Bank 
(``NADBank'') and $215 million for NADBank over five years for 
environment infrastructure projects. In addition, House 
Democrats secured $300 million over four years of additional 
appropriated funds for EPA grants under the Border Water 
Infrastructure Program to address pollution needs connected 
with high priority wastewater facilities on the U.S.-Mexico 
border. Further, House Democrats secured $8 million for NOAA 
over four years to address marine debris in North American 
waters.

d. Access to medicines

    U.S. patients are currently facing a crisis relating to 
access to affordable health care and prescription drugs. The 
NAFTA did not include provisions on biologics, secondary 
patents, the protection of new clinical information, patent 
linkage, or other provisions that limit patients' access to 
medicines. The USMCA, as originally negotiated, would have 
locked-in practices that lead to high drug prices, hindered the 
generic competition that brings down prices, and ignored access 
to medicines principles from the May 10th Agreement. The 
December 10th Agreement now preserves Congress's power to pass 
laws that bring down high prescription drug costs, ensures fair 
terms of competition, and recognizes key access to medicine 
standards. The December 10th Agreement creates a balance 
between encouraging the competition that brings greater access 
to medicines at lower costs to patients and supporting 
pharmaceutical innovation. This balance was an important 
requirement of the Bipartisan Congressional Trade Priorities 
and Accountability Act of 2015.
            1. Preserving Congressional power to bring down high 
                    prescription drug costs
    The December 10th Agreement removes the biologics 
provision, and all references to it, from the intellectual 
property chapter. This provision required that the United 
States, Canada, and Mexico provide at least 10 years of market 
exclusivity for biologics, which are some of the most expensive 
drugs on the market. Some of these medicines now cost more than 
$200,000 per year per patient. The removal of this provision 
preserves the policy space needed to drive down the high price 
of biologics.
    The December 10th Agreement also removes the requirement 
that the United States, Canada, and Mexico confirm the 
availability of patents for new uses of known products. This 
provision would have locked in the practice of ``patent 
evergreening,'' in which pharmaceutical companies obtain 
hundreds of patents related to a product to block generic 
competition and price reductions. The December 10th Agreement 
ensures that the United States does not lock-in patent 
evergreening here or require its export to Mexico and Canada.
    In addition, the December 10th Agreement removes the 
requirement that the United States, Canada, and Mexico provide 
at least three years of additional exclusivity for new clinical 
information submitted to support new uses of previously-
approved pharmaceutical products.
            2. Ensuring fair terms of competition
    Congress passed the Drug Price Competition and Patent Term 
Restoration Act of 1984, commonly known as ``Hatch-Waxman,'' to 
balance incentives for the initial innovation of a 
pharmaceutical with opportunities for follow-on competition 
from less expensive generic drugs.\14\ The December 10th 
Agreement also focuses on ensuring that the USMCA reflects the 
balance in U.S. law to promote access to medicines.
---------------------------------------------------------------------------
    \14\See Drug Price Competition and Patent Term Restoration Act of 
1984, Pub. L. No. 98-417.
---------------------------------------------------------------------------
    The December 10th Agreement adds new language to the 
regulatory review provision to ensure that it is consistent 
with U.S. law and fosters competition. A strong regulatory 
review provision enables generic and biosimilar manufacturers 
to use a patented invention during the patent term to develop 
information needed to obtain regulatory approval the moment the 
patent expires.
    The December 10th Agreement also ensures that the USMCA's 
data protection provisions are consistent with U.S. law. Under 
U.S. law, branded pharmaceutical companies may obtain a form of 
data protection known as new chemical entity (``NCE'') 
exclusivity for a period of five years. A new footnote ensures 
that a generic company can continue to seek approval in less 
than five years when the branded company receives notice of the 
generic's claim and does not bring legal action within 45 days. 
Another footnote ensures that NCE exclusivity is limited to 
those products with the same active moiety or molecule as the 
branded product, consistent with U.S. law.
            3. Reflecting key May 10th principles
    The December 10th Agreement removes the concept of ``hard'' 
patent linkage--under which a regulatory agency cannot approve 
the marketing of a generic version of a pharmaceutical until it 
certifies that no patent would be violated--from the trade 
agreement template. Under a new Annex, Mexico may continue its 
current linkage system only if it ensures that directly 
affected persons receive notice and a reasonable opportunity to 
be heard. The December 10th Agreement also improves 
transparency and incentives for generic competition. The patent 
linkage provision applies only to chemically-synthesized drugs 
as the United States does not apply patent linkage to 
biologics.
    The December 10th Agreement also aligns the provision on 
patent term adjustments more closely with the May 10th 
principles by providing non-exhaustive examples of limitations 
and restrictions on when patent term adjustments for regulatory 
delays may be permitted.

                        II. KEY USMCA PROVISIONS

    The USMCA makes some notable changes to the NAFTA's market 
access provisions for autos, agriculture products, and 
services, as well as changes to rules and disciplines, 
including in the areas of investment and intellectual property 
rights. The USMCA also addresses new issues such as digital 
trade and currency.

a. Autos

    The NAFTA phased out U.S. tariffs on imports of automotive 
goods from Canada and Mexico that met the rules of origin 
requirements. The USMCA increases regional value content 
requirements for passenger vehicles, light and heavy trucks, 
and automotive parts. It also imposes a new requirement that 70 
percent of steel and 70 percent of aluminum purchases by 
vehicle producers must originate in USMCA countries. For the 
first time in a trade agreement, the USMCA includes wage 
requirements stipulating a minimum of 40 to 45 percent of 
production of vehicles traded in the USMCA region be made by 
workers earning on average at least $16 per hour.

b. Agriculture

    The USMCA generally maintains the market access for 
agriculture provided under the NAFTA, which allows tariff-free 
trade of most agricultural goods in the region. The USMCA 
provides additional market access for U.S. dairy, poultry, and 
eggs to Canada. Canada also agreed to eliminate its pricing 
schemes for skim milk products six months after the agreement 
enters into force. New provisions address Canada's 
discriminatory practices regarding the sale, distribution, and 
labeling of wine and distilled spirits, and grading of U.S. 
wheat. Additionally, the USMCA includes strengthened 
disciplines for science-based sanitary and phytosanitary 
measures and provisions that address novel agricultural bio 
technologies such as gene editing.
    The Committee is of the view that U.S. recognition of Sotol 
as a distinctive product of Mexico would contravene the purpose 
of 27 U.S.C. 205(e), under which the Secretary of the Treasury 
is charged with developing regulations on packaging, marking, 
branding, and labeling ``as will prohibit deception of 
consumers with respect to'' distilled spirits products. In 
fact, U.S. recognition of Sotol as a distinctive product of 
Mexico through such a regulation would fundamentally deceive 
U.S. consumers because Sotol is the generic name for 22 species 
of a plant that grows naturally on both sides of the U.S.-
Mexico border. For the same reasons, the Committee is of the 
view that the Alcohol and Tobacco Tax and Trade Bureau 
(``TTB'') does not have authority under its regulations to 
recognize Sotol as a distinctive product of Mexico, since 27 
CFR 5.22 prohibits TTB from recognizing distilled spirits as 
distinctive products if ``by usage and common knowledge [they] 
have lost their geographical significance to such an extent 
that the appropriate TTB officer finds they have become 
generic.''

c. Currency

    The USMCA includes new policy and transparency commitments 
on currency issues. It requires commitments to refrain from 
competitive devaluations and targeting exchange rates and 
provides accountability mechanisms.

d. Digital trade

    The USMCA includes new digital trade provisions, including 
prohibiting customs duties on electronically transmitted 
products and limits on source code disclosure requirements. The 
USMCA also contains broad provisions on cross-border data 
flows, and restrictions on data localization and the liability 
of Internet platforms for third-party content. The USMCA is the 
first trade agreement to include certain limitations on 
liability of interactive computer service suppliers or users 
for third-party content. The Committee understands that 
inclusion of this obligation will not preclude Congress from 
acting to amend U.S. law related to these principles in the 
future.

e. Intellectual property

    The USMCA creates a strong framework of standards for 
protection and enforcement of intellectual property rights 
including copyrights, trademarks, trade secrets, and patents. 
It also includes robust criminal and civil enforcement 
provisions.

f. Investment

    The USMCA's investment provisions largely track those of 
the NAFTA, except for changes to the investor-state dispute 
settlement (``ISDS'') provisions. The Agreement generally ends 
ISDS between Canada and the United States. With respect to 
Mexico and the United States, the USMCA would limit ISDS to 
claims involving government contracts in natural gas, power 
generation, infrastructure, transportation, and 
telecommunications sectors, or in other sectors provided 
national remedies are exhausted first.

g. Services

    The USMCA's services provisions require nondiscriminatory 
treatment of partner-country providers in like circumstances, 
including national treatment and MFN treatment; no limitations 
on the number of service suppliers, the total value or volume 
of services provided, the number of persons employed, or the 
types of legal entities that a foreign service supplier may 
employ; and include prohibitions on commercial presence 
requirements. Mexico and Canada also agreed to increase their 
customs de minimis thresholds.

                        II. LEGISLATIVE HISTORY


Background

    On December 13, 2019, the President transmitted, in 
accordance with Section 106(a) of the Bipartisan Congressional 
Trade priorities and Accountability Act of 2015, documents 
including a draft of the implementing bill, a copy of the final 
legal text, and a statement of administrative action with 
respect to such agreement. On the same day the implementing 
bill, H.R. 5430, was introduced by Majority Leader Steny Hoyer 
on behalf of himself and the Minority Leader. On December 17, 
2019, H.R. 5430 was referred to the Committee on Ways and 
Means.

Committee hearings

    On June 25, 2019, the Subcommittee on Trade held a hearing 
on ``Mexico's Labor Reform: Opportunities and Challenges for an 
Improved NAFTA.'' Members heard testimony from experts in 
Mexico's economy, including: 1) Dr. Joyce Sadka from the Center 
for Economic Research at Instituto Tecnologico Autonomo de 
Mexico, 2) Ms. Gladys Cisneros from the Solidarity Center, 3) 
Dr. Harley Shaiken from the Center for Latin American Studies 
at University of California, Berkeley, and 4) Ms. Cathy 
Feingold, AFL-CIO. On June 19, 2019, the full Committee held a 
hearing on ``The 2019 Trade Policy Agenda: Negotiations with 
China, Japan, the EU, and UK; new NAFTA/USMCA; U.S. 
Participation in the WTO; and other matters.'' Ambassador 
Robert E. Lighthizer, the U.S. Trade Representative, was the 
only witness at the hearing.
    On May 22, 2019, the Subcommittee on Trade held a hearing 
on ``Enforcement in the New NAFTA.'' Members heard from the 
following witnesses: 1) Ms. Beth Baltzan, from the American 
Phoenix Trade Advisory Services PLLC, 2) Mr. Owen Herrnstadt 
from the International Association of Machinists and Aerospace 
Workers, 3) Ms. Sandra Polaski, an Independent Expert, and 4) 
Mr. Alexander von Bismark from the U.S. Environmental 
Investigation Agency. The minority invited Ms. Devry Boughner 
Vorwerk from Cargill, Inc. On March 26, 2019, the Subcommittee 
on Trade held a hearing on ``Trade and Labor: Creating and 
Enforcing Rules to Benefit American Workers.'' Members heard 
from the following witnesses: 1) Ms. Celeste Drake from the 
American Federation of Labor and Congress of Industrial 
Organizations (AFL-CIO), 2) Mr. Shane Larson from Communication 
Workers of America (CWA), 3) Mr. Josh Nassar, United Auto 
Workers (UAW), 4) Ms. Holly Hart from United Steelworkers 
(USW), 5) Mr. Steve Catanese from Local 668 Chapter, Services 
Employees International Union (SEIU) and 6) Ms. Thea Lee, 
Economic Policy Institute (EPI). The minority invited Ms. Susan 
Montevideo from American Association of Port Authorities 
(AAPA).
    On March 21, 2018, the full Committee held a hearing on the 
``U.S. Trade Policy Agenda.'' Ambassador Robert E. Lighthizer, 
the U.S. Trade Representative, was the only witness at the 
hearing.
    On July 18, 2017, the Subcommittee on Trade held a hearing 
on ``Modernization of the North American Trade Agreement 
(NAFTA).'' Members heard from many witnesses, including: 1) Mr. 
Tom Linebarger from Cummins, Inc., 2) Mr. Patrick J. Otensmeyer 
from Kansas City Southern, 3) Mr. Dennis Arriola from Sempra 
Energy, 4) Ms. Celeste Drake from American Federation of Labor 
and Congress of Industrial Organizations (AFL-CIO), 5) Mr. 
Jason Perdue from the Nebraska Farm Bureau, 6) Ms. Christine 
Bliss from Coalition of Services Industries, 7) Mr. Stan Ryan 
from Darigold, Inc., 8) Ms. Althea Erickson, Etsy, Inc., and 9) 
Ms. Susan Helper from Case Western Reserve University.
    On June 22, 2017, the full Committee held a hearing on the 
``U.S. Trade Policy Agenda.'' Ambassador Robert E. Lighthizer, 
the U.S. Trade Representative, was the only witness at the 
hearing.

Committee action

    The Committee on Ways and Means met in open session on 
December 17, 2019 to consider H.R. 5430, the ``United States-
Mexico-Canada Agreement Implementation Act,'' on December 17, 
2019, and ordered the bill favorably reported by voice vote 
(with a quorum being present).

                      III. EXPLANATION OF THE BILL


Section 1. Short Title and Table of Contents

    Section 1 of H.R. 5430 contains the short title of the Act, 
which may be cited as the ``United States-Mexico-Canada 
Agreement Implementation Act'', and sets forth the table of 
contents of the bill.

Section 2. Definition

    Section 2 of H.R. 5430 defines various terms used 
throughout the bill, including the terms ``appropriate 
congressional committees'', ``HTS'', ``identical goods'', 
``NAFTA'', ``preferential tariff treatment'', ``USMCA'', 
``USMCA Country'', ``International Trade Commission'', and 
``Trade Representative''.

  TITLE I--APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE USMCA


        Section 101: Approval and Entry Into Force of the USMCA


                              CURRENT LAW

    Section 101 of the NAFTA Implementation Act approved the 
NAFTA, and the accompanying exchange of letters and Statement 
of Administrative Action.

                         EXPLANATION OF CHANGE

    Section 101(a) of H.R. 5430 states that Congress approves 
the Protocol Replacing the North American Free Trade Agreement 
with the Agreement between the United States of America, the 
United Mexican States, and Canada, the USMCA attached as an 
Annex to the Protocol, as amended by the Protocol of Amendment 
to the Agreement between the United States of America, the 
United Mexican States, and Canada, and the Statement of 
Administrative Action. Section 101(b) provides for the USMCA to 
enter into force with respect to Canada and Mexico not earlier 
than 30 days after the date on which the President submits to 
Congress the written notice required by section 106(a)(1)(G) of 
the Bipartisan Congressional Trade Priorities and 
Accountability Act of 2015 (TPA 2015), which shall include the 
date on which the USMCA will enter into force.

                           REASON FOR CHANGE

    Approval of the USMCA and the Statement of Administrative 
Action is required under the procedures of section 103(b)(3)(B) 
of TPA 2015.\15\ Section 101 provides for such approval and for 
entry into force of the USMCA.
---------------------------------------------------------------------------
    \15\See Bipartisan Congressional Trade Priorities and 
Accountability Act of 2015, Pub. L. No. 114-26.
---------------------------------------------------------------------------

 Section 102: Relationship of the USMCA to United States and State Law


                              CURRENT LAW

    Section 102 of the NAFTA Implementation Act contains 
similar provisions as section 102 of H.R. 5430 described below 
concerning the relationship of the NAFTA to U.S. and State laws 
and private right of action.

                         EXPLANATION OF CHANGE

    Section 102(a) of H.R. 5430 provides that U.S. law prevails 
in the case of a conflict with the USMCA. Section 102(b) 
provides that only the United States is entitled to bring a 
court action challenging a state law as being invalid on 
grounds of inconsistency with the USMCA. Section 102(c) of H.R. 
5430 states that there is no private cause of action or defense 
under the FTA and no person other than the United States may 
challenge a federal or state law in court as being inconsistent 
with the FTA.

                           REASON FOR CHANGE

    The provision addresses the issue of the operation of the 
agreement relative to federal and state law, as well as private 
remedies. Section 102 of H.R. 5430 is necessary to make clear 
that no provision of the USMCA will be given effect if it is 
inconsistent with federal law and that entry into force of the 
agreement creates no new private remedy.

Section 103: Implementing Actions in Anticipation of Entry Into Force; 
           Intial Regulations; Tariff Proclamation Authority


                              CURRENT LAW

    Section 105 of the NAFTA Implementation Act contains 
similar provisions as section 103 of H.R. 5430 described below 
concerning the implementing actions in anticipation of entry 
into force of the NAFTA.

                         EXPLANATION OF CHANGE

    Section 103(a) of H.R. 5430 authorizes actions between the 
date of enactment of H.R. 5430 and entry into force of the 
USMCA necessary to implement the Agreement on that date. 
Section 103(a) of H.R. 5430 provides that, after the date of 
enactment, the President may proclaim such actions, and other 
U.S. Government officers may issue such regulations, as are 
necessary to ensure the appropriate implementation of any 
provision of the legislation that is to take effect on the date 
of entry into force of the Agreement. The effective date of 
such actions and regulations may not be earlier than the date 
of entry into force of the USMCA. Where proclaimed actions are 
not subject to consultation and layover requirements under the 
bill, proclamations generally may not take effect earlier than 
15 days after their publication.
    Section 103(b) of H.R. 5430 establishes that regulations 
necessary or appropriate to carry out actions under the bill 
and Statement of Administrative Action must, to the maximum 
extent feasible, be issued within one year of entry into force 
of the USMCA or, where a provision takes effect on a later 
date, within one year of the effective date of the provision.
    Section 103(c) of H.R. 5430 authorizes the President to 
proclaim (i) modifications or continuations of any duty; (ii) 
continuation of duty-free or excise treatment; or (iii) 
additional duties that the President determines to be necessary 
or appropriate to carry out or apply Article 2.4 (Treatment of 
Customs Duties), Article 2.7 (Temporary Admission of Goods), 
Article 2.8 (Goods Re-Entered After Repair or Alteration), 
Article 2.9 (Duty-Free Entry of Commercial Samples of 
Negligible Value and Printed Advertising Materials), Article 
2.10 (Most-Favored Nation Rates of Duty on Certain Goods), 
Article 6.2 (Handmade, Traditional Folkloric, or Indigenous 
Handicraft Goods), Article 6.3 (Special Provisions), and the 
Tariff Schedule of the United States to Annex 2-B (Tariff 
Commitments), including the appendices to that Annex, Annex 2-C 
(Provisions Between Mexico and the United States on Automotive 
Goods), and Annex 6-A (Special Provisions).
    Section 103(c) of H.R. 5430 also authorizes the President 
to provide for the continuation, phase-out, and elimination, 
according to the Tariff Schedule of the United States to Annex 
2-B of the USMCA, of customs duties on imports from Canada and 
Mexico that meet the Agreement's rules of origin.

                           REASON FOR CHANGE

    These provisions of H.R. 5430 are necessary to ensure full 
implementation of obligations under the USMCA upon its entry 
into force and the issuance of all Federal regulations.

  Section 104: Consultation and Layover Provisions for, and Effective 
                      Date of, Proclaimed Actions


                              CURRENT LAW

    Section 103 of the NAFTA Implementation Act established 
consultation and layover requirements similar to the provisions 
carried forward in section 104 of H.R. 5430.

                         EXPLANATION OF CHANGE

    Section 104 of H.R. 5430 establishes requirements for the 
proclamation of actions that are subject to consultation and 
layover provisions under the Act. The President may proclaim 
such action only after: (1) obtaining advice from the 
appropriate private sector advisory committees and the USITC, 
which shall hold a public hearing on the proposed action before 
providing advice regarding the proposed action, (2) submitting 
a report to the appropriate congressional committees concerning 
the reasons for the action, and (3) providing for a 60-day 
layover period (starting after the President has both obtained 
the required advice and provided the required report). Section 
104 of H.R. 5430 provides that the proposed action cannot take 
effect until after the expiration of the 60-day period and 
after the President has consulted with the appropriate 
congressional committees regarding the proposed action.
    The President may initiate the consultation and layover 
process under section 104 of H.R. 5430 on enactment of the 
bill. However, under section 103(a) of the bill, any modifying 
proclamation cannot take effect until the Agreement enters into 
force. In addition to modifications of customs duties, these 
provisions apply to other Presidential proclamation authority 
provided in the bill that is subject to consultation and 
layover, such as authority to implement a proposal to modify 
the Agreement's specific rules of origin in accordance with 
Article 5.18 (Committee on Rules of Origin and Origin 
Procedures) and Article 6.4 (Review and Revision of Rules of 
Origin) of the USMCA.
    Section 104 of H.R. 5430 gives the President certain 
proclamation authority but requires extensive consultation with 
Congress before such authority may be exercised. The Committee 
believes that such consultation is an essential component of 
the delegation of authority to the President and expects that 
such consultations will be conducted in a thorough and timely 
manner.

                           REASON FOR CHANGE

    Section 104 of H.R. 5430 is necessary to provide the 
statutory authority for the President to proclaim certain 
actions that are subject to consultation and layover. Because 
the proclamation authority is expressly subject to the 
consultation and layover requirements, the Committee and 
Congress will carefully review any changes in the rules that 
would vary from those previously set out.

      Section 105: Adminstration of Dispute Settlement Proceedings


                              CURRENT LAW

    Section 105 of the NAFTA Implementation Act establishes and 
authorizes funds for the United States Section of the NAFTA 
Secretariat.

                         EXPLANATION OF CHANGE

    Section 105(a) of H.R. 5430 authorizes the President to 
establish or designate within the U.S. Department of Commerce a 
United States Section of the Secretariat established under 
Chapter 30 of the USMCA. Subsection (b) of H.R. 5430 authorizes 
appropriations for each fiscal year after fiscal year 2020 to 
the Department of Commerce $2 million for the establishment and 
operations of the section and for payment of the U.S. share of 
expenses of panels established under Chapter 31 of the USMCA 
including under Annex 31-A relating to the Facility-Specific 
Rapid Response Labor Mechanism, binational panels and 
extraordinary challenge committees convened under NAFTA for 
matters covered by Article 34.1 of the USMCA.
    It also provides for the reimbursement of expenses incurred 
in dispute settlement proceedings under Chapter 10 of the 
USMCA, Chapter 31 of USMCA, or under Chapter 19 of NAFTA if the 
Canadian or Mexican Section of the Secretariat provides funds 
to the U.S. Section during any fiscal year as reimbursement for 
their expenses in connection with dispute settlement 
proceedings.

                           REASON FOR CHANGE

    Dispute settlement procedures and panels are necessary to 
ensure that disputes over compliance with FTA provisions can be 
resolved effectively. The Committee believes that the Commerce 
Department is the appropriate agency to provide administrative 
assistance to such panels.

              Section 106: Trade Representative Authority


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 106 of H.R. 5430 provides that if a country (other 
than the United States) that has signed the USMCA does not 
enact implementing legislation, the Trade Representative is 
authorized to enter into negotiations with the other country 
that has signed the USMCA to consider how the applicable 
provisions of the USMCA can come into force with respect to the 
United States and that other country as promptly as possible.

                           REASON FOR CHANGE

    This provision in H.R. 5430 is necessary to help ensure 
that USTR is authorized to enter into negotiations to consider 
how applicable provisions of the USMCA can come into force with 
respect to the United States if either Mexico or Canada fails 
to enact implementing legislation.

                      Section 107: Effective Date


                              CURRENT LAW

    Section 109 of the NAFTA Implementation Act provides for 
the effective date of the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 107 of H.R. 5430 provides that sections 1 through 3 
of Title 1 (other than section 103(c)) shall take effect on the 
date of the enactment of USMCA Implementation Act and Section 
103(c) shall take effect on the date on which the USMCA enters 
into force.

                           REASON FOR CHANGE

    Section 107 of H.R. 5430 is necessary to implement 
provisions of the USMCA relating to the effective date of the 
bill.

                      TITLE II--CUSTOMS PROVISIONS


  Section 201: Exclusion of Originating Goods of USMCA Countries from 
                Special Agriculture Safeguard Authority


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 201 of H.R. 5430 implements an exclusion of 
originating goods of USMCA from special agricultural safeguard 
authority. It exempts from any duty imposed under Section 202 
any good that qualifies as an originating good under section 
202 of the USMCA Implementation Act of a USMCA country with 
respect to which preferential tariff treatment is provided 
under the USMCA.

                           REASON FOR CHANGE

    Section 201 of H.R. 5430 is necessary to implement 
commitments made in the USMCA relating to agricultural 
safeguards.

                      Section 202: Rules of Origin


                              CURRENT LAW

    Section 202 of the NAFTA Implementation Act implements the 
rules of origin for trade of goods between the United States, 
Canada, and Mexico under NAFTA.

                         EXPLANATION OF CHANGE

    Section 202 of H.R. 5430 implements the rules of origin set 
out in Chapter 4 of the USMCA. Section 202(c) establishes four 
basic ways for a good from Canada or Mexico to qualify as an 
``originating good'' and therefore be eligible for preferential 
tariff treatment when it is imported into the United States. A 
good is an originating good if:
    (1) it is wholly obtained or produced entirely in the 
territory of one or more USMCA countries as established in 
Article 4.3 of the Agreement;
    (2) it is produced entirely in the territory of one or more 
USMCA countries and any materials used to produce the good that 
are not themselves originating goods are transformed in such a 
way as to cause their tariff classification to change or the 
good otherwise meets regional content and other requirements, 
as specified in Annex 4-B of the USMCA;
    (3) it is produced entirely in the territory of one or more 
USMCA countries, exclusively from originating materials; or
    (4) except for a good provided for in Chapter 61 to 63 of 
the Harmonized System, the good is produced entirely in the 
territory of one or more of the USMCA countries but one or more 
of the non-originating materials provided for as parts under 
the Harmonized System used in the production of the good cannot 
satisfy the requirements set out in Annex 4-B of the USMCA 
(because both the good and its materials are classified in the 
same subheading or same heading that is not further subdivided 
into subheadings or, the good was imported into the territory 
of a USMCA country in an unassembled or a disassembled form but 
was classified as an assembled good pursuant to rule 2(a) of 
the General Rules of Interpretation of the Harmonized System), 
but only if the regional value content of the good, determined 
in accordance with Article 4.5 of the Agreement meets certain 
thresholds (not less than 60 percent if the transaction value 
method is used, or not less than 50 percent if the net cost 
method is used).
    Section 202(c)(2) of H.R. 5430 provides recovered material 
qualifies as ``originating'' for the purposes of determining 
whether a remanufactured good is originating if it is derived 
in the territory of one or more USMCA countries.
    The remainder of Section 202 of H.R. 5430 sets forth more 
detailed rules for determining whether a good meets the 
Agreement's requirements under the second and fourth method of 
qualifying as an originating good. These include alternative 
methods for calculating regional value content and valuation of 
materials used in production.
    Other provisions in Section 202 of H.R. 5430 address 
accumulation of materials for production of goods; rules 
pertaining to de minimis quantities of non-originating 
materials that do not undergo a tariff transformation, 
including for textiles; determination of the originating or 
non-originating status of fungible goods and materials; and 
treatment of accessories, spare parts and tools, packaging and 
packing materials, indirect materials, and goods put up in 
sets. Section 202(l) specifies goods that undergo further 
production or other operations outside the territory of a USMCA 
country (with certain exceptions) or do not remain under the 
control of the customs authorities of such other countries do 
not qualify as originating goods.

                           REASON FOR CHANGE

    Section 202 of H.R. 5430 is necessary to implement the 
rules of origin established under Chapter 4 of the USMCA to 
ensure only products of the United States, Canada, and Mexico 
receive USMCA preferential tariff treatment. As stated in the 
Statement of Administrative Action submitted by the 
Administration, the rules are intended to direct the benefits 
of customs duty elimination under the Agreement principally to 
firms producing or manufacturing goods in USMCA countries. 
These rules also prevent importers from improperly claiming 
benefits under the Agreement for third-country goods 
transshipped through Canada and Mexico.

            Section 202A: Special Rules for Automotive Goods


                              CURRENT LAW

    Section 202(c) of the NAFTA Implementation Act implements 
the rules of origin for trade in automotive goods between the 
United States, Canada, and Mexico as established under Article 
403 of the NAFTA.

                         EXPLANATION OF CHANGE

    Section 202A of H.R. 5430 implements the specific 
provisions related to the rules of origin for automotive goods 
in the Appendix to Annex 4-B of the USMCA.
    Section 202A(a) defines terms specific to the rules of 
origin for automotive goods and consistent with the Appendix to 
Annex 4-B of the USMCA.
    Section 202A(b) directs the President to establish an 
interagency committee led by the Trade Representative with 
participation by other relevant agencies, including the United 
States Department of Commerce, Customs and Border Protection, 
the Department of Labor, the USITC, and any other members 
determined to be necessary by the Trade Representative to 
provide advice on the implementation, enforcement, and 
modification of the automotive rules of origin. Additionally, 
the interagency committee will review the operation of the 
agreement with respect to trade in automotive goods, including 
the economic effects of the rules on the U.S. economy, workers, 
and consumers, and the impact of new technology on such rules 
of origin.
    Section 202A(c) lays out the certification requirements 
relating to the new labor value content and steel and aluminum 
purchase rules for producers of passenger vehicles, light 
trucks, and heavy trucks. Article 6 of the Appendix to Annex 4-
B of the Agreement includes new requirements that at least 70 
percent of a vehicle producer's purchases of steel by value and 
at least 70 percent of a vehicle producer's purchases of 
aluminum by value are of originating goods. Article 7 of the 
Appendix requires that vehicle producers source a certain share 
of content from North American plants or facilities that on 
average pay direct production workers at least $16 per hour, 
known as the labor value content requirement. The 
Administration's stated objective of the labor value content 
rule is to incentivize U.S. jobs and facilitate U.S. 
development and manufacture of high-technology parts, such as 
advanced batteries.
    Section 202A(d) requires the Trade Representative, in 
consultation with the interagency committee established in 
section 202A(b), to publish the requirements for producers of 
covered vehicles to request a transition to meet the USMCA 
requirements under an alternative staging regime, as described 
in Article 8 of the Appendix to Annex 4-B of the USMCA. The 
Trade Representative will request a detailed and credible plan 
which describes the actions the producer intends to take to 
bring production of the passenger vehicles or light trucks into 
compliance with the requirements set forth in Articles 2 
through 7 of the Appendix to Annex 4-B of the USMCA from a 
producer that seeks to use the alternative staging regime for 
more than 10 percent of the producer's total production of 
passenger vehicles or light trucks in USMCA countries. 
Producers of passenger vehicles and light trucks may modify 
their alternative staging plans at any point during the 
alternative staging regime period. The Trade Representative, in 
consultation with the interagency committee established in 
section 202A(b) shall make a determination with respect to 
whether to authorize the use of the alternative staging regime 
and shall issue that determination to each producer in writing 
not later than 120 days after receiving a request of a producer 
for the alternative staging regime. The Trade Representative 
shall maintain a public list of the producers whose covered 
vehicles have been authorized to use the alternative staging 
regime and provide the appropriate congressional committees 
with a summary of requests for the alternative staging regime. 
The remainder of the section addresses modification of 
alternative staging plans and treatment of producers unable to 
meet the requirements of the alternative staging regime.
    Section 202A(e) permits the Secretary of the Treasury in 
conjunction with the Secretary of Labor to conduct a 
verification of whether a covered vehicle complies with the 
labor value content requirements. Section 202(f) authorizes the 
Secretary of Labor to establish or designate an office within 
the Department of Labor to carry out the provisions of this 
section for which the Department is responsible.
    Section 202A(g) requires the Trade Representative, in 
consultation with the interagency committee to conduct a 
biennial review of the operation of the USMCA with respect to 
trade in automotive goods to ensure the Agreement's provisions 
remain relevant in light of new technology and changes in the 
content, production processes, and character of automotive 
goods. The USITC shall submit to Congress a report on the 
economic effects of the automotive rules of origin on the U.S. 
economy, including on the wages and employment of workers in 
the automotive sector. Lastly, the Comptroller General of the 
United States shall submit to the Committee a report assessing 
the effectiveness of the United States Government interagency 
coordination on the implementation, enforcement, and 
verification of the automotive rules of origin.

                           REASON FOR CHANGE

    The USMCA covers new requirements for passenger vehicles 
and trucks to be eligible for preferential treatment, including 
stronger product-specific rules for vehicles and vehicle parts 
and a requirement that certain core parts used in the 
production of a vehicle be originating. The Appendix to Annex 
4-B of the USMCA eliminates the NAFTA's ``tracing'' provisions. 
It includes new requirements that vehicle producers' purchases 
of steel and aluminum have a minimum percentage of originating 
steel and aluminum. The USMCA rules also require that vehicle 
producers source a share of content from North American plants 
or facilities that, on average, pay direct production workers 
at least $16 per hour.
    Section 202A of H.R. 5430 is necessary to implement the 
commitments made in the Agreement with respect to rules of 
origin applying to trade of automotive goods between USMCA 
countries. The Committee has imposed additional reporting 
requirements given the novelty of the automotive rules of 
origin, particularly the labor value content rule and the steel 
and aluminum purchase requirement.
    The Committee expects the Trade Representative to keep the 
Committee fully apprised of the operation of the automotive 
rules of origin, including the operation of the alternative 
staging regime, and any efforts to modify these provisions to 
ensure the USMCA automotive rules of origin remain relevant and 
promote U.S. and North American competitiveness, investment, 
and jobs in light of new technology and the changing 
composition and character of automobiles.

                SECTION 203: Merchandise Processing Fee


                              CURRENT LAW

    Section 204 of the NAFTA Implementation Act implements the 
U.S. obligation under NAFTA Article 310 to provide for the 
immediate elimination of the merchandise processing fee for 
Canadian goods, consistent with U.S. commitments under the 
U.S.-Canada FTA. The section also provides for the elimination 
of the merchandise processing fee on imports of Mexican goods.

                         EXPLANATION OF CHANGE

    Section 203 of H.R. 5430 amends section 13031(b)(10) of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 to 
implement the U.S. commitments under Article 2.16.3 and Annex 
6-A of the USMCA by eliminating the Merchandise Processing Fee 
(``MPF'') on originating goods. In accordance with U.S. 
obligations under the General Agreement on Tariffs and Trade 
1994, the provision also prohibits use of funds in the Customs 
User Fee Account to provide services related to entry of 
originating goods.\16\
---------------------------------------------------------------------------
    \16\See General Agreement on Tariffs and Trade, available at: 
https://www.wto.org/english/docs_e/legal_e/gatt47.pdf.
---------------------------------------------------------------------------

                           REASON FOR CHANGE

    The USMCA eliminates the MPF on qualifying goods from 
Canada and Mexico. Other customs user fees remain in place. 
Section 203 of H.R. 5430 is necessary to put the United States 
in compliance with the user fee elimination provisions of the 
USMCA.
    The amendments take effect on the date on which the USMCA 
enters into force and apply with respect to a good entered, or 
exported from the United States, on or after that date. Section 
203 also provides that goods entered or exported from the 
United States before USMCA enters into force will be provided 
NAFTA treatment.

Section 204: Disclosure oF Incorrect Information; False Certifications 
              of Origin; Denial of Preferential Treatment


                              CURRENT LAW

    Section 205 of the NAFTA Implementation Act concerns the 
disclosure of incorrect information, false certifications of 
origin, and the denial of preferential treatment

                         EXPLANATION OF CHANGE

    Section 204 of H.R. 5430 amends section 592 of the Tariff 
Act of 1930 by prohibiting the imposition of a penalty upon 
importers who make an invalid claim for preferential tariff 
treatment under the agreement if the importer acts promptly and 
voluntarily to correct the error and pays any duties owed on 
the good in question.\17\ The amendment also makes it unlawful 
for a person to certify falsely, by fraud, gross negligence, or 
negligence that a good exported from the United States is an 
originating good. The amendment also prohibits the imposition 
of a penalty if the exporter or producer promptly and 
voluntarily provides notice of the incorrect information to 
every person to whom a certification was issued. Section 204(b) 
of H.R. 5430 amends section 514 of the Tariff Act of 1930 and 
provides that if an importer, exporter or producer has engaged 
in a pattern of conduct in providing false or unsupported 
representations, U.S. authorities may suspend preferential 
treatment with respect to identical goods imported by that 
importer, exporter or producer. The amendments take effect on 
the date on which the USMCA enters into force and apply with 
respect to a good entered, or exported from the United States, 
on or after that date. Section 204 also provides that goods 
entered or exported from the United States before the USMCA 
enters into force will be provided NAFTA treatment.
---------------------------------------------------------------------------
    \17\See Smoot-Hawley Tariff Act, Pub. L. 71-361.
---------------------------------------------------------------------------
    The amendments take effect on the date on which the USMCA 
enters into force and apply with respect to a good entered, or 
exported from the United States, on or after that date. Section 
203 also provides that goods entered or exported from the 
United States before USMCA enters into force will be provided 
NAFTA treatment.

                           REASON FOR CHANGE

    This provision is necessary to implement commitments in the 
USMCA relating to application of penalties for submission of 
false information or certifications by importers, exporters and 
producers.

                 Section 205: Reliquidation of Entries


                              CURRENT LAW

    Section 206 of the NAFTA Implementation Act authorizes the 
Customs Service to reliquidate an entry to refund any excess 
duties paid and provide NAFTA tariff treatment to the entry.

                         EXPLANATION OF CHANGE

    Section 205 of H.R. 5430 amends section 520(d) of the 
Tariff Act of 1930 to make conforming changes to ensure that 
the Customs Service is authorized to reliquidate an entry to 
refund any excess duties (including any merchandise processing 
fees) paid on a good qualifying under the rules of origin for 
which no claim for preferential tariff treatment was made at 
the time of importation if the importer so requests, within one 
year after the date of importation.
    The amendments take effect on the date on which the USMCA 
enters into force and apply with respect to a good entered, or 
exported from the United States, on or after that date. Section 
205 also provides that goods entered or exported from the 
United States before USMCA enters into force will be provided 
NAFTA treatment.

                           REASON FOR CHANGE

    Section 205 of H.R. 5430 implements U.S. obligations under 
Article 5.11 of the USMCA by amending section 520(d) of the 
Tariff Act of 1930, as amended (19 U.S.C. 1520(d)) to allow an 
importer to claim preferential tariff treatment for originating 
goods within one year of their importation.

                Section 206: Recordkeeping Requirements


                              CURRENT LAW

    Section 614 of the NAFTA Implementation Act addresses the 
recordkeeping requirements of the NAFTA.

                         EXPLANATION OF CHANGE

    Section 206 of H.R. 5430 amends section 508 of the Tariff 
Act of 1930 by defining the terms USMCA, USMCA country, USMCA 
certification of origin. It also makes an amendment that 
provides that a U.S. exporter or producer that issues a USMCA 
certification of origin must make, keep, and, if requested 
pursuant to rules and regulations promulgated by the Secretary 
of the Treasury, render for examination and inspection a copy 
of the certification and such records and supporting documents. 
The amendment also requires that the exporter or producer keep 
these records and supporting documents for five years from the 
date it issues the certification. Further, it provides specific 
amendments related to vehicle producers.
    The amendments take effect on the date on which the USMCA 
enters into force and apply with respect to a good entered, or 
exported from the United States, on or after that date. Section 
206 also provides that goods entered or exported from the 
United States before the USMCA enters into force will be 
provided NAFTA treatment.

                           REASON FOR CHANGE

    Section 206 is necessary to implement the USMCA as it 
relates to exporters and producers for the United States by 
amending the customs record keeping statute (section 508 of the 
Tariff Act of 1930).

 Section 207: Actions Regarding Verification of Claims Under the USMCA


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 207 of H.R. 5430 provides that the Secretary of 
Treasury may conduct a verification of whether a good is an 
originating good under Section 202 or 202A of the bill. It also 
provides that if the Secretary of Treasury conducts a 
verification, the President may direct the Secretary to release 
the good only upon payment of duties of security and, deny or 
withhold preferential tariff treatment in the case of certain 
determinations.

                           REASON FOR CHANGE

    Section 207 of H.R. 5430 implements U.S. obligations 
related to Article 5.9 (Origin Verification) and 6.6 
(Verification) of the USMCA.

                         Section 208: Drawback

    This section has been transferred from section 203 of the 
NAFTA Implementation Act to the USMCA Implementation Act by 
operation of Section 501 of the USMCA Implementation Act.

        Section 209: Other Amendments to the Tariff Act of 1930


                              CURRENT LAW

    Subtitle C of the NAFTA Implementation Act implements 
miscellaneous amendments to the Tariff Act of 1930.

                         EXPLANATION OF CHANGE

    Section 209 of H.R. 5430 amends sections 304, 509, and 628 
of the Tariff Act of 1930 by making conforming changes to the 
Tariff Act of 1930 concerning the country of origin marking and 
the examination of books and witnesses. It also amends section 
628 of the Tariff Act of 1930 by authorizing Customs and Border 
Protection to exchange information with any government agency 
of a USMCA country.
    The amendments take effect on the date on which the USMCA 
enters into force and apply with respect to a good entered, or 
exported from the United States, on or after that date. Section 
209 also provides that goods entered or exported from the 
United States before the USMCA enters into force will be 
provided NAFTA treatment.

                           REASON FOR CHANGE

    These amendments were necessary to implement U.S. 
commitments under paragraph 7 of the General Note to the Tariff 
Schedule of the United States, by amending section 304 of the 
Tariff Act of 1930 (19 U.S.C. 1304). The amendment makes 
conforming terminology changes.

                        Section 210: Regulations


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 210 of H.R. 5430 directs the Secretary of Treasury 
to prescribe regulations necessary to carry out the provisions 
of Title II of the H.R. 5430, except for those regulations as 
may be necessary to carry out the labor value content 
determination under section 202A of H.R 5430. It also directs 
the Secretary of Labor to prescribe regulations necessary to 
carry out the labor value content determination under section 
202A of H.R. 5430.

                           REASON FOR CHANGE

    This provision gives the Secretary of Treasury and 
Secretary of Labor necessary regulatory authority to carry out 
the agreement.

      TITLE III--APPLICATION OF THE USMCA TO SECTORS AND SERVICES


      Subtitle A--Relief from Injury Caused by Import Competition

    This subtitle has been transferred from section 311 of the 
NAFTA Implementation Act to the USMCA Implementation Act by 
operation of section 502 of the USMCA Implementation Act.

             Subtitle B--Temporary Entry of Business Person

    This subtitle has been transferred from section 341 of the 
NAFTA Implementation Act to the USMCA Implementation Act by 
operation of section 503 of the USMCA Implementation Act.

   Subtitle C--United States-Mexico Cross-Border Long-Haul Trucking 
                                Services


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 321 of H.R. 5430 defines key terms for this 
subtitle.
    Section 322 provides that the USITC is required to conduct 
an investigation regarding whether current or future grants of 
authority to operate cross-border trucking services cause or 
are threatening to cause material harm to the U.S. long-haul 
trucking industry. Investigations may be started by the filing 
of a petition from an interested party, a request from the 
President or the Trade Representative, or a resolution from the 
Committee on Ways and Means or the Senate Finance Committee.
    This section also describes the factors that the USITC is 
required to consider, which include, among other things, the 
volume and tonnage of merchandise transported and the 
employment, wages, hours or service, and working conditions in 
the industry. Finally, section 322 provides that the USITC is 
required to make a determination in an investigation within 120 
days of it being initiated. If the USITC determines that the 
investigation is extraordinarily complicated, the USITC is 
required to make its determination within 150 days.
    Section 323 requires the USITC to issue a report within 60 
days of making its determination under section 322. The report 
shall include an explanation of its determination and, if the 
determination is affirmative, recommendations for action to 
address the material harm. The report shall also include any 
addition and dissenting views. The USITC is required to 
promptly make the report public and to publish a summary in the 
Federal Register.
    If the President receives an affirmative determination, 
section 324 requires the President to issue an order to the 
Department of Transportation (DOT) directing the relief to be 
carried out. The order must be issued within 30 days of the 
date on which the President receives the USITC's report. The 
President is not required to provide relief if the President 
determines that it is not in the national economic interest of 
the United States or it would cause serious harm to the 
national security of the United States.
    Section 324 also describes the type of relief that the 
President is authorized to provide. The President is authorized 
to deny new grants of authority to provide cross-border 
trucking services, revoke, restrict, or limit existing grants 
of authority, and place a cap on the number of grants of 
authority issued on an annual basis. DOT is required to provide 
this relief within 15 days of the President's determination.
    The relief may not last longer than two years, but such 
relief can be extended for an additional four years if the 
USITC finds that an extension is necessary to remedy of prevent 
material harm. If the President determines that an extension, 
then the President may extend the relief for an additional four 
years.
    Section 325 ensures that the USITC protects confidential 
business information that it receives during the course of any 
investigation.
    Section 326 provides that certain provisions in Title 49 do 
not limit DOT's ability to carry out the actions authorized by 
this subtitle.
    Section 327 requires DOT to conduct a survey of all 
existing and any pending grants of operating authority to 
Mexican-domiciled motor carriers. DOT shall complete this 
report within 180 days of the date on which USMCA enters into 
force. The report shall be delivered to the Trade 
Representative, USITC, the Committee on Ways and Means, the 
Senate Finance Committee, the House Transportation and 
Infrastructure Committee, and the Senate Committee on Commerce, 
Science, and Transportation.

                           REASON FOR CHANGE

    The United States included a non-conforming measure in its 
Annex II schedule for investment and services regarding long-
haul truck services. The measure provides that the United 
States may adopt certain limitations on grants of authority for 
persons of Mexico to provide long-haul trucking services in 
certain circumstances. This provision establishes the process 
by which the United States may impose limitations on such 
grants of authority.

            TITLE IV--ANTIDUMPING AND COUNTERVAILING DUTIES


                  Subtitle A--Preventing Duty Evasion


                             (Section 401)

    Current Law There is no provision under the NAFTA 
Implementation Act.

                         EXPLANATION OF CHANGE

    Section 401 of H.R. 5430 amends section 414(b) of the 
Enforce and Protect Act of 2015 by inserting conforming changes 
to ensure that section 414(b) of the Enforce and Protect Act of 
2015 applies to the USMCA and USMCA Parties.\18\
---------------------------------------------------------------------------
    \18\See Enforce and Protect Act of 2015, Pub, L. No. 114-125.
---------------------------------------------------------------------------

                           REASON FOR CHANGE

    Section 401 of H.R. 5430 is intended to ensure that section 
414(b) of the Enforce and Protect Act of 2015 applies to the 
USMCA and USMCA Parties.

                     Subtitle B--Dispute Settlement

    This subtitle has been transferred from sections 401-408 of 
the NAFTA Implementation Act to the USMCA Implementation Act by 
operation of section 504 of the USMCA Implementation Act.

                   Subtitle C--Conforming Amendments


                           (Sections 421-432)

    Current Law There is no provision under the NAFTA 
Implementation Act.

                         EXPLANATION OF CHANGE

    Sections 421-432 of H.R. 5430 amend the Tariff Act of 1930 
to make conforming amendments related to judicial review in 
antidumping and countervailing duty cases, disclosure of 
proprietary information under protective orders, and the Court 
of International Trade.

                           REASON FOR CHANGE

    The amendments made in sections 421-432 of H.R. 5430 are 
necessary to ensure that the treatment provided under the NAFTA 
continue to apply to the USMCA.

                     Subtitle D--General Provisions


                           (Sections 431-432)

    Current Law There is no provision under the NAFTA 
Implementation Act.

                         EXPLANATION OF CHANGE

    Section 431 of H.R. 5430 relates to the effect of 
termination of USMCA country status as well proceedings 
regarding protective orders and undertakings and binational 
panel and extraordinary challenge committee reviews. The 
section provides that, on the date on which a country ceases to 
be a USMCA country, the provisions of Title IV of the USMCA 
Implementing Bill will cease to have effect with respect to 
that country. Section 431 of H.R. 5430 also provides that if on 
the date on which a country ceases to be a USMCA country (1) an 
investigation or enforcement proceeding concerning the 
violation of a protective order issued under section 7777(f) of 
the Tariff Act of 1930 or an undertaking of the government of 
that country is pending, the investigation or proceeding shall 
continue and sanctions may continue to imposed; or (2) a 
binational panel or extraordinary review is pending or has been 
requested with respect to a determination that involves a class 
or kind of merchandise, such determination shall be reviewable 
and the time limits for commencing an action shall not begin to 
run until the date on which the USMCA cease to be in force with 
respect to that country.
    Section 431 of H.R. 5430 shall take effect on the date that 
the USMCA enters into force but shall not apply to any final 
determination or any binational panel review under the NAFTA, 
or any extraordinary challenge arising out of any such review, 
that was commenced before the date on which the USMCA enters 
into force.

                           REASON FOR CHANGE

    Sections 431-432 of the H.R. 5430 are necessary to describe 
the effect of termination of USMCA country status.

           TITLE V--TRANSFER PROVISIONS AND OTHER AMENDMENTS


                         Section 501: Drawback


                              CURRENT LAW

    Section 203 of the NAFTA Implementation Act addresses 
drawback for goods traded between the Parties to the NAFTA.

                         EXPLANATION OF CHANGE

    Section 501 of H.R. 5430 transfers section 203 of the NAFTA 
Implementation Act to section 208 of H.R. 5430 and amends 
section 203 of the NAFTA Implementation Act to provide 
exceptions to the limitation on drawback implemented in the 
NAFTA for certain goods traded between the Parties to the 
Agreement. This amendment includes conforming terminology 
changes and references to provisions of the USMCA, as well as 
changes to the exception for sugar to reflect new tariff 
nomenclature and expansion to include sugar-containing 
products. This section also amends sections 311, 312, 313, and 
562 of the Tariff Act of 1930 (19 U.S.C. 1311, 1312, 1313, and 
1562), which provide that drawback with respect to goods 
imported into the United States and subsequently exported to 
the territory of another Party, used in the production of a 
good exported to another Party, or substituted by goods used in 
the production of a good exported to another Party, be limited 
to the lesser of the duties paid or owed upon importation into 
the United States, or the duties paid on the good to another 
Party. The amendments make conforming terminology changes with 
respect to the limitation on drawback implemented in the NAFTA 
relating to bonded manufacturing warehouses, bonded smelting 
and refining warehouses, substitution drawback, and 
manipulation in bonded warehouses. This section also amends 
section 3(a) of the Act of June 18, 1934 (19 U.S.C. 81c), to 
make conforming terminology changes regarding the limitation on 
drawback as provided under the Foreign Trade Zones Act.

                           REASONS OF CHANGE

    Section 501 of H.R. 5430 amends the NAFTA Implementation 
Act and makes conforming changes to address drawback for goods 
traded between the Parties of the USMCA.

      Section 502: Relief From Injury Caused by Import Competition


                              CURRENT LAW

    Section 311 of the NAFTA Implementation Act addresses 
relief from injury caused by import competition.

                         EXPLANATION OF CHANGE

    Section 502 of H.R. 5430 transfers section 311 of the NAFTA 
Implementation Act to subtitle A, title III of H.R. 5430 and 
redesignates it as section 301 of H.R. 5430 without substantive 
change.

                           REASON FOR CHANGE

    Section 502 of H.R. 5430 transfers section 311 of the NAFTA 
Implementation Act to subtitle A, title III of H.R. 5430 and 
redesignates it as section 301 of H.R. 5430 without substantive 
change.

                      Section 503: Temporary Entry


                              CURRENT LAW

    Section 341 of the NAFTA Implementation Act addresses 
temporary entry of business persons.

                         EXPLANATION OF CHANGE

    Section 503 of H.R. 5430 transfers section 341 of the NAFTA 
Implementation Act to subtitle B, title III of H.R. 5430 and 
redesignates it as section 311 of H.R. 5430 without substantive 
change.

                           REASON FOR CHANGE

    Section 503 of H.R. 5430 incorporates or otherwise 
transfers section 341 of the NAFTA Implementation Act to H.R. 
540.

Section 504: Dispute Settlement in Antidumping and Countervailing Duty 
                                 Cases


                              CURRENT LAW

    The NAFTA Implementation Act establishes procedures in the 
United States for implementing the dispute settlement 
provisions related to antidumping and countervailing duty cases 
in the NAFTA, including the processes for the selection dispute 
settlement panelists and initiating a case, among other things.

                         EXPLANATION OF CHANGE

    Section 504 of H.R. 5430 transfers sections 401, 402, 403, 
404, 405, 406, 407, and 408 of the NAFTA Implementation Act to 
subtitle B, title IV of H.R. 5430 and redesignates those 
sections as sections 411, 412, 413, 414, 415, 416, 416, 417, 
and 418 of H.R. 5430 without substantive change. Section 504 of 
H.R. 5430 also provides for an effective date that is the date 
on which the USMCA enters into force, and a transition period 
for antidumping and countervailing duty cases decided before 
USMCA enters into force and cases that are appealed to a 
binational NAFTA panel before the USMCA enters into force. In 
addition, Section 504 of H.R. 5430 provides that the relevant 
provisions in the NAFTA Implementation Act will continue to 
apply to such to cases.

                           REASON FOR CHANGE

    Section D of Chapter 10 of the USMCA contains the same 
substantive provisions as Chapter 19 of the NAFTA, which allows 
for binational dispute settlement of antidumping and 
countervailing duty cases. These changes ensure that the NAFTA 
implementing bill provisions that are necessary to implement 
these provisions are carried over in the USMCA implementing 
bill. These changes also provide for a transition period for 
antidumping and countervailing duty cases decided before USMCA 
enters into force and cases that are appealed to a binational 
NAFTA panel before USMCA enters into force.

                  Section 505: Government Procurement


                              CURRENT LAW

    United States procurement law (such as the Buy American Act 
of 1933 and the Buy American Act of 1988) limits procurement 
from certain foreign suppliers of goods and services in favor 
of U.S. providers of goods and services. Most discriminatory 
purchasing provisions are waived if the United States is a 
party to a bilateral or multilateral procurement agreement, 
such as the WTO Agreement on Government Procurement, or a 
bilateral or multilateral trade agreement that includes 
provisions on procurement.\19\ Section 301(a) of the Trade 
Agreements Act of 1979 (19 U.S.C. 2511(a)) (Trade Agreements 
Act), as amended, authorizes the President to waive for 
eligible products of foreign countries that the President 
designates under section 301(b) of that Act the application of 
certain federal laws, regulations, procedures, and practices 
that ordinarily treat foreign goods and services and suppliers 
of such goods and services less favorably than U.S. goods, 
services, and suppliers. The term ``eligible product'' in 
section 301(a) of the Trade Agreements Act is defined in 
section 308(4)(A) of that Act.Under the NAFTA, the United 
States has procurement obligations with respect to Mexico and 
Canada.
---------------------------------------------------------------------------
    \19\See World Trade Organization Agreement on Government 
Procurement, available at: https://www.wto.org/english/tratop_e/
gproc_e/gpa_1994_e.htm.
---------------------------------------------------------------------------

                         EXPLANATION OF CHANGE

    Chapter 13 of the USMCA establishes rules that certain 
government entities listed in Annex 13-A will apply whenever 
these entities undertake procurements of covered goods and 
services valued above thresholds specified in Annex 13-A. 
Chapter 13 applies only as between the United States and 
Mexico. Once the USMCA enters into force, the United States 
will continue to have procurement obligations with respect to 
Canada under the WTO Agreement on Government Procurement and 
will also have national treatment and most-favored-nation 
obligations with respect to the purchase or acquisition of 
financial services by public entities in the United States 
under the General Agreement on Trade in Services (GATS) at the 
WTO, as set out in the U.S. Schedule of Commitments and the 
Understanding on Commitments in Financial Services. Under the 
USMCA, the United States has excluded uniforms and clothing 
procurement by the Transportation Security Administration of 
the Department of Homeland Security from coverage.
    Section 505 of H.R. 5430 implements U.S. obligations under 
Chapter 13 by amending the definition of ``eligible product'' 
in section 308(4)(A) of the Trade Agreements Act. As amended, 
section 308(4)(A) will provide that ``eligible product'' means 
a product or service of Mexico that is covered under the USMCA 
for procurement by the United States. This amended definition, 
coupled with the President's exercise of his waiver authority 
under section 301(a) of the Trade Agreements Act, will allow 
U.S. government entities covered by the USMCA to purchase, on 
non-discriminatory terms, covered products and services from 
Mexico for procurements that fall above the thresholds 
established under the USMCA.

                           REASON FOR CHANGE

    Section 505 of H.R. 5430 is necessary to implement U.S. 
commitments under Chapter 13 of the USMCA (Government 
Procurement).

    Section 506: ActionS Affecting United States Cultural Industries


                              CURRENT LAW

    Section 513 of the NAFTA Implementation Act addresses 
actions affecting United States cultural industries.

                         EXPLANATION OF CHANGE

    Section 506 of H.R. 5430 makes a conforming change to 
maintain the treatment provided with respect to Canada 
regarding cultural industries once the USMCA enters into force 
by exempting certain measures adopted or maintained by Canada 
with respect to a cultural industry from a number of 
obligations under the USMCA. It also allows the United States 
or Mexico to take a measure of equivalent commercial effect in 
response.

                           REASON FOR CHANGE

    The amendments in Section 506 of H.R. 5430 are necessary to 
implement Article 32.6 of the USMCA.

         Section 507: Regulatory Treatment oF Uranium Purchases


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 508 of H.R. 5430 amends the Energy Policy Act of 
1992 to strike the ``North American Free Trade Agreement'' and 
insert the ``USMCA.''\20\
---------------------------------------------------------------------------
    \20\See Energy Policy Act of 1992, Pub. L. No. 102-486.
---------------------------------------------------------------------------

                           REASON FOR CHANGE

    The Annex on Energy Regulatory Measures and Regulatory 
Transparency, attached to the exchange of letters executed on 
November 30, 2018 between the United States and Canada, which 
is integral to the USMCA, contains obligations with respect to 
energy regulatory measures similar to obligations under Chapter 
6 of the NAFTA (Energy and Basic Petrochemicals). Section 
1017(c) of the Energy Policy Act of 1992 (42 U.S.C. 2296b-6) 
contains a savings clause that references the NAFTA. Section 
507 makes a conforming change to that section to maintain the 
treatment provided with respect to Canada once the USMCA enters 
into force.

           Section 508: Report on Amendments to Existing Law

    Current Law There is no provision under the NAFTA 
Implementation Act.

                         EXPLANATION OF CHANGE

    Not later than 180 days after the date of the enactment of 
H.R. 5430, the Trade Representative shall submit to the Senate 
Finance Committee and the Committee on Ways and Means a report 
setting forth a proposal for technical and conforming 
amendments to the laws under the jurisdiction of such 
committees, and other laws, necessary to fully carry out the 
provisions of, and amendments made by H.R. 5430.

                           REASON FOR CHANGE

    Section 508 of H.R. 5430 is necessary to ensure that 
Congress has a comprehensive list of all technical and 
conforming amendments to laws necessary to carry out the 
provisions of the USMCA.

           TITLE VI--TRANSITION TO AND EXTENSION OF THE USMCA


                  Subtitle A--Transitional Provisions


                           (Sections 601-602)


                              CURRENT LAW

    There is no provision in the NAFTA Implementation Act that 
addresses a repeal of a trade agreement; however, section 107 
addresses overlapping provisions of the NAFTA Implementation 
Act and the U.S.-Canada FTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 601 of H.R. 5430 repeals the NAFTA Implementation 
Act effective on the date on which the USMCA enters into force. 
Section 602 of H.R. 5430 continues to suspend the U.S.-Canada 
Free Trade Agreement (``FTA'').

                           REASONS FOR CHANGE

    The USMCA incorporates or otherwise carries forward many of 
the provisions of the NAFTA. In some cases, USMCA provisions 
supersede provisions of the NAFTA (for example, the USMCA 
rather than the NAFTA rules of origin will apply to U.S.-
Canada-Mexico trade) or have been added on subject matters not 
covered by the NAFTA. The United States and Canada will 
continue to suspend the operation of the bilateral free trade 
agreement upon the entry into force of the NAFTA between the 
two countries, to stay in effect for such period as the two 
governments remain parties to the NAFTA.
    Accordingly, section 107 of H.R. 5430 suspends certain 
provisions of the U.S.-Canada FTA Implementation Act that are 
superseded by the NAFTA Implementation Act. Other provisions of 
the U.S.-Canada FTA Implementation Act that implement 
continuing U.S. obligations under the FTA will remain in effect 
or are amended by the NAFTA Implementation Act.

       Subtitle B--Joint Reviews Regarding Extension of the USMCA


                             (SECTION 611)


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Article 34.7 of the USMCA provides a mechanism for the 
Parties to conduct a joint review of the Agreement on the sixth 
anniversary of its entry into force, and for annual reviews 
thereafter, if a Party does not confirm it wishes to extend the 
term of the Agreement at such joint review. Section 611 of H.R. 
5430 provides that the Trade Representative will seek public 
comment prior to participating in a joint review. In addition, 
section 611 of H.R. 5430 provides for consultations between the 
Trade Representative and the appropriate congressional 
committees with respect to joint reviews or any annual review.

                           REASON FOR CHANGE

    Section 611 of H.R. 5430 creates a process leading up to 
the joint review for the sunset provisions provided in Article 
34.7 of the USMCA by providing opportunity for significant 
engagement between the Trade Representative and Congress. The 
Committee intends to be heavily engaged in any decisions with 
respect to sunset and expects consultation to be timely and 
robust.

                  Subtitle C--Termination of the USMCA


                             (Section 621)


                              CURRENT LAW

    Section 109 of the NAFTA Implementation Act addresses the 
termination of the NAFTA.

                         EXPLANATION OF CHANGE

    Section 621 of H.R. 5430 provides that during any period in 
which a country ceases to be a USMCA country, H.R. 5430 and any 
amendments shall cease to have effect with respect to that 
country. It further provides that on the date on which the 
USMCA ceases to be in force with respect to the United States, 
H.R. 5430 and any amendments shall cease to have effect.

                           REASON FOR CHANGE

    Section 621 of H.R. 5430 is necessary to implement 
provisions of the USMCA relating to the date of termination of 
the USMCA Implementation Act. The Committee intends to be 
heavily engaged in any decisions with respect to withdrawal and 
expects consultation to be timely and robust.

              TITLE VII--LABOR MONITORING AND ENFORCEMENT


                        Section 701: Definitions


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 701 of H.R. 5430 defines ``labor attache,'' ``labor 
obligations,'' and ``Mexico's labor reform,'' which are key 
terms for Title VII.

                           REASON FOR CHANGE

    This provision clarifies the meanings of key terms in Title 
VII.

 Subtitle A--Interagency Labor Committee for Monitoring and Enforcement


                           (Sections 711-719)


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 711 of H.R. 5430 requires the President to 
establish the Interagency Labor Committee for Monitoring and 
Enforcement (Interagency Labor Committee) within 90 days of the 
enactment of the USMCA Implementation Act. The Interagency 
Labor Committee will be co-chaired by the Trade Representative 
and the Department of Labor (DOL) and other agencies with 
relevant expertise. The Interagency Labor Committee will be 
responsible for monitoring compliance with the USMCA labor 
obligations and Mexico's labor reform and requesting that the 
Trade Representative take enforcement actions.
    Section 712 establishes the Interagency Labor Committee's 
duties. These duties include, among other things, coordinating 
the U.S. government's monitoring of the USMCA labor 
obligations, consulting regularly with the Labor Advisory 
Committee, visiting Mexico to assess implementation and 
compliance, establishing an ongoing dialogue with the 
Government of Mexico, coordinating with the ILO and the IDB, 
identifying priority capacity building activities in Mexico, 
meeting on at least a biannual basis, and recommending 
enforcement actions.
    Section 713 requires the Interagency Labor Committee to 
establish enforcement priorities. The Interagency Labor 
Committee is required to review the list of priority sectors 
identified in Annex 31-A of the USMCA and make suggestions 
regarding including additional sectors. The Interagency Labor 
Committee is also required to establish and annually update a 
list of priority subsectors for enforcement. This section 
establishes the initial list of priority subsectors. The 
Interagency Labor Committee is also required to review priority 
facilities within the priority subsectors for monitoring and 
enforcement.
    Section 714 requires the Interagency Labor Committee to 
complete assessments of Mexico's compliance with the USMCA 
labor obligations. The Interagency Labor Committee is required 
to complete these assessments on a biannual basis for the first 
five years after the Act is enacted and requires the 
Interagency Labor Committee to consult with the Committee on 
Ways and Means and the Senate Finance Committee regarding 
whether assessments could be completed on annual basis for the 
following five years.
    The assessments shall include a review regarding whether 
Mexico has met certain benchmarks and satisfied commitments it 
has made regarding funding and the federal and state-level 
implementation timelines regarding its labor reform. The 
assessment shall also review whether legal challenges to 
Mexico's labor reform have succeeded in Mexican courts.
    Section 715 requires the Interagency Labor Committee to 
recommend enforcements actions to the Trade Representative when 
it determines that a USMCA country has failed to meet its labor 
obligations. Such recommendations will be informed by the 
Interagency Labor Committee's monitoring activities, the 
Interagency Labor Committee's assessments (described above), 
and determinations made by the Independent Mexico Labor Expert 
Board (described below). When the Trade Representative receives 
an Interagency Labor Committee recommendation, this section 
requires the Trade Representative to determine whether to 
initiate an enforcement action within 60 days. If the Trade 
Representative's determination is negative, the Trade 
Representative is required to submit a report to the Committee 
on Ways and Means and the Senate Finance Committee regarding 
any negative determination.
    Section 716 establishes procedures for petitions submitted 
to the Interagency Labor Committee regarding a failure to 
comply with the USMCA labor obligations. If the Interagency 
Labor Committee receives a petition requesting an enforcement 
action under Annex 31-A, the Interagency Labor Committee shall 
determine whether there is sufficient, credible information to 
request an enforcement action under Annex 31-A. If its 
determination is negative, it shall certify this determination 
to the Committee on Ways and Means, the Senate Finance 
Committee, and the petitioner. If the Interagency Labor 
Committee's determination is affirmative, the Trade 
Representative is required to request a review at such facility 
under Annex 31-A. Within 60 days of the Interagency Labor 
Committee's affirmative determination, the Trade Representative 
is required to make a determination regarding whether to 
request the establishment of a rapid response labor panel under 
Annex 31-A. If the Trade Representative's determination is 
negative, the Trade Representative is required to certify its 
determination and provide information regarding any remediation 
plan to the Committee on Ways and Means and the Senate Finance 
Committee.
    Section 716 also establishes a petition process for 
allegations of non-compliance with the USMCA labor obligations 
not related to Annex 31-A. For such petitions, the Interagency 
Labor Committee is required to review the petition and 
determine whether it warrants further review within 20 days. If 
its determination if affirmative, the Interagency Labor 
Committee is required to determine whether there is credible, 
sufficient information to pursue an enforcement action within 
60 days of receiving the petition. If the Interagency Labor 
Committee makes an affirmative determination, the Trade 
Representative is required to make a determination within 60 
days. If such determination is affirmative, the Trade 
Representative is required to initiate an appropriate 
enforcement action. If such determination is negative, the 
Trade Representative is required to submit a notification to 
the Committee on Ways and Means and the Senate Finance 
Committee regarding its decision and rationale.
    Section 717 requires the Interagency Labor Committee to 
establish a web-based hotline to receive confidential 
information regarding labor issues in USMCA countries from 
interested parties. Such interested parties include Mexican 
workers. The DOL will monitor this hotline.
    Section 718 requires the Interagency Labor Committee to 
submit a biannual report for the first five years after this 
Act is enacted. The report shall include a description of the 
Interagency Labor Committee's staffing and capacity building 
activities, Mexico's compliance with its labor reform, 
including budgetary commitments, a summary of petitions filed 
under section 716, the results of the Interagency Labor 
Committee's assessments under section 714, and any 
determinations made by the Independent Mexico Labor Expert 
Board. After five years, the Trade Representative and DOL shall 
consult with the Committee on Ways and Means and the Senate 
Finance Committee regarding whether the report could be 
submitted on an annual, instead of biannual, basis.
    Section 718 also requires the Interagency Labor Committee 
to complete a five-year assessment that will include a 
comprehensive assessment regarding Mexico's implementation of 
its labor reform. The assessment shall include a strategic plan 
and recommendations regarding areas of concern regarding 
Mexico's labor reform for purposes of the joint review 
conducted pursuant to Article 34.7 of the USMCA.
    Section 719 requires the Interagency Labor Committee to 
consult with the Labor Advisory Committee, the Committee on 
Ways and Means, and the Senate Finance Committee regarding the 
selection of rapid response labor panelists under Annex 31-A. 
This section also requires the United States, in consultation 
with Mexico, to provide adequate funding for such panelists.

                           REASON FOR CHANGE

    U.S. trade agreements have required countries to comply 
with labor obligations, but the United States has failed to 
adequately monitor whether countries are in compliance with 
those obligations. These provisions will establish a robust 
monitoring system to ensure that the United States government 
is actively monitoring whether USMCA countries are in 
compliance with their labor obligations.
    The section also requires the Interagency Labor Committee 
to consult regularly with key stakeholders and regularly report 
to Congress on specific issues, many of which relate to whether 
Mexico is successfully implementing its labor reform. These 
requirements will ensure that Congress is able to complete full 
oversight of the Interagency Labor Committee's activities.
    This section also establishes clear timelines when the 
Interagency Labor Committee receives a petition alleging 
noncompliance with the USMCA labor obligations. These 
provisions will ensure that the Interagency Labor Committee 
takes quick action when a USMCA country is out of compliance 
with its labor obligations.

                   Subtitle B--Mexico Labor Attaches


                           (Sections 721-723)


 CURRENT LAW THERE IS NO PROVISION UNDER THE NAFTA IMPLEMENTATION ACT.

                         EXPLANATION OF CHANGE

    Section 721 of H.R. 5430 requires the Secretary of Labor to 
hire five labor attaches that will be detailed or assigned to 
work on behalf of the U.S. government in Mexico. Section 722 
establishes the duties for Mexico labor attaches, which include 
assisting the Interagency Labor Committee in its monitoring 
efforts and submitting quarterly reports regarding Mexico's 
compliance with its labor obligations. Section 723 provides 
that Mexico labor attaches shall remain employees of the DOL 
while they are detailed or assigned in Mexico.

                           REASON FOR CHANGE

    One key aspect of monitoring compliance with labor 
obligations is collecting information directly in the country 
that is being monitored. The Mexico labor attaches established 
under this subtitle will ensure that the U.S. government has 
officials on the ground in Mexico to actively monitor and 
assess Mexico's compliance. The Mexico labor attaches will 
report the information they collect to Congress and to the 
Interagency Labor Committee to support its monitoring efforts.

           Subtitle C--Independent Mexico Labor Expert Board


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 731 of H.R. 5430 establishes the Independent Mexico 
Labor Expert Board (Board). It also establishes that the Board 
is responsible for monitoring and evaluating Mexico's 
compliance with its labor obligations and advising the 
Interagency Labor Committee regarding capacity building 
activities in Mexico.
    Section 732 provides the membership of the Board and the 
terms for its members. The Labor Advisory Committee will 
appoint four members. The Speaker, House Minority Leader, 
Senate Majority Leader, and Senate Minority Leader will each 
appoint two members. The members will serve an initial term of 
six years. After six years, the Board will determine whether to 
extend its terms. If a majority of its members determine that 
Mexico is not in full compliance with its labor obligation, the 
Board's term will extend for four years.
    Section 733 requires the United States to provide necessary 
funding to support the work completed by the Board.
    Section 734 requires the Board to submit an annual report 
to the Interagency Labor Committee and the Committee on Ways 
and Means and the Senate Finance Committee that will contain an 
assessment of Mexico's labor reform implementation efforts and 
general labor law enforcement. The Board's reports may contain 
a determination that Mexico is not in compliance with its labor 
obligations, which triggers a review by the Interagency Labor 
Committee under subtitle A.

                           REASON FOR CHANGE

    The Board will provide independent analysis regarding 
Mexico's compliance with its labor reform and labor obligations 
generally. This analysis will ensure that the Interagency Labor 
Committee is receiving a full range of information and ensure 
that the Interagency Labor Committee analysis is fulsome and 
accurate.

                        Subtitle D--Forced Labor


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 741 of H.R. 5430 requires the President to 
establish a Forced Labor Enforcement Task Force (Task Force) 
within 90 days of the enactment of this Act to monitor the 
enforcement of the prohibition on importation of goods made by 
or with forced labor under section 307 of the Tariff Act of 
1930. The Task Force will be chaired by the Secretary of 
Homeland Security and will be comprised of the Trade 
Representative, DOL, and other agencies with relevant 
expertise. The Task Force shall meet on a quarterly basis.
    Section 742 requires the Task Force to establish timelines 
for responding to petitions alleging that goods are being 
imported by or with forced or child labor. The Task Force must 
establish such timelines within 90 days of being constituted 
and shall consult with the Committee on Ways and Means and the 
Senate Finance Committee. The Task Force shall submit the 
timelines in a report to the Committee on Ways and Means and 
the Senate Finance Committee and make it publicly available.
    Section 743 requires the Task Force to submit a biannual 
report to the Committee on Ways and Means and the Senate 
Finance Committee regarding enforcement of the prohibition on 
importation of goods made by or with forced labor under section 
307 of the Tariff Act of 1930. The report shall include a 
description of actions taken and an enforcement plan regarding 
goods included in the DOL's ``Finding on the Worst Forms of 
Child Labor'' and ``List of Goods Produced by Child Labor or 
Forced Labor'' reports, among other things.
    Section 744 requires the Task Force to develop an 
enforcement plan regarding goods made by or with forced labor 
in Mexico. The Task Force is required to consult with the 
Committee on Ways and Means and the Senate Finance Committee 
regarding its enforcement plan. The Task Force is also required 
to report to the Interagency Labor Committee regarding its 
enforcement of child and forced labor in Mexico.

                           REASON FOR CHANGE

    Section 307 of the Tariff Act of 1930 prohibits the 
importation of goods made by or with forced labor. The USMCA 
also includes a provision that requires parties to prohibit the 
importation of goods made by or with forced labor. U.S. 
government enforcement of this prohibition, however, has been 
sporadic.
    This subtitle requires the U.S. government to better 
coordinate its enforcement efforts and report to Congress on a 
regular basis regarding such efforts. Further, it requires the 
Task Force to build upon the monitoring efforts currently being 
completed by the Department of Labor regarding forced and child 
labor.

      Subtitle E--Enforcement Under Rapid Response Labor Mechanism


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 751 of H.R. 5430 requires the Trade Representative 
to immediately submit reports issued by a rapid labor response 
labor panel under Annex 31-A of the USMCA to the Labor Advisory 
Committee, the Committee on Ways and Means, the Senate Finance 
Committee, and to the petitioner. The Trade Representative is 
also required to make reports issued by a rapid response labor 
panel to the public in a timely manner.
    Section 752 provides the Trade Representative with the 
authority to direct the Secretary of the Treasury to suspend 
liquidation of entries of goods from a covered facility that is 
subject to a review under Annex 31-A of the USMCA. Suspension 
of liquidation shall continue until the Trade Representative 
notifies the Secretary of the Treasury that a rapid response 
labor panel has made a determination that there was not a 
denial of rights at the facility, a course of remediation has 
been completed at the facility, or the denial of rights at the 
facility has been otherwise remedied.
    Section 753 provides the Trade Representative with the 
authority to direct the Secretary of the Treasury to impose a 
remedy in accordance with Annex 31-A of the USMCA if a rapid 
response labor panel has found a denial of rights at a 
facility. The remedy may include requiring goods or services 
from the facility to pay a tariff or penalty and can include 
denying entry to goods from facilities if it is found to have 
been in violation by a rapid response labor panel on three 
occasions. The Trade Representative is required to consult with 
the Committee on Ways and Means and the Senate Finance 
Committee regarding the remedy it will impose.

                           REASON FOR CHANGE

    Annex 31-A of the USMCA provides parties with the right to 
impose certain remedies if a rapid response labor panel finds 
that a denial of rights has occurred at a facility. This 
subtitle is necessary to provide the U.S. government with the 
ability to impose remedies in accordance with Annex 31-A.

   TITLE VIII--MONITORING AND ENFORCEMENT RELATING TO THE ENVIRONMENT


                        Section 801: Definitions


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 801 of H.R. 5430 defines ``environmental law'' and 
``environmental obligations,'' which are key terms for Title 
VIII of H.R. 5430.

                           REASON FOR CHANGE

    This provision clarifies the scope of the provisions in 
Title VIII of H.R. 5430.

                  Subtitle A--Interagency Environment


                Committee for Monitoring and Enforcement


                           (Sections 811-817)


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 811 of H.R. 5430 requires the President to 
establish an Interagency Environment Committee for Monitoring 
and Enforcement (Interagency Environment Committee) 30 days 
after the enactment of H.R. 5430. The Interagency Environment 
Committee will oversee the implementation, monitoring, and 
enforcement of the USMCA environment commitments, which appear 
in Chapters 1 and 24. Membership of the committee will include, 
but is not limited to, the Trade Representative, the U.S. 
Department of State, U.S. Department of Agriculture (USDA) 
Animal and Plant Health Inspection Service (APHIS), USDA U.S. 
Forest Service (USFS), the U.S. Department of the Interior 
(DOI), the U.S. Department of Homeland Security (DHS) Customs 
and Border Protection (CBP), the U.S. Department of Justice 
(DOJ), the U.S. Agency for International Development (USAID), 
the U.S. Environmental Protection Agency (EPA), and the U.S. 
Department of Commerce (DOC) National Oceanic and Atmospheric 
Administration (NOAA). The Interagency Environment Committee 
will allow for better coordination amongst the U.S. government 
in holding Canada and Mexico to their environment commitments.
    Section 812 provides for the Interagency Environment 
Committee, in coordination with Canada and Mexico, to carry out 
an assessment of the environmental laws and policies of Canada 
and Mexico to determine if such laws and policies are 
sufficient to implement their environmental obligations and 
identify any gaps and key priority areas for continued 
assessment and monitoring, technical assistance and capacity 
building, and enhanced cooperation. The assessment must be 
conducted within 90 days of establishment of the committee and 
before entry into force of the agreement. The assessment must 
be shared with Congress and the Trade and Environment Policy 
Advisory Committee. The assessment must be updated after five 
years of the agreement being in force so that the Trade 
Representative can use it while conducting the ``joint review'' 
under Article 34.7.2 in year six of the agreement.
    Section 813 describes monitoring actions that the 
Interagency Environment Committee will undertake related to 
implementation of the USMCA environment obligations. Section 
813 does not list all monitoring actions that the Interagency 
Environment Committee will undertake. However, it does provide 
for new monitoring requirements that have not been taken 
pursuant to previous free trade agreement implementation. 
Section 813 provides for the Interagency Environment Committee 
to review public submissions filed pursuant to Article 24.27 
(Submissions on Enforcement Matters) and factual records 
prepared by the Secretariat of the Commission for Environmental 
Cooperation and determine if the United States should pursue an 
enforcement action in response to the findings. If the findings 
show that a USMCA Party has failed to effectively enforce their 
own environment laws or the USMCA environment obligations and 
the Interagency Environment Committee decides not to recommend 
an enforcement action, then the Interagency Environment 
Committee must submit a written explanation and justification 
to the Committee.
    Section 813 provides for the Interagency Environment 
Committee to review regular reports provided by U.S. government 
environment experts assigned to Mexico (attaches). Section 813 
also provides for the implementation of the Environment 
Cooperation and Customs Verification Agreement between the 
United States and Mexico (Customs Verification Agreement). 
Section 813 provides for the Interagency Environment Committee 
to request of Mexico information to verify a shipment either in 
response to a public comment or by self-initiation. Further, 
the Interagency Environment Committee must review all public 
comments within 30 days and determine whether to pursue the 
shipment highlighted in the public comment. Section 813 
provides for the Interagency Environment Committee to review 
all information received from Mexico in response to a customs 
verification request and determine whether additional steps are 
necessary to determine the legality of the shipment. Section 
813 also provides that the Trade Representative, on behalf of 
the Interagency Environment Committee, consult quarterly with 
the Committee and the Trade and Environment Policy Advisory 
Committee on all activity that takes place related to the 
Customs Verification Agreement.
    Section 814 provides for enforcement actions that the 
Interagency Environment Committee may request. The list of 
enforcement actions is illustrative. Section 814 provides for 
the Interagency Environment Committee to request the Trade 
Representative to pursue consultations under Article 24.29, 
Article 31.4 or Article 31.6 of the USMCA. Further, Section 814 
provides for Interagency Environment Committee to request the 
head of a federal agency take action, provided for under 
existing U.S. federal law, to enforce the USMCA environment 
obligations.
    Section 815 describes other existing U.S. government 
authorities, predominantly under relevant U.S. environment and 
conservation statutes, that will assist the Interagency 
Environment Committee to monitor and enforce the USMCA 
environment obligations. For example, Section 815 includes the 
Magnuson-Stevens Fishery Conservation and Management Act, the 
Pelly Amendment; the Agreement on Port State Measures to 
Prevent, Deter and Eliminate Illegal, Unreported and 
Unregulated Fishing; the Endangered Species Act; the Lacey Act; 
the Migratory Bird Act; the Eliminate, Neutralize and Disrupt 
Wildlife Trafficking Act; and the Wild Bird Conservation Act.
    Section 816 provides that no later than one year after the 
USMCA enters into force, and annually for each of the next four 
years, and biennially thereafter, the Trade Representative will 
report to the Committee on steps that the Parties have taken to 
implement and enforce the USMCA environment commitments, and 
additional actions that may need to be taken with respect to 
USMCA countries that might be failing to implement their 
environmental obligations. Additionally, Section 816 provides 
for a comprehensive determination regarding the USMCA 
countries' implementation efforts along with an updated 
assessment to be submitted in the fifth-year report.
    Section 817 provides for Federal agencies participating in 
the Interagency Environment Committee to prescribe regulations 
necessary to carry out the requirements to implement the 
functions of the Interagency Environment Committee.

                           REASON FOR CHANGE

    More than 25 years ago, when Congress considered the NAFTA, 
there were serious concerns that the elimination of duties, 
coupled with a lack of environmental protections in Mexico, 
could lead to the deterioration of competitiveness and 
opportunities for American workers, producers, and 
manufacturers. In response to those concerns, environmental 
cooperation provisions were negotiated in a side agreement, 
subject to a separate enforcement mechanism. Not a single 
arbitral panel has ever been convened under these provisions.
    Meanwhile, environmental protections in Mexico continue to 
lag significantly behind those in the United States and Canada. 
The NAFTA resulted in environmental externalities, 
infrastructural degradation, and health hazards that do not 
recognize borders. In the 25 years since the NAFTA was passed, 
some environmental concerns have evolved into existential 
threats.
    The Committee is committed to ensuring that there are 
meaningful improvements to the environmental standards in 
Mexico, coupled with transboundary collaboration between the 
three nations. The lack of consistent environmental standards 
in North America promotes the exportation of pollution between 
nations. For example, U.S. companies have been exporting and 
disposing of used lead batteries to Mexico to avoid U.S. 
restrictions on lead pollution. This practice has led to an 
increased risk of lead poisoning in Mexico and U.S. border 
communities. Further, increased human and industrial 
development in Mexico created by the NAFTA, coupled with weak 
Mexican environmental standards, have led to toxic sewage 
filled with feces, industrial chemicals and other raw waste 
contaminating waterways like the New River, which flows from 
Mexico's Mexicali Valley through Calexico, leaving neighboring 
towns subject to polluted air and water. In addition, weak 
rules and the lack of enforcement on fishing subsidies, fishing 
management practices, and combatting illegal, unreported and 
unregulated (IUU) fishing in Mexico has led to a significant 
amount of illegally fished seafood to enter the United States 
from Mexico.
    The Committee understands that the establishment of an 
Interagency Environment Committee is intended to ensure that 
Canada and Mexico live up to their USMCA environment 
commitments and that the Trade Representative will have the 
correct tools to pursue an enforcement action if necessary. The 
Committee intends for the Interagency Environment Committee to 
work with Canada and Mexico to build a roadmap to full 
implementation of the USMCA environment obligations. The 
Committee understands that the goal of the USMCA environment 
chapter is to have substantive provisions and enforcement 
mechanisms that will support the sustainable management of 
North American resources and their trade, and limit the 
exacerbation of existing environmental problems. The work of 
the Interagency Environment Committee will be important because 
the failure of Mexico to comply with and enforce environmental 
standards in Mexico has had negative economic consequences and 
undermined American competitiveness. Strong enforcement of the 
USMCA environment obligations will be critical in the fight to 
protect U.S. small- and medium-sized businesses that are 
consistently undercut by these environmental practices. Each 
year, 15 percent of world fish catches occur illegally. This 
black market is estimated to be worth as much as $23 billion 
dollars, which translates to billions in economic losses for 
those who play by the rules. Also, the American Forest & Paper 
Association estimates that illegal logging costs U.S. timber 
producers $1 billion annually, eroding sustainable forest 
management practices and costing jobs in responsibly managed 
forests. This reality cannot continue.
    Under the Interagency Environment Committee, the U.S. 
Government will be better coordinated in implementing and 
utilizing existing authorities. For example, existing U.S. law 
provides the tools to stop the trade of illegal wildlife at the 
border. Some of the world's worst actors trade in illegal 
rainforest timber, rhino horns, elephant ivory, and turtle 
shells use their ill-gotten gains to fund vast criminal 
syndicates and terrorist organizations. The al-Qaeda affiliate 
al-Shabaab generates a significant portion of its funding from 
illegal ivory. The Lord's Resistance Army also depends on a 
portion of the $10 billion generated each year from wildlife 
trafficking. Organized crime siphons off a piece of the $30 to 
$100 billion in the annual illegal timber trade. Trade in 
illegally taken fauna and flora continues to be a huge problem, 
especially through Mexico. U.S. law prohibits trade in products 
that were illegally harvested in their country of origin, and 
in 2008, the Lacey Act was amended to prohibit trafficking in 
illegally sourced wood products. Those amendments enjoyed broad 
bipartisan support in Congress and support from industry, 
labor, and environmental groups. Mexico does not have a similar 
law. Coordination under the Interagency Environment Committee 
will allow for the ban of these products to be better enforced 
with our two closest trading partners. The Interagency 
Environment Committee should work with Mexico to develop and 
enforce stronger rules that govern trade in illegally taken 
animals, animal products, plant, and plant products.
    Further, the Committee understands that full utilization of 
the Customs Verification Agreement will incentivize less trade 
in illegally harvest fauna and flora in Mexico. The Customs 
Verification Agreement is a binding agreement signed between 
Mexico and the United States on December 10, 2019. The Customs 
Verification Agreement allows for the United States to request 
customs information from Mexico to verify the legality of a 
shipment of fauna or flora. Not only does the Customs 
Verification Agreement set out specific obligations that the 
Parties must conduct during a customs verification, but also 
provides for the requestor to request additional steps 
necessarily to determine the legality of the shipment(s). Those 
additional steps may include a jointly conducted site visit, 
interviews, verification of point of source or harvest, 
investigations, scientific testing of product, and inspections 
by relevant authorities. The Customs Verification Agreement 
also requires both Mexico and the United States to establish a 
public comment process upon entry into force of the USMCA to 
allow for the public to request that either Party seeks a 
verification.
    The Committee also understands that the standards set in 
the USMCA are just a floor for North American collaboration to 
improve the environment. The Committee believes that the USMCA 
environment obligations could have been stronger. For example, 
while the USMCA is silent, the Committee intends for the 
Interagency Environment Committee to work with Canada and 
Mexico to mitigate the damage of climate change. The Committee 
intends that the Interagency Environment Committee recommend 
and support the Trade Representative in working with Canada and 
Mexico to add the Paris Agreement under the United Nations 
Framework Convention on Climate Change to the list of covered 
agreements under USMCA Articles 1.3 and 24.8(4) at the first 
available opportunity. The Committee believes that the United 
States, Canada and Mexico must work collectively to address the 
global climate crisis.
    Under H.R. 5430, additional resources are provided, both 
funds and personnel, for the implementation, monitoring and 
enforcement of the USMCA environment obligations. The Committee 
understands that with those resources, the Interagency 
Environment Committee will hold Mexico and Canada accountable 
for their USMCA environment commitments and take appropriate 
enforcement action if they fail to live up to their 
commitments.

                       Subtitle B--Other Matters


     Section 821: Border Water Infrastructure Improvement Authority


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 821 of H.R. 5430 provides for the EPA, in 
coordination with other relevant agencies, to carry out the 
planning, design, construction, and operation and maintenance 
of high priority treatment works, to treat wastewater, nonpoint 
sources of pollution and related matters resulting from 
international transboundary water flows originating in Mexico. 
Section 821 also provides that the EPA report to Congress 
yearly on their activities.

                           REASON FOR CHANGE

    Due to the complexity of land ownership and federal agency 
cross-jurisdictional issues in the Tijuana River Watershed, the 
Committee recognizes the need for better coordination among 
eligible public entities in addressing wastewater, stormwater, 
non-point sources of pollution, and related matters resulting 
from international transboundary flows originating in Mexico. 
The Committee has determined that the EPA possesses the issue 
expertise and experience necessary to lead and coordinate all 
efforts associated with pollution reduction in the Tijuana 
River's Watershed. EPA should prioritize collaboration with the 
State of California and other eligible local public entities.

 Section 822: Detail of Personnel to Office of the United States Trade 
                             Representative


                              CURRENT LAW

    There is no provision under the NAFTA Implementation Act.

                         EXPLANATION OF CHANGE

    Section 822 of H.R. 5430 provides for additional monitoring 
and implementation resources in the form of authorizing three 
environmental experts from relevant U.S. government agencies to 
be detailed to the Office of the Trade Representative and 
assigned as environment attaches at the U.S. Embassy or a 
consulate in Mexico in order to assist the Interagency 
Environment Committee in carrying out its duties to monitor and 
enforce the USMCA environment obligations. The experts will be 
reimbursable details to the Office of the Trade Representative 
from the EPA, NOAA, and USFWS. The attaches will prepare and 
submit reports to the Interagency Environment Committee 
quarterly for review.

                           REASON FOR CHANGE

    The Committee understands that it has been very difficult 
to monitor environmental standards in Mexico. Providing U.S. 
government environment experts in Mexico will allow for better 
information gathering and coordination on the status of 
environmental laws and enforcement in Mexico. Further, the 
Committee understands that environment-focused U.S. government 
personnel have been or are currently based at the U.S. Embassy 
in Mexico City or a consulate in Mexico. While the Committee 
understands that those personnel have been conducting important 
work, the positions provided for under Section 822 are for new 
or additional personnel focused on the implementation of the 
USMCA environment commitments and assisting the Interagency 
Environment Committee. This may require that the personnel 
conduct fact finding missions, capacity building or technical 
assistance. The Committee understands that the EPA, NOAA, and 
USFWS will detail one staff each, on a reimbursable basis, with 
the respective relevant expertise to implement the USMCA 
environment commitments.

              Subtitle C: North American Development Bank


                           (Sections 831-834)


                              CURRENT LAW

    Title V, Subtitle D, Part 2 of the NAFTA Implementation Act 
concerns the North American Development Bank.

                         EXPLANATION OF CHANGE

    Sections 831-834 of H.R. 5430 provide for a capital 
increase for the North American Development Bank (NADBank) to 
finance environmental infrastructure projects related to water 
pollution, water and wastewater treatment, water conservation, 
municipal solid waste, stormwater drainage, air quality, and 
renewable energy. Section 831 authorizes a general capital 
increase. Section 832 sets out the policy goals of the NADBank. 
Section 832 provides for the Secretary of the Treasury to 
direct the representatives of the United States to the Board of 
Directors of the NADBank to give preference to the financing of 
projects related to environmental infrastructure relating to 
water pollution, wastewater treatment, water conservation, 
municipal solid waste, stormwater drainage, non-point 
pollution, and related matters. Section 833 provides for the 
Secretary of the Treasury to direct the representatives of the 
United States to the Board of Directors of the NADBank to 
require the NADBank to develop and implement policies and 
practices to streamline the project certification and financing 
processes. Section 834 provides for the Secretary of the 
Treasury to direct the representatives of the United States to 
the Board of Directors of the NADBank to require the NADBank to 
develop and annually update performance measures that align 
with the NADBank's mission and to assess whether the projects 
add value to the U.S.-Mexico border region.

                           REASON FOR CHANGE

    On January 6, 2015, former President Barack Obama and 
former President of Mexico Enrique Pena Nieto agreed to support 
the capital increase of $3 billion for the NADBank.\21\ The 
amount was to be collected by both governments over an 
estimated period of five years, including $450 million in paid-
in capital. This subtitle will provide for the necessary 
capital increase and review of NADBank priorities and functions 
to allow for the development and financing of environmental 
infrastructure on the U.S.-Mexico border.
---------------------------------------------------------------------------
    \21\https://www.nadb.orgews/presidents-obama-and-pena-nieto-agree-
to- north-american-development-bank-capital-increase-of-us3-billion.
---------------------------------------------------------------------------
    In 1989, Congress enacted the International Development and 
Finance Act of 1989 (Public Law 101-240), which included a 
provision known as the ``Pelosi Amendment'' (22 U.S.C. 262m-7). 
By prohibiting the U.S. from voting in favor of any World Bank 
or regional development bank project unless an environmental 
impact assessment is made available to the public 120 days 
prior to a vote, the Pelosi Amendment provides affected 
communities a direct voice in the Bank's decision-making and 
ensures borrower accountability before Bank funds are 
committed.
    In the NADBank's case, the spirit of the Pelosi Amendment 
is reflected in section 2(c) and (d), Article II, Chapter III 
of the Bank's charter, which requires an environmental 
assessment in the NADBank application process so that the Board 
of Directors can ``examine potential environmental and public 
health benefits, environmental risks, and costs, as well as 
available alternatives and the environmental standards and 
objectives of the affected area.'' In certifying projects 
relating to water, wastewater, water conservation, and 
municipal solid waste, the NADBank's Board of Directors is also 
required to consult affected states and local governments.
    The Committee believes that Congress intended the NADBank's 
project certification process to be as robust as possible to 
provide communities on both sides of the U.S.-Mexico border a 
meaningful voice in the NADBank's decision-making. Going 
forward, the Committee urges the NADBank Board to prioritize 
robust public input so that project financing decisions can be 
made in the best interests of project-affected border 
communities.
    The Committee further understands that the scope of 
projects eligible for NADBank financing are those exclusively 
provided for in the NADBank charter. The Committee expects that 
the Secretary of the Treasury will direct the representatives 
of the United States to the Board of Directors of the NADBank 
to oppose the participation of the NADBank in financing for the 
planning or construction of any wall infrastructure along the 
U.S.-Mexico border, for any fossil fuel-fired electricity 
generation project or fossil fuel extraction project, or the 
planning or construction of any incarceration or detention 
facility. Further, the Committee understands the Secretary of 
the Treasury will direct the representatives of the United 
States to the Board of Directors of the NADBank to oppose the 
participation of the NADBank in financing for any project that 
directly facilitates opioid trafficking across the U.S.-Mexico 
border. The committee understands that opposition of the 
aforementioned projects is appropriate because they are not 
within the scope of the NADBank charter and thus, the NADBank 
should not be financing those projects.

         TITLE IX--USMCA SUPPLEMENTAL APPROPRIATIONS ACT, 2019

    Title IX appropriates $843 million to implement and enforce 
the labor and environment obligations of the USMCA.
    From within the $210 million provided to the DOL's Bureau 
of International Labor Affairs, the Committee expects not less 
than $100,000,000 to be used for capacity building grants 
focused on educating and training workers regarding rights in 
the workplace, including worker-focused education and training 
related to Mexico's labor reform enacted on May 1, 2019; and 
not less than $20,000,000 to be used for efforts to reduce 
workplace discrimination in Mexico.

                       IV. VOTES OF THE COMMITTEE

    Pursuant to clause 3(b) of rule XIII of the Rules of the 
House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means during 
the consideration of H.R. 5430, to implement the Agreement 
between the United States of America, the United Mexican 
States, and Canada attached as an Annex to the Protocol 
Replacing the North American Free Trade Agreement on December 
17, 2019.
    H.R. 5430 was ordered favorably reported to the House of 
Representatives by voice vote (with a quorum being present).

                     V. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 5430, as 
reported. The Committee agrees with the estimate prepared by 
the Congressional Budget Office (CBO), which is included below.

   VI. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX EXPENDITURES 
                            BUDGET AUTHORITY

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves increased budget authority for appropriations to 
several federal agencies for the implementation of the USMCA. 
The Committee states further that the bill will increase 
revenues by an estimated $2,970,000,000, resulting in an 
estimated $3,044,000,000 net decrease in the deficit.

     VII. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following estimate by CBO is provided.
    Table 1 and 2 display CBO's estimates of the cost of 
enacting H.R. 5430. Table 1 covers the costs of enacting title 
I, which would approve the United States-Mexico-Canada 
Agreement (USMCA).Table 2 includes CBO's estimate of 
appropriation under Title IX of H.R. 5430, which would provide 
appropriations to several federal agencies for the implementing 
the USMCA. The bill would designate those amounts as emergency 
requirements in accordance with section 251 of the Balenced 
Budget and Emergency Deficit Control Act of 1985. The limits on 
discretionary budget authority established by the Budget 
Control Act of 2011 (Public Law 112-25), as amended, would be 
adjusted to accommodate that funding.

TABLE 1.--DIRECT SPREADING AND REVENUE EFFECTS OF H.R. 5430, THE UNITED STATES-MEXICO-CANADA AGREEMENT IMPLEMENTATION ACT, AS INTRODUCED ON DECEMBER 13,
                                                                          2019
                                                                   [December 16, 2019]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, millions of dollars--
                                         ---------------------------------------------------------------------------------------------------------------
                                            2020     2021     2022     2023     2024     2025     2026     2027     2028     2029   2020-2024  2020-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      INCREASES OR DECREASES (-) IN DIRECT SPENDING
 
Department of Agriculture:
  Estimated Budget Authority............      -19      -23      -17      -13       -7       -5        0        0        0        0       -79         -84
Estimated Outlaysa......................      -19      -23      -17      -13       -7       -5        0        0        0        0       -79         -84
North American Development Bank:
  Estimated Budget Authority............        0        0        0        0        0        0        0        0        0        0         0           0
Estimated Outlaysb......................       10        0        0        0        0        0        0        0        0        0        10          10
Total Changes:
  Estimated Budget Authority............      -19      -23      -17      -13       -7       -5        0        0        0        0       -79         -84
  Estimated Outlays.....................       -9      -23      -17      -13       -7       -5        0        0        0        0       -69         -74
 
                                                                  INCREASES IN REVENUE
 
  Estimated Revenuec....................       10       40       70      230      360      450      460      450      450      450       710       2,970
 
                                                               NET INCREASE IN THE DEFICIT
 
Effect on the Deficit...................      -19      -63      -87     -243     -367     -455     -460     -450     -450     -450      -779      -3,044
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office.
Estimates are relative to CBO's May 2019 baseline, assumed enactment by February 2020.
aCBO estimates that enacting the bill would result in greater U.S. exports of certain dairy products, leading to slightly higher dairy prices and thus a
  small decrease in federal payments that support dairy producers.
bOn October 22, 2019, CBO transmitted a cost estimate for H.R. 132, the North American Development Bank Improvement and Pollution solution Act of 2019.
  In 2016, the Congress appropriated $10 million for paid-in capital, but did not specifically authorize the Department of Treasury to obligate those
  funds. By authorizing the United States to participate, H.R. 132 would allow the department to pay $10 million to the bank; CBO expects it would do so
  in 2020. The fall cost estimate can be found here: https;//www.cbo.gov/ systemfiles2019-10hr132.pdf.
cThe estimated revenue effects of enacting H.R. 5430 mainly reflect higher expected revenue from tariffs on motor vehicles and parts. Because of
  stricter rules of origin for motor vehicles and new labor value content requirements, CBO projects that certain imports of motor vehicles and parts
  that currently benefit from favorable treatment under the North American Free Trade Agreement would not be eligible for favorable treatment under the
  new agreement. Because of that change in eligibility, CBO projects that duty-free imports of vehicles and parts into the United States from the USMCA
  parter countries would decline. A portion of that decline in duty-free imports would be replaced by domestic production while some of that decline
  would increase duty-free imports from Canada, leading to a small reduction in tariff revenues collected on agricultural imports subect to tariffs.
dRevenue estimates are net of income and payroll taxes.

    Estimated prepared By: Tiffany Arthur (Agriculture); Erin 
Deal (Revenues), Sunita D'Monte (North American Development 
Bank); Daniel Fried (Revenues).
    Table 2 displays CBO's estimate of appropriations under 
title IX of H.R. 5430, which would provide appropriations to 
several federal agencies for the implementation of the United 
States-Mexico-Canada Agreement. The bill would designate those 
amounts as emergency requirements in accordance with section 
251 of the Balanced Budget and Emergency Deficit Control act of 
1985. The limits on discretionary budget authority established 
by the Budget Control Act of 2011 (Public Law 112-25), as 
amended, would be adjusted to accommodate that funding.

                           TABLE 2.--DISCRETIONARY APPROPRIATIONS OF TITLE IX, THE USMCA SUPPLEMENTAL APPROPRIATIONS ACT, 2019
                                                                   [December 16, 2019]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2020   2021   2022   2023   2024   2025   2026   2027   2028   2029  2020-2024  2020-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Appropriations Subcommittee
Agriculture:
  Budget Authority..........................................      4      0      0      0      0      0      0      0      0      0         4          4
  Estimated Outlays.........................................      3      1      0      0      0      0      0      0      0      0         4          4
Commerce, Justice, Science:
  Budget Authority..........................................    106      0      0      0      0      0      0      0      0      0       106        106
  Estimated Outlays.........................................     68     22     16      0      0      0      0      0      0      0       106        106
Interior and Environment:
  Budget Authority..........................................    308      0      0      0      0      0      0      0      0      0       308        308
  Estimated Outlays.........................................     37    121    120     30      0      0      0      0      0      0       308        308
Labor, Health and Human Services, Education:
  Budget Authority..........................................    210      0      0      0      0      0      0      0      0      0       210        210
  Estimated Outlays.........................................     11     63     63     42     21      0      0      0      0      0       200        200
State and Foreign Operations:
  Budget Authority..........................................    215      0      0      0      0      0      0      0      0      0       215        215
  Estimated Outlays.........................................    215      0      0      0      0      0      0      0      0      0       215        215
                                                             -------------------------------------------------------------------------------------------
Total:
    Budget Authority........................................    843      0      0      0      0      0      0      0      0      0       843        843
    Estimated Outlays.......................................    334    207    199     72     21      0      0      0      0      0       833        833
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office.
Estimates are relative to CBO's May 2019 baseline, assumed enactment by February 2020.
Section 905 of H.R. 5430 specifies requirements for the budget treatment of title IX. Consistent with that section, and at the direction of the House
  Committee on the Budget, title IX is considered to be appropriation legislation rather than authorization legislation.

    Estimate prepared by Justin Riordan.

    VIII. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII and clause 
2(b)(1) of Rule X of the Rules of the House of Representatives, 
the Committee made findings and recommendations that are 
reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

  D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   E. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
to Congress pursuant to section 21 of Public Law111-139; or (3) 
a program related to a program identified in the most recent 
Catalog of Federal Domestic Assistance, published pursuant 
section 6104 of title 31, United States Code.

                              F. Hearings

    In compliance with Sec.103(i) of H. Res. 6 (116th Congress) 
(1) the following hearings were used to develop or consider H.R 
5430:
    On June 25, 2019, the Subcommittee on Trade held a hearing 
on ``Mexico's Labor Reform: Opportunities and Challenges for an 
Improved NAFTA.''
    On June 19, 2019, the full Committee held a hearing on 
``The 2019 Trade Policy Agenda: Negotiations with China, Japan, 
the EU, and UK; new NAFTA/USMCA; U.S. Participation in the WTO; 
and other matters.''
    On May 22, 2019, the Subcommittee on Trade held a hearing 
on ``Enforcement in the New NAFTA.''
    On March 26, 2019, the Subcommittee on Trade held a hearing 
on ``Trade and Labor: Creating and Enforcing Rules to Benefit 
American Workers.''
    On March 21, 2018, the full Committee held a hearing on the 
``U.S. Trade Policy Agenda.''
    On July 18, 2017, the Subcommittee on Trade held a hearing 
on ``Modernization of the North American Trade Agreement 
(NAFTA).''
    On June 22, 2017, the full Committee held a hearing on the 
``U.S. Trade Policy Agenda.''

       IX. `CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the committee, in order to expedite the 
business of the House of Representatives, it is necessary to 
dispense with the requirements of clause 3(e) of rule XIII of 
the Rules of the House of Representatives (relating to showing 
changes in existing law made by the bill as reported).

   MINORITY VIEWS ON THE USMCA IMPLEMENTATION ACT--DECEMBER 18, 2019

    Committee Republicans agree that the United States-Mexico-
Canada Agreement (USMCA) fulfills President Trump's promise to 
modernize and improve on the North American Free Trade 
Agreement (NAFTA) in a way that grows our economy and benefits 
American workers, farmers, manufacturers, innovators, high tech 
workers, and service providers. According to conservative 
estimates by the independent U.S. International Trade 
Commission, USMCA will create 176,000 American jobs and 
increase the size of the U.S. economy by $70 billion. Congress 
should move forward and pass USMCA without further delay to 
unlock the tremendous benefits of the agreement and continue 
building on pro-growth Republican policies.
    NAFTA entered into force more than 25 years ago and needed 
many updates to reflect our 21st century economy and ensure it 
works well for all Americans. USMCA effectively modernizes our 
trading relationship with our North American allies with state-
of-the-art and enforceable disciplines on, among other things, 
digital trade, agriculture, services, customs and trade 
facilitation, and state-owned enterprises. These provisions 
raise standards and allow American companies to compete and win 
both regionally and globally. Republican Members of the 
Committee anticipate that this successful outcome will create 
considerable momentum for trade agreements with other trading 
partners, to America's benefit. Congressional approval of USMCA 
will send a signal to the rest of the world that the United 
States will continue to lead in setting the standard for trade.
    By maintaining duty-free market access on virtually all 
North American trade, USMCA allows the continued and seamless 
flow of goods and services across borders. This agreement 
strengthens the North American economy in a way that will 
create jobs at home and contribute to a thriving manufacturing 
sector.
    Our farmers and ranchers will maintain their market share 
in Mexico and will have key new opportunities to compete in 
Canada because the agreement opens up the Canadian market for 
our dairy, wheat, poultry, and egg producers. Cutting-edge and 
enforceable biotech and sanitary and phytosanitary disciplines 
will prevent unjustified discrimination against our agriculture 
sector and will signal to the rest of the world that the United 
States expects all our trading partners to treat U.S. food and 
agricultural exports fairly and transparently.
    Tough standards are meaningful only if they are 
enforceable, and the USMCA makes significant improvements over 
NAFTA in the area of enforcement. NAFTA's rules for state-to-
state dispute settlement included gaps that allowed parties to 
``block'' or otherwise avoid the formation of a panel to hear a 
dispute. This is one reason that no NAFTA dispute settlement 
panel has been formed since 2000. USMCA includes many 
innovations to ensure that panel formation cannot be blocked 
and disputes will be resolved promptly. The United States will 
be able to hold Canada and Mexico accountable to implement all 
USMCA commitments, a result that we strongly support.
    USTR negotiated a fair, narrow, and transparent rapid 
response mechanism to hold Mexico accountable for high labor 
standards and prevent Mexican companies from giving themselves 
an advantage by tolerating poor labor conditions. At the same 
time, this labor enforcement mechanism preserves U.S. 
sovereignty and the rights of U.S. companies. No labor union 
meddling or harassment is permitted--the U.S. government is in 
charge of the entire government-to-government process. While 
holding Mexico accountable, USTR achieved important safeguards 
for our companies. The agreement explicitly provides that no 
U.S.-based facility can be subjected to the mechanism unless 
that company is already in trouble under U.S. law because it is 
the subject of an adverse National Labor Relations Board order. 
Agriculture producers are not included.
    While interested parties can petition for action, the 
complaining government retains the final say in deciding 
whether to bring a case. Before any process begins, the 
responding government is to conduct its own review and 
consultations. If the problem is not remediated, then a rapid 
response labor panel is formed, made up of three labor experts 
selected from lists put forward by the U.S. and Mexican 
governments. There is no broad, surprise inspection conducted 
by unions or the governments. Instead, the three panelists may 
conduct announced site visits, and a facility may refuse a site 
visit, although the panel will take that fact into account. If 
a violation is found, there is ample opportunity to mitigate 
before remedies are applied.
    The remedy for the first violation is limited to fines on 
the company for the goods produced in the facility and a loss 
of the USMCA tariff elimination benefit. If there is a second 
violation, then those same penalties can be assessed against 
the company's parent and affiliates, but only if the entire 
process is completed from start to finish. If there is a third 
violation, the goods in question can be blocked at the border, 
but only if the entire process is completed a third time. Any 
remedy must be lifted immediately upon remediation by the 
company.
    On the environment, this agreement strikes the right 
balance and is consistent with the Bipartisan Congressional 
Trade Priorities and Accountability (TPA) Act of 2015 by 
binding the United States only to Multilateral Environmental 
Agreements to which the United States is a full party. 
Consistent with TPA, the United States is not bound by the 
terms of additional MEAs or new provisions of existing MEAs 
unless the United States becomes a full party, requiring Senate 
ratification. Also consistent with our expectations as set 
forth in TPA, the USMCA does not impose any climate change-
related commitments on the United States.
    USMCA fully complies with the prohibition in TPA against 
making changes to U.S. immigration law. USMCA simply maintains 
the NAFTA provisions on temporary entry visas that have been in 
place for over 25 years, with no substantive changes.
    As this agreement is implemented and monitored, we will 
remain fully engaged in oversight and expect robust and 
frequent consultations from this and future Administrations 
regarding all aspects of the agreement. Article I, Section 8 of 
the Constitution vests all authority over commerce with foreign 
nations with the Congress. Congress has developed a partnership 
with the Executive Branch on these issues by delegating aspects 
of this authority over time, and legislation setting the terms 
of this partnership, including the Trade Act of 1974 and 
various iterations of Trade Promotion Authority legislation, 
has been unequivocal that Congress expects robust consultations 
before and after the United States enters into trade 
agreements, whether or not a Congressional vote is required.
    In particular, we expect robust consultation regarding the 
use of proclamation authority to implement this agreement, both 
on tariff and non-tariff issues. Likewise, we anticipate robust 
consultation and consideration of Congressional views when 
developing the U.S. position on any possible amendments to the 
agreement (under Article 34.3) or possible withdrawal (under 
Article 34.6).
    The Joint Review (or ``sunset'') process, to take place at 
least once every six years as set forth in Article 34.7, is a 
new provision for U.S. trade agreements. For that reason, 
Section 611 of the USMCA Implementation Act sets forth some 
important steps for consultation with Congress in developing 
the U.S. position for these Joint Review meetings and making 
decisions on next steps after the meetings occur. The 
consultations set forth in Section 611 are just some components 
of the ongoing consultations we expect regarding the Joint 
Review process.
    Although we strongly support this agreement because it is a 
great win for the United States for all the reasons stated 
above as well as many others, in certain discrete areas our 
view is that concessions were made to address Democratic 
concerns, resulting in weaker provisions that should not be 
replicated in future trade agreements. First, we view Investor 
State Dispute Settlement (ISDS) as an important enforcement 
mechanism that gives U.S. investors in foreign countries access 
to a fair and neutral venue to enforce their rights when a 
foreign country's domestic courts may not provide that due 
process. This agreement preserves a more limited form of ISDS 
for all sectors and NAFTA-like ISDS for investors in certain 
sectors that have contracts with the Government of Mexico. 
However, ISDS is eliminated with Canada after a grandfathering 
period, and access to ISDS is very limited for investors in 
many sectors in Mexico. We expect to see full ISDS rights in 
all sectors in future trade agreements and do not see the need 
for a government contract requirement.
    Second, we strongly supported the USMCA as originally 
negotiated in the area of pharmaceuticals, including 10 years 
of data exclusivity for biologics. These original USMCA 
provisions appropriately balanced strongly support for our 
vital innovators with access to medicines. They would have 
helped raise standards in other countries and prevented the 
significant problem in which far too many countries take 
advantage of the pro-innovation policies in the United States 
without paying a fair share for developing new drugs.
    Unfortunately, the biologics provision was removed from the 
agreement at the insistence of Democrats, who incorrectly 
suggested that this provision had the potential to increase 
U.S. drug prices. We do not consider the removal of this 
provision as establishing a precedent for future agreements.
    At the same time, we note that the USMCA does not change 
the full 12 years of data exclusivity protection for biologics 
under U.S. law and cannot do so because only Congress can 
change U.S. law. In addition, USMCA still maintains important 
protections for American innovation and creativity. Rather than 
create a precedent in a trade agreement for a level of 
protection for biologics that is significantly below U.S. law, 
USMCA is simply silent on what Mexico and Canada are required 
to provide specifically for biologics, just as NAFTA was. 
Moreover, biologics will receive the same protection as other 
pharmaceuticals, including an automatic five years of data 
exclusivity, as well as many other vital IP protections in this 
important sector. We further note that USMCA does not prevent 
Canada and Mexico from choosing to pursue pro-innovation 
policies by raising their standards in this area to a level 
closer to the United States level of 12 years, a result that we 
would view as positive for patients and taxpayers in all three 
countries.
    This agreement is a strong win for Americans across our 
economy. House Democrats dragged their feet for over a year 
before allowing this agreement to come to a vote, which has 
imposed unnecessary costs on the U.S. economy and created 
considerable uncertainty. We are pleased to move forward now 
with a strong bipartisan vote to implement the agreement and 
begin benefiting from the improvements to NAFTA that President 
Trump has won for all Americans.
                                   Kevin Brady,
                                           Republican Leader.
                                   Vern Buchanan,
                                           Republican Leader, Trade 
                                               Subcommittee.

                                  [all]