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116th Congress}                                           { Report
                                 SENATE
  2d Session  }                                           { 116-283

======================================================================
 
        UNITED STATES-MEXICO-CANADA AGREEMENT IMPLEMENTATION ACT

                                _______
                                

 October 21 (legislative day, October 19), 2020.--Ordered to be printed

                                _______
                                

             Mr. Grassley, from the Committee on Finance, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5430]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which 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, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                CONTENTS

                                                                   Page
  I. REPORT AND OTHER MATERIALS OF THE COMMITTEE......................2
          A. Report of the Committee on Finance..................     2
          B. Summary of Congressional Consideration of the 
              Agreement..........................................     2
              1. Background......................................     2
              2. Trade promotion authority procedures in general.     4
              3. Notification prior to negotiations..............     5
              4. Negotiations....................................     5
              5. Conclusion of negotiations and signing of 
                  agreement......................................     6
              6. Hearings........................................     6
              7. Development of the implementing legislation.....     6
              8. Formal submission of the agreement and 
                  implementing legislation.......................     8
              9. Committee and floor consideration...............     9
              10. Implementation.................................    10
          C. Trade Relations With Canada and Mexico..............    11
          D. Overview of the Agreement...........................    13
              1. Background......................................    13
              2. Committee's positions on various USMCA 
                  commitments....................................    13
                a. Qualifying Rules for Automobiles..............    13
                b. Express Shipments.............................    14
                c. Sanitary and Phytosanitary Measures...........    14
                d. Agricultural Biotechnology....................    15
                e. Technical Barriers to Trade...................    15
                f. Labor and Environment.........................    15
                g. Investment....................................    17
                h. Dispute Settlement............................    17
                i. Joint Review..................................    17
                j. Digital Trade.................................    18
                k. Intellectual Property (IP)....................    18
                l. Currency......................................    19
              3. Office of the U.S. Trade Representative Summary.    19
          E. General Description of the Bill to Implement the 
              Agreement..........................................    39
Title I--Approval of, and General Provisions Relating to, the 
  USMCA..........................................................    39
Title II--Customs Provisions.....................................    42
Title III--Application of USMCA to Sectors and Services..........    45
Title IV--Antidumping and Countervailing Duties..................    47
Title V--Transfer Provisions and Other Amendments................    48
Title VI--Transition to and Extension of USMCA...................    50
Title VII--Labor Monitoring and Enforcement......................    51
Title VIII--Environment Monitoring and Enforcement...............    56
Title IX--USMCA Supplemental Appropriations Act, 2019............    58
          F. Vote of the Committee in Reporting the Bill.........    59
 II. BUDGETARY IMPACT OF THE BILL....................................59
III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS.................61
 IV. ADDITIONAL VIEWS................................................62
  V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........73

             I. REPORT AND OTHER MATERIALS OF THE COMMITTEE


                 A. Report of the Committee on Finance

    The Committee on Finance, to which was referred the bill 
(H.R. 5430) to implement the United States-Mexico-Canada 
Agreement (Agreement), having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

       B. Summary of Congressional Consideration of the Agreement


1. Background

    On February 2, 2017, President Trump announced his 
intention to renegotiate the North American Free Trade 
Agreement (NAFTA). President Trump had made redressing NAFTA's 
shortcomings one of his top priorities upon entering into 
office. In accordance with Section 105(a)(1) of the Bipartisan 
Congressional Trade Priorities and Accountability Act of 2015 
(TPA 2015) (Pub. L. 114-26), U.S. Trade Representative Robert 
E. Lighthizer notified Congress on May 18, 2017 that the 
President intended to initiate negotiations with Canada and the 
United Mexican States (Mexico) regarding modernizing NAFTA. In 
his letter, Ambassador Lighthizer noted that:

          . . . NAFTA was negotiated 25 years ago, and while 
        our economy and businesses have changed considerably 
        over that period, NAFTA has not. Many chapters are 
        outdated and do not reflect modern standards. . . . In 
        addition, and consistent with the negotiating 
        objectives in the Trade Priorities and Accountability 
        Act, our aim is that NAFTA be modernized to include new 
        provisions to address intellectual property rights, 
        regulatory practices, state-owned enterprises, 
        services, customs procedures, sanitary and 
        phytosanitary measures, labor, environment, and small 
        and medium enterprises. Moreover, establishing 
        effective implementation and aggressive enforcement of 
        the commitments made by our trading partners under our 
        trade agreements is vital to the success of those 
        agreements and should be improved in the context of 
        NAFTA.

This is the first time the United States has sought to 
comprehensively update an existing free trade agreement (FTA).
    Ambassador Lighthizer consulted with the relevant 
congressional committees, including the Senate Committee on 
Finance, with respect to the initiation of negotiations. He 
also met with the Senate Advisory Group on Negotiations (SAGON) 
on May 17, 2017 to discuss the initiation of negotiations. In 
accordance with Section 105(a)(1)(D) of TPA 2015, the 
President's negotiating objectives were published on the Office 
of the U.S. Trade Representative's (USTR) website on July 17, 
2017, as was an updated version on November 17, 2017. The 
United States, Mexico, and Canada proceeded to formally launch 
negotiations on August 16, 2017.
    At the launch of negotiations, it was recognized that for 
more than two decades, trade among the United States, Canada, 
and Mexico had taken place under the auspices of NAFTA. At the 
time of its entry into force, NAFTA was the largest free trade 
area other than the European Union (EU), and notably the first 
reciprocal FTA between developing and advanced economies. It 
helped facilitate economic expansion and integration in North 
America.
    While tariffs with Canada had already been reduced through 
the U.S.-Canada Free Trade Agreement (CUSFTA), which entered 
into force on January 1, 1989, Mexico's average applied tariff 
rate before NAFTA was significantly higher than the average 
applied U.S. tariff rate on Mexican goods, in part because 
Mexico enjoyed preferential tariff access under the Generalized 
System of Preferences Program. NAFTA reduced tariffs with both 
Mexico and Canada and complemented tariff reduction and 
elimination with important disciplines to tackle non-tariff 
barriers, which were a major impediment to expanding trade 
among the three countries. For example, while CUSFTA lacked 
commitments on the protection of intellectual property, NAFTA 
included a chapter on intellectual property. Prior to NAFTA, 
approximately 60 percent of U.S. agricultural exports to Mexico 
required import licenses or faced other non-tariff barriers. 
NAFTA helped to redress these barriers to U.S. competitiveness, 
and bring greater overall prosperity to the American people.
    Although U.S. exports to both Mexico and Canada increased 
significantly from 1993 to 2016--to Mexico by 334 percent in 
inflation-adjusted terms, and to Canada by more than 160 
percent--international trade and commerce had changed 
dramatically since NAFTA was negotiated. When NAFTA was 
negotiated, there was no digital economy. By 2017, the digital 
economy accounted for nearly 6.9 percent of U.S. GDP, or $1.35 
trillion.\1\ In addition, the NAFTA Parties' labor and 
environment obligations concerning trade were contained in side 
agreements rather than in the core of the FTA itself. There 
were also concerns that different or unenforced environmental 
and labor standards facilitated outsourcing of economic 
activity from the United States. Moreover, it had become 
apparent over time that a NAFTA Party could frustrate 
enforcement of its rules by preventing the composition of a 
dispute settlement panel. Thus, NAFTA lacked important rules in 
a number of critically important areas, and those rules that 
did exist lacked sufficient enforceability.
---------------------------------------------------------------------------
    \1\U.S. Bureau of Economic Analysis, https://www.bea.gov/news/blog/
2019-04-04/digital-economy-accounted-69-percent-gdp-2017.
---------------------------------------------------------------------------

2. Trade promotion authority procedures in general

    The ability of the United States to enter into any trade 
agreement--as well as update and modernize any existing 
agreement--requires Congress's assent under the Constitution. 
Specifically, Article I, Section 8 of the Constitution of the 
United States vests Congress with the authority to regulate 
international trade. Congress has periodically delegated some 
of its authority to the President in order to advance the 
economic interests of the United States. In order for any such 
delegation to be constitutionally valid, Congress must impose 
sufficient strictures on the executive to ensure that Congress 
retains ultimate control over the conduct of trade policy. To 
that end, Congress has periodically enacted statutes known as 
Trade Promotion Authority (TPA) or ``Fast Track,'' which govern 
the congressional-executive partnership on trade policy.
    TPA represents a compact between Congress and the 
Administration, by which Congress guarantees it will vote on a 
trade agreement entered into by the Administration without 
amendment and the Administration guarantees close consultation 
with Congress during the negotiation, approval, and 
implementation of the trade agreement in order to achieve the 
objectives that Congress identifies. Thus, TPA's provision for 
a privileged vote is predicated upon the Administration 
strictly following the requirements that Congress sets forth in 
the TPA legislation. Thorough and timely consultation by the 
Administration with Congress is the essential bedrock upon 
which Congress's delegation of constitutional authority rests. 
This longstanding compact, periodically renewed over the last 
few decades, has resulted in the successful negotiation and 
implementation of numerous trade agreements that have 
contributed significantly to increased economic growth and 
prosperity in the United States.
    The most recent incarnation of this compact is found in the 
Bipartisan Congressional Trade Priorities and Accountability 
Act of 2015 (TPA 2015) (Pub. L. 114-26). The Act includes 
prerequisites for congressional consideration of a trade 
agreement under expedited procedures, which are found in 
Sections 103 through 105 of the Act (19 U.S.C. Sec. Sec. 4203-
4205) and Section 151 of the Trade Act of 1974 (19 U.S.C. 
Sec. 2191). Section 102 of the Act outlines the negotiating 
objectives that the President must achieve if the President 
intends to use TPA procedures to implement a trade agreement. 
Section 103 of the Act authorizes the President to enter into 
reciprocal trade agreements with foreign countries to reduce or 
eliminate tariff or non-tariff barriers and other trade-
distorting measures. And Section 151 of the Trade Act of 1974 
sets forth expedited procedures for congressional consideration 
of a trade agreement without amendment. The President's 
authority under Section 103 extends to trade agreements entered 
into on or before July 1, 2021.

3. Notification prior to negotiations

    In accordance with Section 105(a)(1) of TPA 2015, the 
President must provide written notice to Congress at least 90 
calendar days before initiating negotiations. Ambassador 
Lighthizer notified Congress on May 18, 2017 that the President 
intended to initiate negotiations with Canada and Mexico 
regarding modernizing NAFTA. This was the first time the United 
States had sought to comprehensively update and expand an 
existing FTA.
    As noted earlier, Ambassador Lighthizer consulted with the 
relevant congressional committees, including the Senate 
Committee on Finance, with respect to the initiation of 
negotiations. He also met with the Senate Advisory Group on 
Negotiations (SAGON) on May 17, 2017 to discuss the initiation 
of negotiations. In accordance with Section 105(a)(1)(D) of TPA 
2015, the President's negotiating objectives were published on 
the USTR website on July 17, 2017, as was an updated version on 
November 17, 2017. The United States, Mexico, and Canada 
launched negotiations on August 16, 2017.

4. Negotiations

    Section 104(a) of TPA 2015 provides that USTR must consult 
closely and keep fully apprised the Committee on Ways and Means 
of the House of Representatives and the Committee on Finance of 
the Senate regarding the status of the trade negotiations. 
Moreover, Section 104(a) of TPA 2015 requires USTR to 
promulgate written guidelines for consultation with Congress 
(Consultation Guidelines). The Trump Administration continued 
to utilize the Consultation Guidelines promulgated under the 
Obama Administration.
    The Finance Committee considers this requirement key to 
ensuring compliance with the consultation requirement in TPA 
2015, and to ensuring that Congress retains appropriate 
oversight over trade policy consistent with the Constitution. 
To that end, USTR and committee staff met regularly to review 
and discuss potential negotiating proposals. Committee staff 
also attended the negotiations to ensure they could be kept 
fully informed regarding the status of negotiations, convey the 
views of Members of the Committee to negotiators in real time, 
and be in a position to update Members promptly.
    There were seven formal rounds of negotiations regarding 
the modernization of NAFTA.
          1. August 16-22, 2017 (Washington, DC, United States)
          2. September 1-5, 2017 (Mexico City, Mexico)
          3. September 23-27, 2017 (Ottawa, Canada)
          4. October 11-17, 2017 (Arlington, VA, United States)
          5. November 15-21, 2017 (Mexico City, Mexico)
          6. January 23-29, 2018 (Montreal, Canada)
          7. February 25-March 5, 2018 (Mexico City, Mexico)
    In addition to these formal rounds, negotiations advanced 
through digital videoconferences, telephone calls, and 
Ministerial level meetings. The Committee notes its view that 
these negotiations are not excluded from the ambit of ``key 
negotiation meetings'' under the Consultation Guidelines if 
they concern substantive issues, regardless of whether they 
were part of a formally designated negotiating round or not. 
Moreover, TPA 2015 itself requires that the Committee be kept 
timely apprised and consulted regarding all aspects of the 
negotiations, including any proposals that might be tabled on 
behalf of the United States.

5. Conclusion of negotiations and signing of agreement

    Under Section 106(a)(1)(A) of TPA 2015, the President must 
notify Congress at least 90 calendar days before entering into 
an agreement of his intent to enter into the agreement. On 
August 31, 2018, President Trump notified Congress of his 
intent ``to enter into a trade agreement with Mexico--and with 
Canada if it is willing'' pursuant to Section 106(a)(1)(A) of 
TPA 2015.\2\ The three parties published the text of the new 
proposed agreement on September 30, 2018 on USTR's website as 
required by Section 106(a)(1)(B) of TPA 2015, a requirement 
that ensures that both the public and Members of Congress are 
aware of the content of the Agreement before it is signed by 
the President. On November 30, 2018, the three Parties signed 
the Agreement in Buenos Aires, Argentina.
---------------------------------------------------------------------------
    \2\Text of a letter from the President to the Speaker of the House 
of Representatives and the President of the Senate, 31 August, 2018, 
https://www.whitehouse.gov/briefings-statements/text-letter-president-
speaker-house-representatives-president-senate-33/.
---------------------------------------------------------------------------

6. Hearings

    The Committee believes it to be critical to obtain the 
input of the Administration and the stakeholders that are the 
intended beneficiaries of a trade agreement to effectively 
evaluate the agreement and develop implementing legislation. To 
that end, the Committee held two hearings on USMCA. The first 
hearing was held on June 18, 2019, and was titled ``The 
President's 2019 Trade Policy Agenda and the United States-
Mexico-Canada Agreement.'' The sole witness was Ambassador 
Lighthizer. The second hearing was held on July 30, 2019, and 
titled ``The United States-Mexico-Canada Agreement.'' The 
witnesses at this hearing were Paula Elaine Barnett, Owner, 
Paula Elaine Barnett Jewelry; the Honorable Matt Blunt, 
President, American Automotive Policy Council; James Collins, 
CEO, Corteva Agriscience; Derek Leathers, President and CEO, 
Werner Enterprises; the Honorable Thomas Vilsack, President and 
CEO, U.S. Dairy Export Council; and Michael Wessel, President, 
Wessel Group, and member of the Labor Advisory Committee for 
Trade Negotiations and Trade Policy.

7. Development of the implementing legislation

    Under TPA procedures, Congress and the Administration work 
together to produce legislation that implements an FTA. Draft 
legislation is developed in close consultation among the 
Administration, the House Committee on Ways and Means, and the 
Senate Committee on Finance. The committees may hold informal 
meetings to consider the draft legislation and make 
recommendations to the Administration. Although not a TPA 
requirement, the Administration normally also receives 
Congressional input through a ``mock markup'' process, in which 
members of the House Committee on Ways and Means and the Senate 
Committee on Finance can make proposed amendments to a draft 
implementing bill. The Administration then finalizes the 
implementing legislation for formal submission to Congress. 
These procedures are meant to ensure close cooperation between 
the executive and legislative branches on the development of 
legislation that faithfully implements the agreement. Under TPA 
2015, trade agreement implementing bills may include only those 
provisions that are strictly necessary or appropriate to 
implement the agreement.
            a. House Working Group
    Typically, obligations in the FTA are settled upon 
conclusion of the agreement between the parties, allowing the 
Administration and Members of the relevant congressional 
committees to have time to thoroughly consider the content of 
the FTA and to discuss what legislative and administrative 
actions would be necessary for implementation. One of the 
rationales for TPA is to enhance the Administration's 
effectiveness during negotiations by giving trading partners 
confidence that the agreement reached is the agreement that 
Congress will vote on, subject to minor changes if any, 
including changes that might be implemented through side 
letters. However, TPA does not preclude the Administration from 
going back to a trading partner and requesting changes to an 
agreement, in consultation with Congress.
    On June 13, 2019, House Speaker Nancy Pelosi appointed a 
Working Group of House Democrats to conduct negotiations with 
the Administration regarding changes to USMCA required to 
secure their support. These negotiations were kept confidential 
from most Members of the House and Senate.
    On December 10, 2019, the House Democrats' Trade Working 
Group and the Administration reached a deal that would secure 
Democratic support. That same day, the USMCA Parties signed a 
Protocol of Amendment to USMCA in Mexico City. The publication 
of the Protocol of Amendment was the first time most members of 
Congress had an opportunity to see the changes the House 
Democrats' Trade Working Group requested for USMCA. The Parties 
agreed to amend Chapter 1 (Initial Provisions and General 
Definitions), Chapter 4 (Rules of Origin), Chapter 20 
(Intellectual Property), Chapter 23 (Labor), Chapter 24 
(Environment), and Chapter 31 (Dispute Settlement). The final 
Protocol of Amendment to USMCA made the following changes to 
the agreement:
           Enforcement: Eliminated the requirement for 
        the Free Trade Commission to convene before a panel is 
        established, and ended the NAFTA practice of blocking 
        dispute settlement panels by allowing the complaining 
        party to appoint the panelists if the defending party 
        refuses to participate in the panelist selection 
        procedure.
           Labor: Created a presumption that violations 
        of the relevant labor obligations in USMCA occur in a 
        manner affecting trade and investment between the 
        Parties, and established a unique mechanism to 
        investigate facilities that are denying fundamental 
        labor rights. Specifically, the mechanism is unique 
        because it supports labor reforms that the Mexican 
        government has itself chosen to undertake. To that end, 
        the purpose of this mechanism as noted in the Protocol 
        of Amendment is ``to ensure a remediation of a Denial 
        of Rights . . . [and] not to restrict trade.''
           Environment: Created a presumption that 
        violations of the relevant environmental obligations in 
        USMCA occur in a manner affecting trade and investment 
        between the Parties. The Parties agreed to adopt, 
        maintain, and implement seven multilateral 
        environmental agreements, an obligation which is 
        modeled after obligations in our FTAs with Colombia, 
        Panama, and Peru.
           Intellectual Property: Eliminated Article 
        20.49.1 of USMCA, which required the parties to 
        ``provide effective market protection through the 
        implementation of Article 20.48.1 . . . for a period of 
        at least ten years from the date of first marketing 
        approval of that product in that Party.'' Also 
        eliminated the requirement that the Parties confirm the 
        availability of patents for new uses of known products, 
        as well as provided greater clarity that certain U.S. 
        practices would comply with obligations in the chapter.
           Rules of Origin: Instituted a requirement 
        that steel used in the automotive sector only receive 
        preferential treatment under USMCA if it is melted and 
        poured in the region.
    In addition, the United States and Mexico signed a side 
agreement creating a framework for cooperation and customs 
verification to combat illegal trafficking of flora and fauna.
            b. Mock Markup
    For consideration of every other FTA to date, the Committee 
has conducted a ``mock markup'' to consider the draft 
implementing legislation for the trade agreement and the draft 
Statement of Administrative Action (SAA). The Committee can 
propose amendments for both, although the Administration is not 
required to accept them. Mock markups are not required by 
statute. Nonetheless, the Committee considers them valuable 
opportunities to engage in the development of implementing 
legislation. Mock markups are also an important way to 
reinforce the requirement in TPA 2015 that provisions in the 
implementing legislation be ``strictly necessary or 
appropriate'' to implement the trade agreement. To fulfill its 
purpose, a mock markup has to happen before the Administration 
formally submits the implementing bill and corresponding 
materials to Congress. The Committee notes that the lack of a 
mock markup for USMCA was an exceptional situation that should 
not be a precedent for the future consideration of FTA 
implementing bills by Congress.

8. Formal submission of the agreement and implementing legislation

    When the President formally submits a trade agreement to 
Congress under Section 106(a)(1)(E) of TPA 2015, the President 
must include in the submission the final legal text of the 
agreement, together with implementing legislation, an SAA 
describing regulatory and other changes to implement the 
agreement, and a statement setting forth the reasons of the 
President regarding how and to what extent the agreement makes 
progress in achieving the applicable purposes, policies, 
priorities, and objectives set forth in TPA 2015; how the 
agreement serves the interests of U.S. commerce; and how the 
implementing bill meets the standards to qualify for trade 
authorities procedures under Section 103(b)(3) of TPA 2015.
    On December 13, 2019, President Trump transmitted to 
Congress the final text of the Agreement, the implementing 
legislation, the SAA, and other supporting information under 
Section 106 of TPA 2015. On the same day, House Majority Leader 
Steny Hoyer introduced H.R. 5430. On December 16, 2019, Mr. 
Grassley, for himself, Mr. Wyden, and Mr. McConnell, introduced 
the bill as S. 3052, and it was referred to the Committee on 
Finance. On December 17, H.R. 5430 was referred to the House 
Committee on Ways and Means. The Committee on Ways and Means 
met in open session on December 17, 2019 to consider H.R. 5430 
and ordered the bill favorably reported by voice vote. On 
December 19, 2019, the House passed H.R. 5430 by a vote of 385-
41.
    On January 3, 2020, H.R. 5430 was transmitted to the Senate 
and referred to the Committees on: Finance; Health, Education, 
Labor, and Pensions; Environment and Public Works; 
Appropriations; Foreign Relations; Commerce, Science, and 
Transportation; and the Budget.
    The Committee notes that H.R. 5430 was referred to multiple 
committees while the identical Senate bill, S. 3052, was 
referred solely to the Committee on Finance on December 16, 
2019. It is the view of the Committee that the subject matters 
that predominated the USMCA implementing bill were customs, 
revenue, reciprocal trade agreements, tariffs and import 
quotas, and matters related thereto, most of which are within 
the jurisdiction of the Committee on Finance.
    The Committee notes that the implementing bill also 
included an Appropriations title, granting $843 million in 
appropriations. In large part, these appropriations are 
dedicated to the monitoring and enforcement of certain 
commitments that are specific to Mexico. Moreover, the 
Congressional Budget Office has projected that even with these 
appropriations, USMCA will, on net, be revenue-positive. The 
Committee recognizes that undertaking certain trade agreement 
obligations may entail the need for appropriations to ensure 
the obligations can be carried out. However, the Committee 
believes that any such appropriation needs careful scrutiny and 
consultation, because of Congress's constitutional authority 
over appropriations and because TPA 2015 provides that only 
provisions strictly necessary or appropriate to implement the 
final trade agreement are permitted in the implementing bill. 
Since 1984, no implementing bill for a trade agreement passed 
pursuant to expedited procedures has included discretionary 
appropriations. The provision of appropriations in the USMCA 
Implementation Act must be considered in light of these 
particular circumstances.

9. Committee and floor consideration

    If the requirements of TPA 2015 are satisfied, implementing 
revenue bills are subject to the legislative procedures of 
Section 151 of the Trade Act of 1974. The following schedule 
for congressional consideration applies under these procedures:
    (i) House committees have up to 45 session days in which to 
report the bill; any committee which does not do so in that 
period will be automatically discharged from further 
consideration.
    (ii) A vote on final passage by the House must occur on or 
before the 15th session day after the committees report the 
bill or are discharged from further consideration.
    (iii) Senate committees must act within 15 session days of 
receiving the implementing revenue bill from the House or 
within 45 session days of Senate introduction of the 
implementing bill, whichever is later, or they will be 
discharged automatically.
    (iv) The full Senate then must vote within 15 session days 
on the implementing bill.
    Once the implementing bill has been formally submitted by 
the President and introduced, no amendments to the bill are in 
order in either house of Congress. Floor debate in each house 
is limited to no more than 20 hours, to be equally divided 
between those favoring the bill and those opposing the bill.
    The House passed H.R. 5430 on December 19, 2019, by a roll 
call vote of 385 ayes, 41 nays. The Committee on Finance met in 
open executive session on January 7, 2020, to consider 
favorably reporting H.R. 5430. At this meeting, Senator Toomey 
sought to offer an amendment to Section 621 of the USMCA 
Implementation Act that would require approval of Congress 
before USMCA could expire under the Agreement's sunset clause. 
The Chairman ruled the amendment out of order because of the 
privileged status of the bill under TPA 2015. Senator Toomey 
did not appeal the ruling of the chair. The Committee then 
proceeded to favorably report H.R. 5430 without amendment by 
roll call vote of 25 ayes, 3 nays. Ayes: Grassley, Crapo, 
Roberts, Enzi, Cornyn, Thune, Burr (proxy), Portman, Scott, 
Lankford, Daines, Young, Sasse, Wyden, Stabenow, Cantwell, 
Menendez, Carper, Cardin (proxy), Brown, Bennet, Casey, Warner, 
Hassan, and Cortez Masto. Nays: Toomey, Cassidy, and 
Whitehouse.
    On January 16, 2020, the Senate passed H.R. 5430 by a roll 
call vote of 89 ayes, 10 nays. President Donald J. Trump signed 
H.R. 5430 into law on January 29, 2020 (Pub. L. 116-113).

10. Implementation

    Congress's constitutional role with respect to trade policy 
includes the passage of legislation and oversight of its 
implementation. Congress has a key role to play in the 
implementation of FTAs and expects that to continue with USMCA. 
The Administration's Consultation Guidelines correctly 
acknowledge as much:

          Prior to entry into force of a trade agreement with a 
        trading partner, USTR will consult with the Committees 
        on Finance and Ways and Means regarding measures taken 
        or to be taken by that trading partner to implement 
        provisions of the trade agreement. In addition, USTR 
        will also consult regularly on trading partner 
        compliance with provisions of a trade agreement after 
        entry into force.

To that end, the Committee expects USTR to routinely update the 
Committee, and to be available promptly upon request to answer 
any of the Committee's queries.

               C. Trade Relations With Canada and Mexico


1. United States-Canada Trade

    Canada ranks first among U.S. export markets and third 
among foreign exporters to the United States. U.S. exports to 
Canada totaled $292.69 billion in 2019, while U.S. imports 
totaled $319.7 billion. The top export categories (2-digit HS) 
in 2018 were: vehicles ($52 billion), machinery ($45 billion), 
mineral fuels ($27 billion), electrical machinery ($26 
billion), and plastics ($14 billion).\3\ The top import 
categories (2-digit HS) in 2018 were: mineral fuels ($85 
billion), vehicles ($53 billion), machinery ($23 billion), 
special other (returns) ($16 billion), and plastics ($12 
billion). The United States had a services trade surplus of an 
estimated $28 billion with Canada in 2018.
---------------------------------------------------------------------------
    \3\HS refers to the Harmonized Commodity Description and Coding 
System, an international nomenclature used to classify products.
---------------------------------------------------------------------------
    The following graph shows nominal values of American 
imports in Canada since 1995.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


2. United States-Mexico Trade

    Mexico ranks second among U.S. export markets and second 
among foreign exporters to the United States. U.S. exports to 
Mexico totaled $358.1 billion in 2019, while U.S. imports 
totaled $256.37 billion. The top export categories (2-digit HS) 
in 2018 were: machinery ($46 billion), electrical machinery 
($43 billion), mineral fuels ($35 billion), vehicles ($22 
billion), and plastics ($18 billion). The top import categories 
(2-digit HS) in 2018 were: vehicles ($93 billion), electrical 
machinery ($64 billion), machinery ($63 billion), mineral fuels 
($16 billion), and optical and medical instruments ($15 
billion). The United States had a services trade surplus of an 
estimated $8.0 billion with Mexico in 2018.
    The following graph shows nominal values of American 
imports in Mexico since 1995.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


3. Tariffs and Trade Agreements

    Canada acceded to the World Trade Organization (WTO) on 
January 1, 1995. It has an average bound tariff rate of 6.5 
percent for all goods (15 percent for agricultural goods and 
5.1 percent for non-agricultural goods). In 2018, Canada 
maintained a simple average applied most-favored nation (MFN) 
tariff rate of 4 percent for all goods (15.9 percent for 
agricultural goods and 2.1 percent for non-agricultural goods). 
In addition to NAFTA and CUSFTA, Canada has the following FTAs 
in force: the Comprehensive and Progressive Agreement for 
Trans-Pacific Partnership (CP-TPP), and FTAs with Chile, 
Colombia, Cost Rica, the EU, the European Free Trade 
Association (EFTA), Honduras, Israel, Jordan, Korea, Panama, 
Peru, and Ukraine.
    Mexico acceded to the WTO on January 1, 1995. It has an 
average bound tariff rate of 36.2 percent for all goods (45 
percent for agricultural goods and 34.8 percent for non-
agricultural goods). In 2018, Mexico maintained a simple 
average applied MFN tariff rate of 7 percent for all goods 
(13.9 percent for agricultural goods and 5.8 percent for non-
agricultural goods). In addition to NAFTA, Mexico has the 
following FTAs in force: CP-TPP, and FTAs with Central America 
(Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), 
Chile, the EU, EFTA, Israel, Japan, Panama, Peru, and Uruguay.

4. U.S. International Trade Commission Study

    As required by Section 105(c) of TPA 2015, the U.S. 
International Trade Commission (USITC or Commission) released 
in April 2019 a report from its investigation (Investigation 
No. TPA 105-003) into the probable economic effect of the 
Agreement (USITC Pub. 4889). In the Highlights Section of the 
report, the Commission noted the following:

          The Commission's model estimates that USMCA would 
        raise U.S. real GDP by $68.2 billion (0.35 percent) and 
        U.S. employment by 176,000 jobs (0.12 percent). The 
        model estimates that USMCA would likely have a positive 
        impact on U.S. trade, both with USMCA partners and with 
        the rest of the world. U.S. exports to Canada and 
        Mexico would increase by $19.1 billion (5.9 percent) 
        and $14.2 billion (6.7 percent), respectively. U.S. 
        imports from Canada and Mexico would increase by $19.1 
        billion (4.8 percent) and $12.4 billion (3.8 percent), 
        respectively. The model estimates that the agreement 
        would likely have a positive impact on all broad 
        industry sectors within the U.S. economy. Manufacturing 
        would experience the largest percentage gains in 
        output, exports, wages, and employment, while in 
        absolute terms, services would experience the largest 
        gains in output and employment.

The Commission also estimated that there would be employment 
gains for the U.S. agriculture, manufacturing, and services 
sectors. The following table from the report summarizes the 
respective gains estimated for those sectors.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      D. Overview of the Agreement


1. Background

    USMCA continues the trilateral free trade area that was 
established under NAFTA. It continues duty-free treatment among 
Canada, Mexico, and the United States for qualifying goods, and 
contains updated rules and disciplines intended to reduce non-
tariff barriers. It also allows for the United States to take 
prompt action against such barriers through dispute settlement. 
USMCA contains a number of commitments that have not been 
included in previous U.S. FTAs. As such, the Committee believes 
it is relevant to discuss them below.

2. Committee's positions on various USMCA commitments

            a. Qualifying Rules for Automobiles
    One of the Administration's objectives in USMCA was to 
strengthen the North American automobile industry. The process 
of integrating supply chains in North America began in 1965 
with the Canada--United States Automotive Products Agreement 
(Auto Pact). NAFTA brought Mexico into the supply chain as 
well. North America has become one of the world's most 
important, innovative, and efficient automotive manufacturing 
hubs.
    To attempt to address concerns regarding the functioning of 
the auto rules of origin, USMCA contains two innovations. 
First, it creates a new ``Labor Value Content'' rule requiring 
that 40 to 45 percent of auto content be made by workers 
earning at least $16 per hour. Second, USMCA provides that 
eligibility for preferential tariff treatment requires that an 
increased percentage of the auto content originate in North 
America.
    The Committee believes these requirements are reasonable 
approaches with respect to the North American automobile sector 
because of the continent's uniquely integrated automobile 
industry. However, as noted in the USITC's USMCA report, these 
requirements may inadvertently increase costs for American 
consumers and increase compliance costs for U.S.-based 
manufacturers, and they require careful consideration before 
use with other countries or for other sectors. Because these 
requirements are unique and novel, the Committee expects the 
Administration to continue consulting closely with automakers 
that have a significant U.S. manufacturing presence to ensure 
the companies can continue to grow employment and investment in 
the United States. The Committee expects to be timely briefed 
on such engagement and any developments resulting from such 
engagement.\4\
---------------------------------------------------------------------------
    \4\The Committee notes that there are certain changes to the rules 
of origin made by the Protocol of Amendment that are to be phased in at 
a later time, or that address calculation methodologies. See Protocol 
of Amendment, para. 2. The Committee did not have an opportunity to 
evaluate the potential economic implications of these changes since 
they occurred after the International Trade Commission prepared its 
economic assessment of USMCA. Committee members will monitor these 
changes to assess their impact, and provide appropriate input.
---------------------------------------------------------------------------
            b. Express Shipments
    USMCA's chapter on customs and trade facilitation includes 
important commitments that will reduce costs and advance 
business opportunities for U.S. small and medium enterprises. 
The agreement creates a new informal shipment level of $2,500, 
allowing express shipments under that amount to benefit from 
reduced paperwork and red tape. It also raises the de minimis 
level for express shipments in Canada and Mexico. In Mexico, 
shipments valued at or below US$117 may enter free of customs 
duties, and shipments valued at or below US$50 may enter free 
of taxes. In Canada, shipments valued at or below C$150 may 
enter free of customs duties, and shipments valued at or below 
C$40 may enter free of taxes.
    Although the increased de minimis levels are a significant 
improvement upon the past, especially in Canada, the Committee 
notes that the preferred outcome would have been for Canada and 
Mexico to have matched the U.S. de minimis level of $800. The 
Committee expects USTR to continue pushing our trading partners 
to match the U.S. de minimis level in future negotiations. The 
Committee further notes that the U.S. de minimis level 
continues to enjoy broad bipartisan support and any changes to 
this level would have to be enacted by Congress.
            c. Sanitary and Phytosanitary Measures
    USMCA's chapter on sanitary and phytosanitary (SPS) 
measures contains a number of critical commitments that should 
prevent countries from disguising discriminatory restrictions 
on agricultural products in the name of food safety or animal 
or plant health. The SPS chapters in other U.S. FTAs simply 
established a committee for the Parties to discuss SPS issues 
rather than binding the Parties to concrete obligations. In 
contrast, USMCA's SPS chapter has a number of enforceable 
commitments, including that SPS measures be based on scientific 
principles and that risk assessment and risk management for SPS 
regulations be documented and afforded opportunities for public 
comment. These commitments achieve the negotiating objectives 
in TPA 2015 to ensure more open and equitable market access 
through robust rules on SPS measures.\5\ The Committee strongly 
supports these commitments and believes they should be a model 
for future FTAs.
---------------------------------------------------------------------------
    \5\(b)(3).
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            d. Agricultural Biotechnology
    Section B of the Agriculture Chapter of USMCA contains 
disciplines to avoid unreasonable restrictions on products 
derived through agricultural biotechnology and increase 
cooperation regarding the trade in these products. 
Unfortunately, such restrictions have become a major trade 
irritant over the last two decades, including through the 
application of moratoriums on approval processes for such 
products. The Committee notes in particular that Article 3.14.4 
of USMCA provides that Parties must accept and review 
applications for authorizing products of agricultural 
biotechnology year-round. The Committee views this obligation 
as an important commitment that requires the Parties to refrain 
from adopting any type of moratorium, official or otherwise, on 
the approval of agricultural biotechnology.
            e. Technical Barriers to Trade
    The Committee appreciates that our trading partners can use 
standards-related measures to achieve legitimate commercial and 
policy objectives. Unfortunately, many trading partners also 
use such measures as a disguised restriction on trade. USMCA's 
chapter on technical barriers to trade (TBT) contains a number 
of important disciplines to ensure U.S. commerce is not 
unreasonably frustrated through standards-related measures. The 
Committee supports obligations including Article 11.5, which 
requires the Parties to facilitate the acceptance of multiple 
international standards; Article 11.6, which requires the 
Parties to provide national treatment to conformity assessment 
bodies; and Article 11.7, which requires that TBT measures be 
developed transparently, including by allowing persons of 
another Party to participate in the development of technical 
regulations, standards, and conformity assessment on terms no 
less favorable than accorded to its own citizens. These 
outcomes adhere to the objective in TPA 2015 to achieve greater 
openness, transparency, and convergence on standards 
development processes.\6\ The Committee expects that the 
Administration will seek a similar level of ambition in future 
trade agreements. This is particularly important because an 
increasingly problematic impediment to U.S. commerce in recent 
years has been the failure of trading partners to afford 
national treatment to U.S. conformity assessment bodies, 
resulting in unnecessary testing and costs.
---------------------------------------------------------------------------
    \6\(b)(7)(D).
---------------------------------------------------------------------------
            f. Labor and Environment
    TPA 2015 provides that the U.S. negotiating objectives for 
labor and environment include that each Party to an FTA adopts 
and maintains measures implementing internationally recognized 
core labor standards and obligations under common multilateral 
environmental agreements.\7\ Moreover, no obligations in USMCA 
or other U.S. FTAs preclude the United States from changing its 
laws or implementing measures with respect to environmental 
laws, or labor laws, provided they achieve the relevant rights 
in the ILO Declaration on Rights at Work enumerated in Article 
23.3 of USMCA.
---------------------------------------------------------------------------
    \7\(b)(10).
---------------------------------------------------------------------------
    USMCA's ``facility-specific rapid response labor 
mechanism'' provides authority for designated panelists to 
conduct verifications for reasons relating to a ``Denial of 
Rights.'' When determining whether there has been a Denial of 
Rights, the relevant panelists must be objective, reliable, 
independent, and of sound judgment. The mechanism also provides 
disputing Parties the right to submit evidence, and to test the 
veracity of any evidence that may be submitted. Accordingly, 
the mechanism is designed to be a fair and impartial process 
for determining whether certain specific labor rights have been 
breached. The inclusion in USMCA of a ``facility-specific rapid 
response labor mechanism'' will not change U.S. labor law, or 
impose any additional obligations on state and local 
governments, or the private sector. Moreover, the Committee's 
view is influenced by the fact that Mexico had already chosen 
to adopt significant reforms to its labor laws. The mechanism 
is thus supporting a decision independently made by Mexico.
    The Committee notes that the mechanism operates differently 
with respect to Mexico and the United States. In particular, 
the footnote to Article 31-1.2 of USMCA provides as follows:

          With respect to the United States, a claim can be 
        brought only with respect to an alleged Denial of 
        Rights owed to workers at a covered facility under an 
        enforced order of the National Labor Relations Board. 
        With respect to Mexico, a claim can be brought only 
        with respect to an alleged Denial of Rights under 
        legislation that complies with Annex 23-A (Worker 
        Representation in Collective Bargaining in Mexico).

Before Mexico can invoke the mechanism against the United 
States, there must be an enforced order where a United States 
Court of Appeals has issued a final and conclusive decree 
requiring compliance with an order issued by the National Labor 
Relations Board (NLRB). Accordingly, this mechanism cannot be 
utilized against facilities in the United States unless federal 
litigation on the issue has been fully concluded and U.S. 
courts have determined that a U.S. facility has denied a 
fundamental right. There is no comparable mechanism between the 
United States and Canada.
    USMCA as originally negotiated contained commitments that 
the Parties would not waive or otherwise derogate from core 
labor standards or environmental laws in a manner affecting 
trade or investment between the United States and that Party. 
The language requiring that the waiver or derogation occur in a 
manner affecting trade or investment is drawn directly from TPA 
2015.\8\ The Protocol of Amendment also includes an amendment 
to USMCA providing that dispute settlement panels shall presume 
that a waiver or derogation is conducted in a manner affecting 
trade or investment, unless the responding party demonstrates 
otherwise. The presumption does not prevent a defending party 
from rebutting it, including by provision of evidence or 
demonstrating that relevant circumstances undermine the 
presumption's application.
---------------------------------------------------------------------------
    \8\(b)(10).
---------------------------------------------------------------------------
            g. Investment
    USMCA's investment provisions are similar to NAFTA's, with 
one major exception: USMCA significantly curtails the scope of 
matters where there is recourse to investor-state dispute 
settlement (ISDS). ISDS is eliminated with Canada after a 
grandfathering period, and access to ISDS is limited to 
specified sectors with respect to Mexico. USMCA also imposes 
certain procedural challenges to recourse, including attempts 
to resolve matters through domestic courts.
    In general, ISDS allows an investor recourse to dispute 
settlement when a government discriminates against an investor, 
repudiates contracts, or expropriates property without due 
process of law and appropriate compensation. The United States, 
as a nation committed to the rule of law, has never lost an 
ISDS case even though it is party to nearly 50 agreements 
containing ISDS provisions. The principle function of ISDS, 
like courts, is to provide some form of relief when a Party has 
failed to comply with obligations it willingly accepted. With 
respect to ISDS, it provides recourse in a particularly 
challenging situation: when a U.S. citizen has been wronged by 
a foreign government, and would like to be heard in a forum 
other than courts controlled by that government. In this 
respect, ISDS has often been claimed to further the rule of law 
by removing incentives for corruption and politicization of 
courts. Finally, TPA 2015 contained a negotiating objective 
related to investment that, among other things, required the 
Administration to seek ``to improve mechanisms used to resolve 
disputes between an investor and a government.''\9\ 
Accordingly, the Committee is of the view that the approach to 
ISDS in USMCA raises concerns.
---------------------------------------------------------------------------
    \9\TPA 2015, Sec. 102(b)(4).
---------------------------------------------------------------------------
            h. Dispute Settlement
    The Committee fully supports the changes made by the 
Protocol of Amendment to preclude a USMCA Party from blocking 
composition of a dispute settlement panel. The Committee notes 
this change comports with an objective in TPA 2015 at Section 
102(b)(16): ``to seek provisions in trade agreements providing 
for resolution of disputes between governments under those 
trade agreements in an effective, timely, transparent, 
equitable, and reasoned manner.'' In light of the continued 
impasse to reform WTO dispute settlement, it is more imperative 
than ever that the United States have recourse to effective and 
efficient dispute settlement under its FTAs.
            i. Joint Review
    Article 34.7 of USMCA concerns Review and Term Extension of 
USMCA, otherwise known as the ``sunset clause.'' Under the 
provision, USMCA will be terminated 16 years after its 
implementation, unless the Parties agree to extend its 
operation after a review that takes place six years after entry 
into force. At this review, the parties could extend the 
termination date to 16 years from the six-year review, with 
another joint review to follow six years later. Failure to 
agree would require additional reviews to occur each year 
thereafter until the initial 16-year period concludes or until 
a consensus is reached on how to address the complainant 
Party's concerns.
    The Committee notes that stability in North American trade 
is critical to the health of our economy, and the Committee 
does not believe that this provision was necessary, 
particularly because, like all trade agreements, USMCA provides 
for withdrawal at any time with six months' notice. This 
provision does not change the constitutional structure of the 
United States with respect to the conduct of trade policy. 
Specifically, the Committee notes that Article 34.7.3 provides 
that each Party shall confirm in writing through its head of 
government whether it wishes to extend the term of USMCA. The 
provision thus only dictates how the communication regarding 
term extension should be made to the other Parties; it does not 
address how the decision itself is made within a Party. 
Further, the United States cannot withdraw from a 
congressionally approved trade agreement without the consent of 
Congress.
            j. Digital Trade
    USMCA modernizes NAFTA by directly addressing digital trade 
among the United States, Canada, and Mexico. USMCA contains 
broad provisions supporting cross-border data flows, as well as 
restrictions on data localization. It also prohibits customs 
duties on electronically transmitted products and limits source 
code disclosure requirements. The Committee strongly supports 
provisions addressing modern means of international trade, 
including digital trade and eCommerce.
            k. Intellectual Property (IP)
    USMCA's IP Chapter requires national treatment for 
copyright and related rights, and provides a minimum copyright 
term. It also establishes patentability standards and describes 
patent-office best practices. The Protocol of Amendment revised 
certain provisions in USMCA's IP Chapter, including an 
obligation to provide 10 years of protection for test and other 
data for biologic medicines.
    Pursuant to TPA 2015, the United States should seek to 
ensure ``that the provisions of any trade agreement governing 
intellectual property rights that is entered into by the United 
States reflect a standard of protection similar to that found 
in United States law.''\10\ The Administration relies on TPA's 
objective to guide their negotiations--and to confirm for our 
trading partners that Congress in fact supports many of the 
relevant asks. These objectives have been carefully vetted 
through regular order in Congress, including substantive work 
in relevant committees. Before deviating from these objectives, 
the Committee believes that the Administration should closely 
and thoroughly consult with the Committee to ensure its Members 
are comfortable with whatever deviations may be under 
consideration. Because that consultation did not take place for 
certain provisions with respect to Intellectual Property 
included in the Protocol of Amendment, the Committee does not 
believe they should be deemed a model for future trade 
agreements under TPA 2015 without such consultations taking 
place.
---------------------------------------------------------------------------
    \10\(b)(5).
---------------------------------------------------------------------------
            l. Currency
    USMCA is the first trade agreement entered into by the 
United States that contains disciplines intended to combat 
currency manipulation. The Committee notes that the Parties are 
obliged to achieve market-determined exchange rates, and 
refrain from competitive devaluations. This is a significant 
achievement that the Committee strongly supports.

3. Office of the U.S. Trade Representative Summary

    The Office of the U.S. Trade Representative prepared a 
summary of the Agreement that was included among the documents 
that the President transmitted to Congress on December 12, 
2019. This summary was distributed to Members of the Committee 
to aid in their consideration of the implementing legislation, 
and it is reprinted below:

  AGREEMENT BETWEEN THE UNITED STATES OF AMERICA, THE UNITED MEXICAN 
                           STATES, AND CANADA


                        SUMMARY OF THE AGREEMENT

    This summary briefly describes key provisions for each 
chapter of the Agreement between the United States of America, 
the United Mexican States, and Canada (USMCA or Agreement).

                                PREAMBLE

    The Preamble to the Agreement provides the Parties' 
underlying objectives in entering into the USMCA and provides 
context for the provisions that follow.

        CHAPTER ONE: INITIAL PROVISIONS AND GENERAL DEFINITIONS

    This chapter states that the Agreement establishes a free 
trade area consistent with Article XXIV of the GATT 1994 and 
Article V of the GATS. It also confirms that each Party retains 
its existing rights and obligations with respect to each other 
under the WTO Agreement and other agreements to which they are 
party. Finally, the chapter provides for definitions that apply 
Agreement-wide.

      CHAPTER TWO: NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS

    Chapter Two and its relevant annexes and appendices set out 
the Agreement's principal rules governing trade in goods. Each 
Party must treat products from the other Parties in a non 
discriminatory manner and eliminate a wide variety of non-
tariff trade barriers that restrict or distort trade flows. 
Chapter Two maintains duty-free treatment under the North 
American Free Trade Agreement (NAFTA) for originating goods 
under the USMCA.
    Chapter Two maintains the NAFTA prohibition on export 
duties, taxes, and other charges, and the waiver of specific 
customs processing fees for originating goods; adds new 
provisions for transparency in import licensing and export 
licensing procedures; prohibits Parties from applying 
requirements to use local distributors for importation; 
prohibits restrictions on the importation of commercial goods 
that contain cryptography; prohibits restrictions on imports of 
remanufactured goods.; prohibits consular transactions and 
their associated fees and charges.
    Agriculture Market Access. The Parties agree to maintain 
existing duty-free market access for originating agricultural 
goods. The Agreement grants U.S. exporters unprecedented access 
to the Canadian dairy, poultry, and egg markets.
    Dairy. Canada agreed to provide new access through new 
tariff-rate quotas (TRQs) for U.S. dairy exports, including 
fluid milk, cream, butter, skim milk powder, cheese, and other 
dairy products. Canada will also eliminate its tariffs on U.S. 
whey and margarine over a number of years. The United States 
will provide Canada reciprocal market access for Canadian dairy 
products.
    Poultry. Canada will provide new access for U.S. exports of 
chicken and eggs through TRQs and expand access for U.S. 
exports of turkey.
    Sugar. The United States will provide Canada small tariff-
rate quotas for refined sugar and sugar-containing products.
    Peanuts. The United States will eliminate tariffs over five 
years for Canadian peanuts and peanut products made from 
peanuts grown in one of the USMCA countries.

                       CHAPTER THREE: AGRICULTURE

    Chapter Three and its annexes contain commitments related 
to trade in agricultural products.
    General Provisions. Chapter Three includes provisions to 
prohibit the use of export subsidies; increase transparency and 
consultation regarding the use of export restrictions for food 
security purposes; and minimize the use of trade-distorting 
domestic support measures. The Parties also commit to work 
together at the WTO on agriculture matters to promote increased 
transparency, and to improve and further develop multilateral 
disciplines.
    Biotechnology. This chapter also includes provisions to 
enhance information exchange and cooperation on agricultural 
biotechnology trade-related matters to support 21st century 
innovations in agriculture. The chapter covers all 
biotechnologies, including new technologies such as gene 
editing, in addition to traditional rDNA technology.
    TRQ Administration. The chapter also includes strong rules 
for administration of TRQs to ensure that TRQs are administered 
fairly and transparently, including an obligation not to 
allocate TRQs to producer groups or limit an allocation to 
processors, unless otherwise agreed.
    Dairy. Canada commits to the elimination of its milk 
classes 6 and 7 within six months of entry into force of the 
Agreement. Canada will ensure that the price for non-fat solids 
used to manufacture skim milk powder, milk protein 
concentrates, and infant formula will be no lower than a level 
based on the USDA price for nonfat dry milk. In addition, 
Canada will apply export charges to its exports of skim milk 
powder, milk protein concentrates, and infant formula at 
volumes over thresholds specified in the Agreement.
    Wheat. Addressing longstanding Canadian barriers to U.S. 
wheat, the United States and Canada agree to non-discriminatory 
treatment in the grading of originating wheat imported from the 
territory of the other Party and to not require a country of 
origin statement on a quality grade certificate for such wheat.
    Distinctive Products. The Parties agree to continue 
recognition of Bourbon Whiskey, Tennessee Whiskey, Tequila, 
Mezcal, and Canadian Whisky as distinctive products.
    Distilled Spirits, Wine, Beer, and Other Alcohol Beverages 
Annex. This annex contains nondiscrimination, transparency, and 
due process commitments regarding the internal sale and 
distribution of alcohol beverages, including beer. The Parties 
agree to labeling and certification provisions that will help 
the Parties avoid barriers to trade in wine and distilled 
spirits.
    Proprietary Food Formulas Annex. This annex requires each 
Party to protect the confidentiality of information relating to 
companies' proprietary formulas in the same manner for domestic 
and imported products, and to limit such information 
requirements to what is necessary to achieve legitimate 
objectives.

     CHAPTERS FOUR AND FIVE: RULES OF ORIGIN AND ORIGIN PROCEDURES

    Chapters Four, Five, and their respective annexes and 
appendices establish the rules of origin that a good must meet 
to qualify as ``originating'' and the procedures that each 
Party and its importers and exporters must adhere to in order 
to ensure that preferential tariff rates of the USMCA can be 
applied to their respective goods. These rules ensure that the 
benefits of the USMCA accrue primarily to Parties to the 
Agreement.
    Chapter Four contains product-specific rules (PSRs) of 
origin for goods. This chapter also outlines new provisions 
such as the labor value content and higher regional value 
content requirements for vehicles and parts, as well as steel 
and aluminum purchasing requirements for vehicle producers.
    Labor Value Content (LVC). In addition to the PSRs outlined 
in Chapter Four, Appendix 4-B Article 7 establishes that a 
vehicle producer of a Party must certify it has met an LVC in 
order for its vehicle to qualify as ``originating'' and 
therefore receive the preferential tariff treatment established 
in the USMCA. The LVC requires that 40 percent of a passenger 
vehicle's value and 45 percent of a light truck or heavy 
truck's value must be produced in a North American plant or 
facility with an average hourly wage of at least $US16 per 
hour. Parties agree that this provision will be implemented 
fully by January 1, 2023, or three years after the date of 
entry into force of the Agreement, whichever is later, unless 
there is an alternative staging period for a vehicle producer.
    Automobiles and Automotive Parts. In Appendix 4-B Articles 
2 through 4, Parties establish the PSRs and Regional Value 
Content (RVC) required for vehicles, passenger vehicles, light 
trucks, heavy trucks, and parts to receive preferential tariff 
treatment under USMCA. Parties agreed to raise the minimum RVC 
of passenger vehicles, light trucks, and associated parts to 75 
percent and to 70 percent for heavy trucks and associated 
parts. Further, Parties established higher thresholds for the 
RVC of core, principal, and complimentary parts for passenger 
vehicles, light trucks, and heavy trucks in order to qualify as 
``originating.''
    The following are the RVC breakdowns for the respective 
parts categories for passenger vehicles and light trucks under 
the net cost method: 75 percent for core parts, 70 percent for 
principal parts, and 65 percent for complimentary parts. For 
parts categories for heavy trucks under the net cost method the 
RVC is 70 percent for principal parts and 60 percent for 
complimentary parts. These commitments will be fully 
implemented by January 1, 2023, or three years after the date 
of entry into force of the Agreement, whichever is later, 
unless there is an alternative staging period for individual 
producers.
    Steel and Aluminum. In addition to the PSRs outlined in 
Chapter Four, Appendix 4-B Article 6 commits Parties to 
consider a passenger vehicle, light truck, or heavy truck as 
``originating'' only if 70 percent of the vehicle producer's 
steel and aluminum purchases, by value, originate from within 
one or more of the Parties of the Agreement.
    Remanufactured Goods. Chapter Four provides for recovered 
materials to be treated as an originating good when these 
materials are used in the production of or incorporated into a 
remanufactured good.
    Chapter Five includes specific rules on how to claim 
preferential tariff treatment and verify products are 
originating, as well as provisions on cooperation between 
customs authorities and enforcement of these new rules.
    Certificates of Origin (COO). In this chapter, the Parties 
establish data fields in order to complete a valid COO. Minor 
errors or discrepancies in a COO shall not be grounds for 
rejection. Parties also agree to allow for the electronic 
submission of COOs and allow them to be signed electronically 
or digitally. USMCA also establishes that COOs are not required 
if the value of the goods being imported does not exceed 
$US1,000, except in certain circumstances.
    Origin Verification. To ensure imported goods are 
originating, the USMCA allows a Party's customs administration 
to conduct verifications through both written requests for 
information and site visits of the producers or exporters. If 
an importer, exporter, or producer is found to be making a 
pattern of false or unsupported claims that a product is 
originating, their access to preferential tariff treatment may 
be withheld.
    Committee on Rules of Origin and Origin Procedures. Chapter 
Five establishes both the Committee on Rules of Origin and 
Origin Procedures (Committee) and the Sub-Committee of Origin 
Verification (Sub-Committee). The Committee is to be composed 
of government representatives from each Party and its primary 
objective is to ensure that Chapter Four and Five commitments 
are administered effectively. The Sub-Committee's primary 
objectives are to develop and improve the processes, materials, 
and guidance associated with origin verifications.

                   CHAPTER SIX: TEXTILES AND APPAREL

    Chapter Six and its annexes contain provisions covering 
trade in textiles and apparel among the Parties.
    The chapter establishes textile-specific provisions related 
to rules of origin, customs cooperation, verification, and 
determinations, including tools for preventing fraud and 
circumvention. It also includes provisions establishing a 
Committee on Textile and Apparel Matters and for monitoring 
tariff preference levels (TPLs) and will promote greater 
transparency and the sharing of information among the Parties. 
Appendices to the chapter set forth rebalanced TPLs for certain 
non-originating products, allowing for limited use of third-
country inputs.
    The PSRs for textile and apparel articles, included in 
Chapter Four, incentivize the use of fibers, yarns, and fabrics 
produced within the territory of the Parties. The updated rules 
of origin require the use of U.S. or regional sewing thread, 
pocketing fabric, narrow elastic bands, and coated fabric in 
most USMCA-qualifying apparel and other finished textile goods.

      CHAPTER SEVEN: CUSTOMS ADMINISTRATION AND TRADE FACILITATION

    Chapter Seven establishes rules designed to encourage 
transparency, predictability, and efficiency in the operation 
of each Party's customs procedures and to provide for 
cooperation between the Parties on customs matters.
    Trade Facilitation. In Chapter Seven, each Party commits to 
observe transparency obligations, including commitments on 
online publication of laws, regulations, and procedures for 
customs and other trade matters. Provisions also require 
customs administrations to be responsive to importers and 
exporters. Additional provisions relating to appeals, 
penalties, and standards of conduct require customs 
administrations to follow rules to ensure fairness and 
integrity in customs work. This chapter requires that the 
Parties, through respective customs administration, issue a 
written advance ruling prior to arrival, promptly release 
goods, and maintain disciplines on setting bonds and surety 
instruments. The chapter also requires the Parties to create a 
``single window'' system for imports into each Party and 
commitments on Authorized Economic Operator programs, with 
cooperation to promote best practices and identify benefits for 
traders.
    The chapter also provides new cost-cutting and efficiencies 
for traders by allowing for reducing reliance on customs 
brokers and creating more competition among customs brokers in 
addition to promoting coordinated inspections of merchandise. 
Additional provisions require standards of conduct to support 
anti-corruption efforts among customs officers.
    Cooperation and Enforcement. The chapter also contains 
provisions aimed at strengthening and expanding customs and 
trade enforcement efforts and cooperation between the Parties. 
This chapter contains provisions on customs compliance 
verification requests, and the exchange of specific 
confidential information.
    Express Shipments. Under provisions in this chapter, the 
Parties agree to create a new informal shipment level of 
$US2,500, including procedures to reduce paperwork and 
formalities required for entry, and to set a de minimis 
shipment value level for each Party. The de minimis level for 
Canada is set at C$40 for taxes, and provides for duty free 
shipments up to C$150. Canada will also allow a period of 90 
days after entry for the importer to make payment of taxes. 
Mexico will provide a $US50 tax-free de minimis and also 
provide duty-free shipments up to the equivalent level of 
$US117. Shipment values up to these levels will enter with 
minimal formal entry procedures.

   CHAPTER EIGHT: RECOGNITION OF THE UNITED MEXICAN STATES' DIRECT, 
       INALIENABLE, AND IMPRESCRIPTIBLE OWNERSHIP OF HYDROCARBONS

    In Chapter Eight, the United States and Canada recognize 
that Mexico has ownership of all hydrocarbons in the subsoil of 
its national territory.

           CHAPTER NINE: SANITARY AND PHYTOSANITARY MEASURES

    Chapter Nine sets out the Parties' obligations regarding 
sanitary and phytosanitary (SPS) measures under the Agreement. 
It reflects the Parties' understanding that implementation of 
existing obligations under the WTO Agreement on the Application 
of Sanitary and Phytosanitary (SPS Agreement) is a shared 
objective. Nothing in the Agreement imposes limitations on any 
Party establishing its appropriate level of protection for 
human, animal, and plant life and health.
    Under Chapter Nine, the Parties agree to strengthen 
disciplines for science-based SPS measures. Parties are 
obligated to base SPS measures on international standards or an 
assessment of risk. Provisions include increasing transparency 
in the development and implementation of SPS measures; 
advancing science-based decision making; improving processes 
for certification, regionalization and equivalency 
determinations; conducting systems-based audits; improving 
transparency for import checks; and working together to enhance 
compatibility of measures.
    Under chapter obligations, Parties must publish proposed 
regulations, provide the relevant scientific evidence, and 
provide for the opportunity to comment on proposed regulations 
and risk assessments. The Parties are obligated to limit 
information required on certificates to essential information. 
In addition, Parties shall promote electronic certification and 
other technologies to facilitate trade. Parties may not stop 
importation of goods solely because an SPS measure is being 
reviewed.
    Cooperation. The chapter establishes a Committee on 
Sanitary and Phytosanitary Measures to implement the chapter, 
consisting of relevant trade and regulatory officials, and 
allows for technical working groups on SPS issues. The SPS 
chapter establishes a mechanism for technical consultations to 
resolve issues between two Parties, prior to moving a matter to 
dispute settlement.

                      CHAPTER TEN: TRADE REMEDIES

    Chapter Ten includes provisions covering safeguards, global 
safeguards, and antidumping (AD) and countervailing duties 
(CVD). Provisions will ensure due process and transparency 
standards, including the use of electronic filing, to enable 
businesses of a Party to effectively participate in AD/CVD 
proceedings. Parties also agree to strong duty evasion 
cooperation provisions to combat attempts to undermine existing 
antidumping, countervailing duty, and safeguards measures. The 
chapter provides for duty evasion verifications and in-country 
facility visits by respective customs authorities, as well as 
the sharing of customs information for the specific purpose of 
combatting duty evasion.
    The Parties have also agreed to share information to more 
effectively address potentially injurious dumped or subsidized 
imports, particularly from third countries. Each Party will 
permit investigating authorities to consider information and 
data from existing AD/CVD petitions filed in another Party, as 
well as third-party subsidy information, in determining whether 
to self-initiate an AD/CVD investigation or take other relevant 
action.
    Section D of Chapter Ten replicates without substantive 
changes the NAFTA mechanism for review and dispute settlement 
in AD and CVD matters.

              CHAPTER ELEVEN: TECHNICAL BARRIERS TO TRADE

    The USMCA chapter on technical barriers to trade (TBT) 
strengthens disciplines related to transparency, standards, 
technical regulations conformity assessment procedures and 
trade facilitation matters. The chapter maintains each 
government's sovereign right to regulate products and 
manufacturing processes that ensure the protection of human, 
animal, or environmental health and safety.
    Key Concepts. TBTs refer to barriers that may arise in 
preparing, adopting, or applying voluntary product standards, 
mandatory product standards (``technical regulations''), and 
procedures used to determine whether a particular good meets 
such standards, i.e., ``conformity assessment'' procedures.
    Provisions in this chapter enhance rights and obligations 
under the WTO Agreement on Technical Barriers to Trade (WTO TBT 
Agreement), and build on WTO rules to promote transparency, 
accountability, and cooperation between the Parties on 
regulatory issues. This includes using the WTO TBT Committee 
Decision on International Standards as a basis in determining 
what standards are ``international.'' In cases where there is 
no international standard, the chapter provides an alternative 
pathway for standards developed in North America to be 
considered in technical regulations. The chapter also prevents 
discriminatory treatment of the conformity assessment bodies 
that are located in one Party's territory and seeks to prevent 
testing procedures from becoming unnecessary obstacles to 
trade. The chapter incorporates good regulatory practices for 
technical regulations, and emphasizes the Parties' commitment 
to reduce unnecessary barriers and to provide national 
treatment with respect to labeling.
    The chapter ensures notification of the entirety of the 
text of draft and final regulations, with a reasonable period 
of at least six months between the publication of the 
regulation and its entry into force. It also provides for 
participation of interested persons in the development of 
standards, technical regulations, and conformity assessment 
procedures. The chapter includes three articles to prevent 
other practices from creating barriers, including that no 
preference may be accorded to standards that have been 
developed in a manner inconsistent with the WTO TBT Committee 
Decision, or where the standard setting body does not allow 
equal opportunity to participate in the standards development; 
that technical assistance should not promote the use of 
standards developed in a manner inconsistent with the WTO TBT 
Agreement; and that no Party can be party to an agreement with 
another country which would require it to withdraw or limit the 
use of a standard developed according to the WTO TBT Committee 
Decision.
    Finally, the chapter lays out specific time lines and 
information requirements to discuss a specific trade concern 
that is under consideration for dispute settlement.
    Committee on Technical Barriers to Trade. The chapter 
establishes a committee to strengthen collaboration and 
facilitate trade between the Parties, including a commitment to 
engage the public in work of the TBT Committee.

                    CHAPTER TWELVE: SECTORAL ANNEXES

    Chapter Twelve is comprised of six sectoral annexes 
containing provisions covering chemical substances, cosmetic 
products, information and communication technology, energy 
performance standards, medical devices, and pharmaceuticals.
    Chemical Substances Annex. This annex contains provisions 
to enhance regulatory compatibility and data and information 
exchange between the three Parties, while recognizing the 
regulatory authority of each Party. This annex commits the 
Parties to make efforts to align risk assessment methodologies 
and risk management measures for chemical substances. Moreover, 
the annex recognizes the importance of minimizing unnecessary 
economic barriers or impediments to technological innovation 
and Parties have agreed to define and, where appropriate, use a 
risk-based approach to the assessment of chemicals. In a risk-
based approach, the evaluation of a chemical substance or 
chemical mixture includes the consideration of both the hazard 
and exposure as well as the protection of health and the 
environment.
    Cosmetic Products Annex. This annex contains provisions to 
enhance regulatory compatibility in the cosmetics sector. In 
this annex, the Parties commit to a risk-based approach for 
cosmetics and further agreed to not require marketing 
authorization for a cosmetic product unless there is a human 
health or safety concern. The Parties also agree to not require 
cosmetic products be tested on animals unless no validated 
alterative test method exists to assess a product's safety. The 
annex also encourages the Parties to consider internationally 
developed science and technical guidance documents when 
implementing regulations to promote greater compatibility among 
the Parties, including for good manufacturing practice 
guidelines. The annex also requires the Parties to share post-
market surveillance information of cosmetics products, where 
appropriate.
    Information and Communication Technology (JCT) Annex. This 
annex contains provisions on regional cooperation activities on 
telecommunication equipment. These provisions capture the 
emerging regulatory practice of electronic labeling for devices 
with a screen, and require the Parties to allow for certain 
regulatory information to be displayed electronically rather 
than being physically etched on the device. The annex also 
includes obligations to protect innovation of encryption 
products to meet consumer and business demand for product 
features that protect privacy and security, while also allowing 
law enforcement access to communications consistent with 
applicable law.
    Energy Efficiency Performance Standards (EPS) Annex. This 
annex contains provisions to enhance regulatory compatibility 
on EPS. Provisions in this annex aim to harmonize federally 
mandated energy performance standards across a wide range of 
product categories (household appliances, HVAC, lighting, 
industrial equipment, and others) within a nine-year timeframe, 
and establish a mechanism for continued regulatory cooperation 
on EPS.
    Medical Devices Annex. This annex contains provisions to 
enhance regulatory compatibility for medical devices. 
Provisions commit the Parties to follow a risk-based approach 
for the classification of medical devices, specifically to 
administer marketing authorization procedures to ensure timely, 
transparent, impartial, and science-based decision making for 
medical device approvals. This annex contains commitments that 
each Party will base its respective marketing authorization 
decision only on safety and efficacy of the product and not on 
unrelated factors, such as sales, pricing, or financial data, 
and to maintain an appeal process. The annex includes 
obligations to recognize each Party's audits of medical device 
manufacturers conducted under the International Medical Device 
Regulator's Forum Single Audit Program.
    Pharmaceuticals Annex. This annex contains provisions to 
enhance regulatory compatibility for the pharmaceutical sector. 
Provisions commit the Parties to administer marketing 
authorization procedures to ensure timely, transparent, 
impartial, and science-based decision making for pharmaceutical 
approvals. This annex also contains commitments that each Party 
will base its respective marketing authorization decision only 
on safety and efficacy of the product and not on unrelated 
factors, such as sales, pricing, or financial data, and to 
maintain an appeal process.
    This annex encourages cooperation on inspections of 
pharmaceutical manufacturers by permitting the Parties to 
participate in each other's inspections, as well as to share 
data on the outcome of those inspections. Furthermore, the 
Parties agreed to take necessary steps to permit the exchange 
of confidential information for such inspections.

                CHAPTER THIRTEEN: GOVERNMENT PROCUREMENT

    Chapter Thirteen and its annexes contain government 
procurement provisions applicable to the United States and 
Mexico only. The chapter specifies covered procurement measures 
as well as activities not covered under the Agreement. Under 
this chapter, the United States and Mexico must apply fair and 
transparent procurement procedures and rules. This chapter also 
contains provisions clarifying that technical specifications 
and conditions for participation in tenders can be used to 
promote the conservation of natural resources, protection of 
the environment, or can be designed to promote compliance with 
laws regarding international labor rights, as long as they are 
otherwise consistent with the Agreement and provided the 
conditions do not constitute a disguised barrier to trade.
    General Principles. Chapter Thirteen establishes a basic 
rule of ``national treatment'' meaning that the United States 
and Mexico must treat goods, services, and suppliers of such 
goods and services from the other Party in a manner that is 
``no less favorable'' than their domestic counterparts. The 
chapter provides incentives for putting information about 
procurement systems online; for electronic publishing of 
notices; and for permissible reductions in time periods when 
using electronic procurement methods.
    Support for Small Businesses. The chapter contains 
provisions to facilitate small business participation in 
procurement, including by encouraging that, to the extent 
possible and appropriate, Mexico and the United States make 
tender documentation free of charge and consider how to better 
structure procurements to help small businesses compete, among 
other things.
    Transparency. Mexico and the United States must make 
procurement statistics publicly available online.
    Ensuring Integrity. Mexico and the United States must have 
measures in place to address corruption, fraud, or abuse in 
government procurement, both by businesses and by tendering 
agencies. The chapter also mandates transparency requirements 
for any debarment procedures.

                      CHAPTER FOURTEEN: INVESTMENT

    Chapter Fourteen establishes rules to protect investors 
from one Party against wrongful or discriminatory government 
actions when they invest or attempt to invest in another 
Party's territory.
    Key Concepts. Under this chapter, the term ``investment'' 
covers all forms of investment, including enterprises, 
securities, certain forms of debt, intellectual property 
rights, licenses, and certain contracts. The chapter covers 
both investments existing when the Agreement enters into force, 
and future investments. The term ``investor of a Party'' 
encompasses U.S., Canadian, and Mexican nationals as well as 
firms (including branches) established in one of the Parties.
    General Principles. The key investment protection 
provisions include rules prohibiting expropriation without 
prompt, adequate, and effective compensation; discrimination; 
performance requirements (e.g., technology transfer and local 
content requirements); nationality-based requirements on the 
appointment of senior management; restrictions on the transfer 
of investment-related capital; and denial of justice and other 
breaches of the customary international law minimum standard of 
treatment. In the event of an investment dispute, each Party 
can seek remedies for breach of these rules in State-to-State 
dispute settlement procedures.
    Sectoral Coverage and Non-Conforming Measures. With the 
exception of investments in or by regulated financial 
institutions, Chapter Fourteen generally applies to all 
sectors, including service sectors. However, each Party 
negotiated a limited list of exemptions from the chapter's 
obligations relating to national treatment, most-favored nation 
(MFN) treatment, performance requirements, or senior management 
and boards and directors as ``non-conforming measures.'' Annex 
I contains each Party's list of existing non-conforming 
measures at the central and regional levels of government. The 
United States has scheduled an exemption from all of the 
aforementioned obligations for all existing state measures. All 
existing local measures are exempt from those obligations for 
all Parties without the need to be listed. In Annex II, each 
Party has listed sectors or activities in which it reserves the 
right to adopt or maintain future non-conforming measures. 
Annexes I and II also include exemptions from Chapter Fifteen 
(Cross Border Trade in Services).
    Investor-State Dispute Settlement (ISDS). Under the 
reformed approach to ISDS in the Investment chapter, U.S. and 
Mexican investors in all sectors will have limited access to 
ISDS as a last resort to provide protection in the context of 
such egregious issues as discrimination and direct 
expropriation. In certain sectors-such as oil and gas, 
telecommunications, and certain infrastructure-investors that 
enter into government contracts will have broader access to 
ISDS to protect the long-term, capital-intensive investments in 
these sectors, which are subject to heightened political risks. 
ISDS with Canada will be phased out over three years, but 
State-to State remedies will remain between the United States 
and Canada.

            CHAPTER FIFTEEN: CROSS-BORDER TRADE IN SERVICES

    Chapter Fifteen governs measures affecting cross-border 
trade in services between the Parties. Certain provisions also 
apply to measures affecting investments to supply services.
    The chapter includes the core obligations of national 
treatment and most-favored nation (MFN) treatment, ensuring 
nondiscrimination in the supply of services. The chapter also 
includes a local presence rule that helps ensure that U.S. 
suppliers will not be required to establish an office in Mexico 
or Canada as a condition for supplying cross-border services. 
This chapter also includes commitments to keep services markets 
open and free from new quantitative restrictions, enhanced 
rules for ensuring good governance in licensing regimes, and a 
new article to enhance commercial opportunities for small and 
medium-sized businesses. Except where the Parties have 
negotiated specific exceptions, the obligations in the chapter 
apply to all services and are subject to enforcement through 
dispute settlement. National treatment, MFN treatment, market 
access, and local presence obligations do not apply to non-
conforming measures as set out by the Parties in their 
respective Schedules to Annexes I and II.
    Chapter Fifteen also contains an annex requiring that 
Canada eliminate its rule prohibiting simultaneous substitution 
of advertising for the Super Bowl, and will increase access for 
teleshopping broadcasters. Additional annexes provide the basis 
for ongoing work in professional services and transportation 
services, and a new set of disciplines for delivery services.

                    CHAPTER SIXTEEN: TEMPORARY ENTRY

    Chapter Sixteen permits temporary entry for professionals 
and businesspeople seeking to engage in certain activities in 
the territory of another Party. These commitments, included in 
the NAFTA, provide predictability for companies and qualified 
professionals in serving clients, moving senior managers, 
initiating new investments, and other business activities 
conducted on a temporary basis in another USMCA country. 
Annexes to this chapter include provisions on Parties' measures 
applicable to temporary entry and define business activities 
and professionals eligible for temporary entry into a Party. 
This chapter maintains the same treatment provided under the 
NAFTA.

                 CHAPTER SEVENTEEN: FINANCIAL SERVICES

    Chapter Seventeen and its annexes include commitments to 
liberalize financial services markets and create a level 
playing field for financial institutions, investors and 
investments in financial institutions, and cross-border trade 
in financial services.
    The chapter includes core obligations, such as national 
treatment, to ensure that a Party does not discriminate against 
financial service suppliers of another Party. It also contains 
market access provisions that prohibit a Party from imposing 
certain quantitative or numerical restrictions on financial 
services. A separate annex contains commitments of the Parties 
relating to cross-border trade, including an expanded list of 
cross-border services, such as portfolio management, investment 
advice, and electronic payment services. Additionally, 
provisions in this chapter create enhanced transparency 
obligations for regulatory licensing and other market access 
authorizations.
    Notably, this chapter includes a key prohibition on local 
data storage requirements where the financial regulator has 
immediate and ongoing access to data that it needs to fulfill 
its regulatory and supervisory mandate.
    Chapter Seventeen also contains specific procedures related 
to ISDS claims with Mexico, including provisions regarding the 
level of expertise required for arbitrators and a special 
procedural mechanism to facilitate the application of the 
prudential and other exceptions.

                  CHAPTER EIGHTEEN: TELECOMMUNICATIONS

    Chapter Eighteen and its annexes include disciplines on 
regulatory measures affecting telecommunications trade and 
investment between the Parties. It includes rules to promote 
effective competition in the telecommunications sector, provide 
access to the networks of other suppliers, and ensure that 
regulation of the sector is independent, impartial, and 
transparent.
    This chapter includes provisions to address competition in 
the supply of fixed and mobile telecommunications services. For 
Internet of Things devices, this chapter includes new rules to 
ensure that countries will not prohibit roaming arrangements 
that are often used to support advanced functionality of such 
devices. The chapter also includes commitments to make publicly 
available information on measures relating to public 
telecommunications services, to resolve disputes and provide 
effective enforcement, to ensure fair access to government 
managed resources, such as spectrum and rights-of-way, to not 
discriminate in favor of state-owned enterprises, and to 
cooperate with regard to international mobile roaming.
    Transparency. In this chapter, the Parties commit to ensure 
that their respective telecommunications regulatory body is 
independent from and impartial to their suppliers of public 
telecommunications services, and to ensure that 
telecommunications regulations are set by independent 
regulators applying transparent procedures, designed to 
encourage adherence to principles of deregulation and 
technological neutrality. The chapter also includes 
transparency commitments for licensing processes.

                    CHAPTER NINETEEN: DIGITAL TRADE

    Chapter Nineteen contains robust disciplines on digital 
trade, providing a firm foundation for the expansion of trade 
and investment in innovative products and services. This 
chapter includes provisions that prohibit the application of 
customs duties and other discriminatory measures to digital 
products distributed electronically (e-books, videos, music, 
software, games, etc.). It also ensures that data can be 
transferred cross-border, and that limits on where data can be 
stored and processed are minimized. Additional provisions in 
the chapter ensure that suppliers are not restricted in their 
use of electronic authentication or electronic signatures, and 
guarantee that enforceable consumer protections, including for 
privacy and unsolicited communications, apply to the digital 
marketplace.The chapter also limits Internet platform's civil 
liability with respect to third-party content that such 
platforms host or process, except regarding intellectual 
property enforcement.
    Chapter Nineteen also promotes open access to government-
generated public data, and collaboration in addressing 
cybersecurity challenges, while seeking to promote industry 
best practices with respect to network security. Additional 
provisions limit governments' ability to require disclosure of 
proprietary computer source code and algorithms, to better 
protect the competitiveness of digital suppliers.

              CHAPTER TWENTY: INTELLECTUAL PROPERTY RIGHTS

    Chapter Twenty complements and enhances existing 
international standards for the protection of intellectual 
property and the enforcement of intellectual property rights, 
consistent with U.S. law. This chapter requires the Parties to 
extend full national treatment for copyright and related 
rights, ensuring the same protections for creators of another 
Party that its domestic creators receive. It also contains 
provisions to ensure transparency With respect to a Party's 
laws, regulations, procedures, and administrative rulings 
concerning the protection and enforcement of intellectual 
property rights, including requirements to publish information 
online. The chapter also contains strong standards for 
industrial design protection, requiring a minimum term of 
protection for industrial designs of at least 15 years.
    Public Health. This chapter includes provisions permitting 
a Party to adopt measures necessary to protect public health 
and nutrition, and to promote the public interest in sectors of 
vital importance to their development, provided that those 
measures are consistent with the provisions of this chapter.
    Trademarks and Geographical Indicators (GIs). Chapter 
Twenty contains provisions for protecting trademarks, including 
well-known marks. In addition, it includes rules relating to 
electronic trademarks systems, a classification system that is 
consistent with international standards, and systems to protect 
against ``trademark squatting'' with respect to a country-code 
top-level domain name. Chapter Twenty also provides important 
procedural safeguards for recognition of new GIs, including 
strong standards for protection against issuances of GIs that 
would prevent producers from using common names, and 
establishes a mechanism for consultation between the Parties on 
future GIs pursuant to international agreements.
    Patents and Pharmaceuticals. This chapter provides robust 
patent protection for innovators, enshrining patentability 
standards and patent office best practices to ensure that 
innovators, including small and medium-sized businesses, are 
able to protect their inventions with patents. The chapter also 
includes strong minimum standards for pharmaceutical and 
agricultural innovators, including with respect to data 
protection. For the pharmaceutical sector, this chapter 
contains provisions requiring compensation of applicants for 
unreasonable marketing approval delays and requires the Parties 
to provide an effective mechanism for the early resolution of 
potential patent disputes.
    Copyright and Related Rights. The chapter requires a 
minimum copyright term of life of the author plus 70 years, and 
for those works with a copyright term that is not based on the 
life of a person, a minimum of 75 years after first authorized 
publication. Provisions also establish appropriate copyright 
safe harbors to provide protection for IP and predictability 
for legitimate enterprises that do not directly benefit from 
the infringement.
    Trade Secrets. The chapter includes all of the following 
protections against misappropriation of trade secrets, 
including by state-owned enterprises: civil procedures and 
remedies, criminal procedures and penalties, prohibitions 
against impeding licensing of trade secrets, judicial 
procedures to prevent disclosure of trade secrets during the 
litigation process, and penalties for government officials for 
the unauthorized disclosure of trade secrets. It also 
establishes strong standards of protection of trade secrets 
against misappropriation.
    Enforcement Provisions. Chapter Twenty contains robust 
intellectual property rights enforcement mechanisms, including 
provisions that require ex officio authority for border 
enforcement officials to stop suspected counterfeit or pirated 
goods at every phase of entering, exiting, and transiting 
through the territory of any Party; express recognition that IP 
enforcement procedures must be available for the digital 
environment for trademark and copyright or related rights 
infringement; meaningful criminal procedures and penalties for 
unauthorized camcording of movies; civil and criminal penalties 
for satellite and cable signal theft; and broad protection 
against trade secret theft, including by state-owned 
enterprises.

                 CHAPTER TWENTY-ONE: COMPETITION POLICY

    Chapter Twenty-One includes provisions on national 
competition laws to promote competition. The Parties recognize 
the importance of consumer protection policy and enforcement to 
creating efficient and competitive markets, and enhancing 
consumer welfare. In this regard, each Party must adopt or 
maintain national consumer protection laws that address 
fraudulent and deceptive commercial activities.
    The Parties agree to obligations providing increased 
procedural fairness and competition law enforcement. This 
provides Parties with a reasonable opportunity to defend their 
interests and ensure that Parties have certain rights and 
transparency under each Party's competition laws.
    The chapter also limits remedies imposed by a national 
competition authority relating to conduct or assets outside of 
the Party's territory to situations in which there is an 
appropriate nexus to harm affecting the Party's territory or 
commerce.
    The chapter includes cooperation and transparency 
provisions related to competition policies and the enforcement 
of national competition laws, including coordination of 
investigations between national authorities, when warranted.

 CHAPTER TWENTY-TWO: STATE-OWNED ENTERPRISES AND DESIGNATED MONOPOLIES

    Chapter Twenty-Two and its annexes apply to the activities 
of state-owned enterprises (SOEs), state enterprises, and 
designated monopolies of a Party that affect or could affect 
trade or investment between Parties of the USMCA. The chapter 
contains a broad definition of what constitutes an SOE to 
ensure that any government ownership of an entity that confers 
control is captured.
    The chapter prohibits certain subsidies to SOEs that are 
particularly trade-distorting. Specifically, it prohibits three 
types of subsidies: (1) subsidies to SOEs that are insolvent or 
on the brink of insolvency, if there is no credible 
restructuring plan; (2) loans or loan guarantees from SOEs such 
as state-owned banks to other, uncreditworthy SOEs; and (3) 
noncommercial SOE debt-to-equity swaps by the government or 
government entities. Further, the SOE Chapter requires the 
Parties to share, upon request, information about the extent of 
government ownership and control, and the subsidies provided to 
their SOEs, as well as all government equity investments made 
in an SOE. Lastly, the SOE Chapter includes commitments by the 
Parties to ensure that SOEs and designated monopolies make 
commercial purchases and sales on the basis of commercial 
considerations and do not discriminate against the enterprises, 
goods, or services of the other Parties.
    Non-Conforming Activities. In Annex N, each Party 
negotiated a limited list of exemptions from the Chapter's 
obligations relating to non-commercial assistance and non-
discriminatory treatment and commercial considerations as 
``non-conforming activities.''
    Application to Sub-Central Entities. In Annex 22.D, each 
Party indicates the extent to which the obligations in the 
chapter do not apply to enterprises owned or controlled by sub-
central governments. In Annex 22.C, Parties agree to commence 
negotiations on coverage of sub-central entities within six 
months of entry into force of the Agreement.

                      CHAPTER TWENTY-THREE: LABOR

    Chapter Twenty-Three sets out the Parties' commitments and 
undertakings regarding trade-related labor rights. USMCA's 
labor provisions are in the core of the Agreement and subject 
to the same dispute settlement mechanism as other chapters.
    The chapter requires the Parties to adopt and maintain 
labor rights in law and practice as recognized by the 
International Labor Organization, to effectively enforce their 
labor laws, and not to waive or derogate from their labor laws.
    The chapter includes provisions requiring Parties to 
prohibit the importation of goods produced by forced labor, to 
address violence against workers exercising their labor rights, 
and to ensure that migrant workers are protected under labor 
laws. It provides procedural guarantees for the enforcement of 
labor laws, including due process through independent and 
impartial judicial and administrative tribunals. It establishes 
institutional mechanisms to provide for intergovernmental 
engagement and cooperation with stakeholder input and a public 
submission process whereby members of the public can seek 
review of claims that a Party is not meeting its obligations 
under the labor chapter.
    Annex on Worker Representation in Collective Bargaining in 
Mexico. This annex commits Mexico to specific legislative 
actions as part of its constitutional labor reforms in order to 
provide for the effective recognition of the right to 
collective bargaining. Required actions include legislation 
that requires majority worker support--through the exercise of 
a personal, free, and secret vote of workers--to elect union 
leadership, challenge existing bargaining representatives, and 
register a new collective bargaining agreement. On May 1, 2019, 
Mexico approved comprehensive labor reform legislation to 
implement the requirements of this Annex.

                    CHAPTER TWENTY-FOUR: ENVIRONMENT

    Chapter Twenty-Four and its annexes set out the Parties' 
commitments and undertakings regarding environmental 
protections. These provisions are subject to the same dispute 
settlement mechanism as other chapters.
    The chapter includes obligations to combat trafficking in 
wildlife, timber, and fish, including by enhancing the 
effectiveness of customs inspections and strengthening law 
enforcement networks to stem such trafficking. The Parties 
agreed to affirm their existing and future commitments under 
listed Multilateral Environmental Agreements. The Parties also 
agree to prohibit some of the most harmful fisheries subsidies, 
such as those that benefit vessels or operators involved in 
illegal, unreported, and unregulated (IUU) fishing. The chapter 
also includes new protections for marine species, such as 
prohibitions on shark-finning and the killing of great whales 
for commercial purposes. There are also first-ever articles to 
improve air quality, prevent and reduce marine litter, support 
sustainable forest management, and ensure appropriate 
procedures for environmental impact assessments. The chapter 
also includes public participation provisions, including a 
streamlined mechanism for public submissions asserting a 
failure by one or more Parties to effectively enforce their 
environmental laws.
    Agreement on Environmental Cooperation. The Parties also 
agree to support implementation of the chapter's commitments by 
continuing their longstanding history of environmental 
cooperation under a modernized Commission for Environmental 
Cooperation, as outlined in the new Agreement on Environmental 
Cooperation (ECA) among the Governments of the United States of 
America, the United Mexican States, and Canada. The ECA will 
take effect upon entry into force of the USMCA and provide a 
platform for environmental cooperation in such areas as 
environmental governance, pollution, conservation of biological 
diversity, and sustainable management of natural resources.

        CHAPTER TWENTY-FIVE: SMALL AND MEDIUM-SIZED ENTERPRISES

    Chapter Twenty-Five includes provisions to promote 
cooperation between the Parties to enhance commercial 
opportunities for Small and Medium-Sized Enterprises (SMEs). 
This new chapter recognizes the fundamental role of SMEs in 
maintaining dynamism and competitiveness in the economies of 
each Party. It aims to promote SME trade and investment 
opportunities among the Parties and establishes information 
sharing tools on the provisions of the Agreement as well as 
other information useful for SMEs doing business in North 
American markets. The chapter also creates a Committee on SME 
Issues comprised of government officials from each Party.
    SME Dialogue. In addition, the SME Chapter launches a new 
framework for an ongoing SME Dialogue, which will be open to 
participation by SMEs, including those owned by diverse and 
under-represented groups. The goal of the SME Dialogue is to 
have participants provide views and information to government 
officials on the implementation and further modernization of 
the Agreement, in order to help SMEs benefit from the Agreement 
and to further enhance cooperation between the Parties. The 
chapter also highlights provisions across the Agreement that 
benefit SMEs.

                  CHAPTER TWENTY-SIX: COMPETITIVENESS

    Chapter Twenty-Six establishes a Committee on 
Competitiveness that will discuss and develop cooperative 
activities to promote regional economic growth in North America 
and facilitate regional trade and investment.

                  CHAPTER TWENTY-SEVEN: ANTICORRUPTION

    Chapter Twenty-Seven contains disciplines to prevent and 
combat bribery and corruption in international trade. It 
requires Parties to criminalize acts of corruption, both with 
respect to their own government officials, and to their own 
nationals' interactions with foreign government officials. 
Provisions in the chapter require Parties to provide 
appropriate sanctions for violations of anticorruption laws; 
disallow the tax deductibility of bribes; require companies to 
maintain accurate books and records; and to establish codes of 
conduct and develop other tools to promote high ethical 
standards among government officials. The chapter also provides 
notable whistleblower protections.
    The chapter also includes provisions that promote honesty 
and integrity among public officials and encourage Parties to 
take appropriate measures to engage civil society and the 
private sector. Finally, the chapter provides for strong 
cooperation among the Parties in the enforcement of 
anticorruption laws.

            CHAPTER TWENTY-EIGHT: GOOD REGULATORY PRACTICES

    Chapter Twenty-Eight sets out specific obligations with 
respect to good regulatory practices, that is, good governance 
procedures that governments apply to promote transparency and 
accountability when developing and implementing regulations. 
The chapter makes clear that no provision prevents governments 
from pursuing public policy objectives with respect to health, 
safety, or the environment. Provisions in this chapter relate 
to the planning, design, issuance, implementation, and review 
of the Parties' respective regulations concerning trade in 
goods, services, and investment.
    This chapter includes commitments relating to central 
coordination; publication of annual plans of expected 
regulations; public consultations on draft texts of 
regulations; evidence-based analysis and explanations of the 
scientific or technical basis for new regulations; other 
provisions concerning evidence-based decision-making (such as 
parameters for conducting regulatory impact assessments and 
retrospective reviews); and techniques for encouraging 
regulatory compatibility and regulatory cooperation.
    This chapter also includes extensive transparency 
requirements to publish key information online, including draft 
regulations (notice and comment) and final regulations, annual 
regulatory agendas, and descriptions of regulatory agencies' 
functions and legal authorities; applicable forms used by 
regulatory agencies; fees associated with licensing, 
inspection, audits, etc.; and judicial or administrative 
procedures available to challenge regulations.
    Finally, the chapter includes provisions on expert advisory 
groups, information quality, and public suggestions for 
improvements to regulations, consideration of effects on small 
businesses, and other elements of evidence-based decision 
making in the development and implementation of regulations. 
The chapter also contains a non-comprehensive list of useful 
alignment practices that support regulatory compatibility and 
cooperation.

          CHAPTER TWENTY-NINE: PUBLICATION AND ADMINISTRATION

    Chapter Twenty-Nine requires each Party to ensure that its 
laws, regulations, procedures, and administrative rulings of 
general application are publicly available. To the extent 
possible, proposed measures are required to be published in 
advance for public comment, and be available online. It also 
provides for due process rights for stakeholders regarding 
administrative proceedings, including prompt review of any 
administrative action through independent and impartial 
judicial or administrative tribunals or procedures.
    The chapter also includes a new commitment to compile laws 
and regulations of general application at the central level of 
government on those freely accessible websites that are 
identified in an annex to the chapter. This new element 
strengthens the commitments of the Parties to ensure that any 
exporter, service supplier, investor, or other interested 
person in each country has access to the relevant laws and 
regulations.

      CHAPTER THIRTY: ADMINISTRATIVE AND INSTITUTIONAL PROVISIONS

    Chapter Thirty establishes a Free Trade Commission 
(``Commission'') to oversee the implementation of the 
Agreement. The Commission is composed of government 
representatives of each Party at the level of Ministers or 
their designees. The Commission will operate by consensus. In 
addition, the chapter provides for Agreement Coordinators to 
facilitate communications between the Parties. Finally, the 
chapter provides for a Secretariat, comprised of National 
Sections. The Secretariat's main function is to provide 
administrative assistance to dispute settlement panels.

                 CHAPTER THIRTY-ONE: DISPUTE SETTLEMENT

    Chapter Thirty-One sets out detailed procedures for the 
resolution of disputes between the Parties for any matter 
arising under the Agreement (with only a few exceptions). The 
chapter provides for a two-step process comprising 
consultations and review by a panel. The disputing Parties 
shall file all documents relating to the dispute 
electronically. Chapter procedures emphasize amicable 
settlements, relying wherever possible on bilateral cooperation 
and consultations. When disputes arise under provisions common 
to the Agreement and other agreements (e.g., the WTO 
agreements), the complaining government may choose a forum for 
resolving the matter that is set forth in any valid agreement 
between the Parties. The selected forum will be the exclusive 
venue for resolving the dispute.
    Consultations. A Party may request consultations with 
another Party on an actual or proposed measure that it believes 
to be inconsistent with obligations of the Agreement. If the 
Parties fail to resolve the issue within a certain time period, 
the complaining Party may request establishment of a panel.
    Panel Procedures. Parties agree to maintain a roster of 
panelists to objectively assess the dispute. The panel report 
is due no later than 150 days from the date of the appointment 
of the last panelist. If the panel finds that the responding 
Party has failed to comply with its obligations or caused 
nullification or impairment, the Parties shall attempt to agree 
on a resolution of the dispute.
    Suspension of Benefits. If the disputing Parties are unable 
to agree on resolution of the dispute, the complaining Party 
may suspend the application to the responding Party of benefits 
of equivalent effect to the non-conformity or the nullification 
or impairment until such time as the dispute is resolved. The 
panel may be convened again to determine if the suspension is 
excessive or if the responding Party has eliminated the non-
conformity or nullification or impairment.
    The chapter also provides for the maintenance of the 
Advisory Committee on Private Commercial Disputes, to 
encourage, facilitate, and promote the use of arbitration, 
mediation, online dispute resolution and other procedures for 
the prevention and resolution of international commercial 
disputes between private parties.
    The chapter also provides for a Facility-Specific, Rapid 
Response Labor Mechanism to ensure remediation of a denial of 
rights, as defined in the chapter.

         CHAPTER THIRTY-TWO: EXCEPTIONS AND GENERAL PROVISIONS

    Chapter Thirty-Two provides for the following exceptions 
and provisions that apply Agreement-wide or to various 
chapters.
    General Exceptions. Chapter Thirty-Two incorporates the 
GATT Article XX exceptions with respect to goods-related 
obligations and OATS Article XIV exceptions with respect to 
services-related obligations.
    Essential Security. This chapter provides for a self-
judging Agreement-wide exception for actions a Party considers 
to be in its essential security interest.
    Taxation Measures. This chapter circumscribes the 
obligations that apply with respect to a Party's taxation 
measures.
    Temporary Safeguard Measures. Chapter Thirty-Two provides 
for an exception allowing a Party to adopt or maintain 
restrictive measures with regard to payments or transfers 
relating to the movements of capital in the event or threat of 
serious balance of payments and external financial 
difficulties. Among other things, any such measure must not be 
inconsistent with national treatment and Most Favored Nation 
obligations of the Investment, Services, and Financial Services 
chapters; be consistent with the Articles of Agreement of the 
International Monetary Fund; avoid unnecessary damage to the 
commercial, economic and financial interests of another Party; 
not be inconsistent with the Expropriation obligation of the 
Investment Chapter; and be temporary and be phased out 
progressively.
    Indigenous Peoples Rights. This chapter provides that 
nothing in the Agreement precludes a Party from adopting or 
maintaining measures it deems necessary to fulfill legal 
obligations to indigenous peoples, as long as those measures 
are not used as a means of arbitrary or unjustified 
discrimination against persons of the other Parties or as 
disguised restrictions on trade or investment.
    Cultural Industries. This chapter provides that the 
Agreement does not apply to a measure adopted or maintained by 
Canada with respect to a cultural industry, and provides 
reciprocal flexibility for the United States and Mexico with 
respect to Canada. Should a Party take a measure that would be 
inconsistent with the Agreement but for this exception, other 
Parties may take a measure of equivalent commercial effect.
    Disclosure of Information. This chapter provides that 
nothing in the Agreement requires a Party to furnish or allow 
access to information, the disclosure of which would be 
contrary to its law or would impede law enforcement, or 
otherwise be contrary to the public interest, or which would 
prejudice the legitimate commercial interests of particular 
enterprises, public or private.
    Personal Information Protection and Access to Information. 
This chapter requires each Party to have a legal framework to 
provide for the protection of personal information. The Parties 
shall endeavor to adopt non-discriminatory practices in 
protecting natural persons from personal information protection 
violations and to foster cooperation in this area. In addition, 
this chapter requires each Party to maintain a legal framework 
that allows natural persons to obtain access to records held by 
the central level of government, subject to reasonable terms 
and limitations.
    Non-market Country Free Trade Agreement (FTA). This chapter 
requires that any Party intending to negotiate an FTA with a 
non-market country must inform the other Parties and provide 
information and an opportunity to review the text. It provides 
that entry into such an agreement by one Party allows for the 
other Parties to terminate the USMCA and replace the USMCA with 
an agreement as between them. A non-market economy country is 
defined as a country that at least one Party has determined to 
be a non-market economy for purposes of its trade remedy laws 
and is a country with which no Party has a signed free trade 
agreement.
    Specific Provision for Mexico. This provision provides 
that, with respect to the obligations in the Cross-Border Trade 
in Services, Investment, State-Owned Enterprises and Designated 
Monopolies, and Market Access for Goods Chapters, Mexico may 
only adopt measures consistent with the least restrictive 
measures it may adopt under its other trade and investment 
agreements.

 CHAPTER THIRTY-THREE: MACROECONOMIC POLICIES AND EXCHANGE RATE MATTERS

    Chapter Thirty-Three includes policy commitments to achieve 
and maintain market-driven exchange rates and refrain from 
competitive devaluations to gain an unfair trade advantage. The 
chapter also contains transparency and reporting requirements 
on intervention and foreign exchange reserves, which reinforce 
accountability by providing rapid information to assess whether 
commitments are being met. Key obligations in the chapter are 
subject to dispute settlement. The chapter also creates a 
Macroeconomic Committee to monitor implementation.

                 CHAPTER THIRTY-FOUR: FINAL PROVISIONS

    Chapter Thirty-Four contains provisions regarding the 
transition from NAFTA 1994, amendments to the Agreement, the 
languages in which the Agreement is authentic, withdrawal, and 
entry into force.
    Review and Term Extension. Chapter Thirty-Four sets the 
term of the USMCA at 16 years, with the possibility of 
extensions. The Commission is required to review the operation 
of the Agreement every six years. At the end of each such 
review, each Party, through its head of government, must 
confirm whether it wishes to extend the term of the Agreement 
for another 16 years (that is, if this is done at the 6th 
anniversary, the Agreement term will then be 22 years). If this 
does not occur, the Commission will meet to review the 
Agreement every year until agreement to extend is reached, or 
the term expires. At any point when the Parties decide to 
extend the Agreement for another 16-year period, the Commission 
will continue conducting reviews every six years.

     E. General Description of the Bill to Implement the Agreement


Sec. 1. Short Title and Table of Contents

    This section contains the short title of the Act, which may 
be cited as the ``United States-Mexico-Canada Agreement 
Implementation Act.'' It also sets forth the table of contents 
for the bill.

Sec. 2. Definitions

    This section defines various terms used throughout the 
bill, including ``appropriate congressional committee,'' 
``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

Sec. 101: Approval and Entry Into Force of the USMCA

    In Section 101(a), 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). The notice must include the date on 
which the USMCA will enter into force.

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

    Section 102(a) provides that U.S. law prevails in the case 
of a conflict with the USMCA.
    Section 102(b) provides that no state law or its 
application can be declared invalid on the ground that it is 
inconsistent with USMCA other than the United States.
    Section 102(c) states that no person other than the United 
States shall have any cause of action or defense under the 
USMCA or may challenge any action brought under any provision 
of law that the action or inaction of an instrumentality of the 
United States is inconsistent with the USMCA.

Sec. 103: Implementing Actions in Anticipation of Entry Into Force; 
        Initial Regulations; Tariff Proclamation Authority

    Section 103(a) provides 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) provides that initial 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) authorizes the President to proclaim:
           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 
        USMCA;
           subject to the consultation and layover 
        provisions in Section 104, such modifications or 
        continuations of any duty or duty-free or excise 
        treatment as the President determines to be necessary 
        or appropriate to maintain the general level of 
        reciprocal and mutually advantageous concessions 
        provided for the USMCA; and
           rules of origin to implement the USMCA
Section 103(c) also provides that in implementing the tariff-
rate quotas set forth in the Schedule of the United States to 
Annex 2-B of the USMCA, the President shall take such actions 
as may be necessary to ensure that imports of agricultural 
goods do not disrupt the orderly marketing of agricultural 
goods in the United States.
    The Committee expects robust consultation regarding the use 
of proclamation authority to implement this agreement, both on 
tariff and non-tariff issues.

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

    Section 104 establishes requirements for the proclamation 
of actions that are subject to consultation and layover 
provisions under the Act. Specifically, 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 a 60-day layover 
period (starting after the President has both obtained the 
required advice and provided the required report). 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.

Sec. 105: Administration of Dispute Settlement Proceedings

    Section 105(a) 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. This section also provides that the U.S. Section 
of the Secretariat is not subject to the Freedom of Information 
Act.
    Section 105(b) authorizes $2 million to the Department of 
Commerce for each fiscal year after fiscal year 2020 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. The 
provision 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.

Sec. 106: Trade Representative Authority

    Section 106 provides that if a USMCA country 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.

Sec. 107: Effective Date

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

                      TITLE II--CUSTOMS PROVISIONS

Sec. 201: Exclusion of Originating Goods of USMCA Countries From 
        Special Agriculture Safeguard Authority

    Section 201 amends the Uruguay Round Agreements Act to 
implement an exclusion of originating goods of USMCA from 
special agricultural safeguard authority.

Sec. 202: Rules of Origin

    Section 202 implements the rules of origin set out in 
Chapter 4 of the USMCA.
    Section 202(a) contains 31 definitions for the terms used 
in this section. Among the terms that are defined are 
``Aquaculture,'' Customs Valuation Agreement,'' ``Fungible Good 
or Fungible Material,'' ``Transaction Value,'' and ``Value.''
    Section 202(b) explains the application and interpretation 
of this section, such as indication that ``tariff 
classification'' means the basis for any tariff classification 
in the HTS.
    Section 202(c) establishes how a good from Canada or Mexico 
may qualify as an ``originating good'' and therefore be 
eligible for preferential tariff treatment when it is imported 
into the United States.

Sec. 202A: Special Rules for Automotive Goods

    Section 202A of S. 3052 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 the following terms used in this 
section: ``Alternative Staging Regime Period,'' ``Automotive 
Appendix,'' ``Automotive Good,'' Automotive Rules of Origin,'' 
``Commission,'' ``Covered Vehicle,'' ``Interagency Committee,'' 
``Passenger Vehicle, Light Truck, Heavy Truck,'' and ``USMCA 
Country.''
    Section 202A(b) directs the President not later than 30 
days after the enactment of the bill 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 International Trade Commission, 
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 for 
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 USMCA 
includes 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. Section 202A(c) also requires the 
Secretary of the Treasury, in consultation with the Secretary 
of Labor, to prescribe regulations to carry out this 
subsection.
    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\11\ set forth in 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.
---------------------------------------------------------------------------
    \11\See Articles 2 through 7 of the Appendix to Annex 4-B of the 
USMCA.
---------------------------------------------------------------------------
    Per subsection (d), the Trade Representative 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. This subsection also includes 
protections for individuals who disclose or cooperate with a 
federal agency with respect to a verification. Importers may 
not request accelerated disposition of any protests regarding 
decisions by Customs and Border Protection regarding 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. In addition, the USITC shall submit to Congress a report 
on the economic effects of the automotive rules of origin on 
the U.S. economy. Finally, the Comptroller General of the 
United States shall submit to the congressional committees a 
report assessing the effectiveness of the interagency 
coordination on the implementation, enforcement, and 
verification of the automotive rules of origin. For all of 
these reports, subsection (g) requires that the relevant agency 
solicit information from the public, allow for the public to 
submit comments, and to make the reports publicly available on 
the internet.

Sec. 203: Merchandise Processing Fee

    Section 203 eliminates the Merchandise Processing Fee on 
originating goods from USMCA countries.

Sec. 204: Disclosure of Incorrect Information; False Certifications of 
        Origin; Denial of Preferential Treatment

    Section 204 prohibits 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. The 
section 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.

Sec. 205: Reliquidation of Entries

    Section 205 ensures that Customs and Border Protection is 
authorized to reliquidate an entry to refund any excess duties 
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.

Sec. 206: Recordkeeping Requirements

    Section 206(a) amends section 508 of the Tariff Act of 1930 
by defining the terms ``USMCA; USMCA country'' and ``USMCA 
certification of origin''; provides that a U.S. exporter or 
producer that issues a USMCA certification of origin must make, 
keep, and, if requested, render for examination and inspection 
a copy of the certification and such records and supporting 
documents; and, requires that the exporter or producer keep 
these records and supporting documents for five years from the 
date it issues the certification.
    Section 206(b) provides that 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.

Sec. 207: Actions Regarding Verification of Claims Under the USMCA

    Sections 207(a) through (c) provide 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, and 
describe the determination and actions that may be taken in 
response. These subsections also provide 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.
    Section 207(d) provides that the Secretary shall interpret 
the requirements of this section in a manner to avoid and 
prevent circumvention of USMCA's requirements.

Sec. 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.

Sec. 209: Other Amendments to the Tariff Act of 1930

    Section 209 makes conforming amendments to sections 304, 
509, and 628 of 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.

Sec. 210: Regulations

    Section 210 directs the Secretary of Treasury to prescribe 
regulations necessary to carry out the provisions of Title II, 
except with respect to the labor value content determinations 
under section 202A, which will be prescribed by the Secretary 
of Labor.

        TITLE III--APPLICATION OF 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 PERSONS

    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

    This subtitle creates a mechanism to address material harm 
to the U.S. long-haul trucking industry on account of increased 
competition from Mexican operators.

Sec. 321: Definitions

    Section 321 defines 14 terms that are used in this 
subtitle, including ``Border Commercial Zone,'' ``Cargo 
Originating in Mexico,'' ``Change in Circumstances,'' and 
``Commercial Motor Vehicle.''

Sec. 322: Investigations and Determinations by Commission

    Section 322(a) provides that upon filing of a petition by 
an interested party, or at the request of the President or the 
Trade Representative, or upon the resolution of the Committee 
on Ways and Means of the House of Representatives or the 
Committee on Finance of the Senate, the USITC shall initiate an 
investigation. The investigation will consider whether there is 
material harm or a threat thereof on account of (1) a request 
by a person of Mexico to receive a grant of authority that is 
pending as of the date of the filing of the petition; (2) a 
person of Mexico who has received a grant of authority on or 
after the date of entry into force of the USMCA and retains 
such grant of authority; or (3) a person of Mexico who has 
received a grant of authority before the date of entry into 
force of the USMCA and retains such grant of authority because 
there has been a change in circumstances.
    Section 322(b) and (c) concern respectively the USITC's 
transmission of the petition to the Trade Representative and 
Secretary of Transportation, and the USITC's notice of the 
investigation and holding of a hearing.
    Section 322(d) establishes the factors that the USITC will 
consider in making its determination, including the volume and 
tonnage of merchandise transported and working conditions.
    Section 322(e) provides that the Secretary of Homeland 
Security will provide assistance at the request of the USITC, 
including on information regarding commercial motor vehicles 
entering or exiting the United States.
    Section 322(f) provides that the USITC shall promulgate 
regulations to provide access to confidential business 
information under a protective order.
    Section 322(g) provides that the USITC shall issue its 
determination in 120 days of initiation except in extraordinary 
cases, in which case the USITC shall have 150 days.
    Section 322(h) provides that certain provisions in the 
Tariff Act of 1930 are to be utilized in the case of a divided 
vote by the USITC.

Sec. 323: Commission Recommendations and Report

    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 
additional and dissenting views. The USITC is required to 
promptly make the report public and to publish a summary in the 
Federal Register.
    Under section 323(b), only those members of the USITC that 
agreed to the affirmative determination may vote on the 
recommendation.

Sec. 324: Action by the President With Respect to Affirmative 
        Determination

    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.
    Section 324(b) provides that 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(c) also provides for 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.
    Section 324(d) provides that 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 or prevent material harm. If the President 
determines that an extension is necessary, then the President 
may extend the relief for an additional four years.

Sec. 325: Confidential Business Information

    Section 325 ensures that the USITC protects confidential 
business information that it receives during the course of any 
investigation.

Sec. 326: Conforming Amendments

    Section 326 makes certain conforming amendments to 
provisions in Title 49 to ensure they do not limit DOT's 
ability to carry out the actions authorized by this subtitle.

Sec. 327: Survey of Operating Authorities

    Section 327 requires DOT to conduct a survey of all 
existing and 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.

            TITLE IV--ANTIDUMPING AND COUNTERVAILING DUTIES

                  SUBTITLE A--PREVENTING DUTY EVASION

Sec. 401: Cooperation on Duty Evasion

    Section 401 provides that the Commissioner of Customs and 
Border Protection to take into consideration that Canada and 
Mexico are USMCA Parties for purposes of trade enforcement and 
compliance assessment activities relating to evasion of 
antidumping and countervailing duties

                     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

    Overview: Sections 421-424 make conforming amendments to 
the Tariff Act of 1930 related to judicial review in anti-
dumping and countervailing duty cases, disclosure of 
proprietary information under protective orders, and the Court 
of International Trade. These amendments reflect that the 
binational panel system under Chapter 19 of NAFTA now operates 
through Chapter 10 of USMCA.

Sec. 421: Judicial Review in Antidumping Duty and Countervailing Duty 
        Cases

    Section 421 makes conforming changes to Section 516A of the 
Tariff Act of 1930.

Sec. 422: Conforming Amendments to Other Provisions of the Tariff Act 
        of 1930.

    Section 422 makes conforming changes to Section 777(f) of 
the Tariff Act of 1930.

Sec. 423: Conforming Amendments to Title 28, United States Code

    Section 423 makes conforming changes to Chapter 95 of Title 
28.

                     SUBTITLE D--GENERAL PROVISIONS

Sec. 431: Effect of Termination of USMCA Country Status

    Section 431 provides that, on the date on which a country 
ceases to be a USMCA country, the provisions of Title IV of the 
USMCA Implementation Act will cease to have effect with respect 
to that country. Section 431 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 be 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 USMCA ceases to be in force with 
respect to that country.

Sec. 432: Effective Date

    Section 432 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.

           TITLE V--TRANSFER PROVISIONS AND OTHER AMENDMENTS

Sec. 501: Drawback

    Section 501 transfers section 203 of the NAFTA 
Implementation Act to section 208 of the USMCA Implementation 
Act, 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.

Sec. 502: Relief From Injury Caused by Import Competition

    Section 502 transfers section 311 of the NAFTA 
Implementation Act to subtitle A, title III of the USMCA 
Implementation Act and re-designates it as section 301 without 
substantive change.

Sec. 503: Temporary Entry

    Section 503 transfers section 341 of the NAFTA 
Implementation Act to subtitle B, title III of the USMCA 
Implementation Act and re-designates it as section 311 without 
substantive change.

Sec. 504: Dispute Settlement in Antidumping and Countervailing Duty 
        Cases

    Section 504 transfers sections 401, 402, 403, 404, 405, 
406, 407, and 408 of the NAFTA Implementation Act to subtitle 
B, title IV of the USMCA Implementation Act and re-designates 
them as sections 411, 412, 413, 414, 415, 416, 416, 417, and 
418 without substantive change. Section 504(k)(1) 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(k)(2) provides that the relevant provisions in the NAFTA 
Implementation Act will continue to apply to such to cases.

Sec. 505: Government Procurement

    Section 505(a) amends Section 301 of the Trade Act of 1974 
to provide the President authority to modify discriminatory 
purchasing requirements.
    Section 505(b) implements U.S. obligations under Chapter 13 
of USMCA 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.

Sec. 506: Action Affecting United States Cultural Industries

    Section 506 makes a conforming change to Section 182(f) of 
the Trade Act of 1974 to maintain the treatment provided 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.

Sec. 507: Regulatory Treatment of Uranium Purchases

    Section 508 amends the Energy Policy Act of 1992 to strike 
the ``North American Free Trade Agreement'' and insert the 
``USMCA.''

Sec. 508: Report on Amendments to Existing Law

    Section 508 requires the Trade Representative not less than 
180 days after the bill's enactment to provide a report setting 
forth any technical or conforming amendments to other laws that 
may be necessary to carry out the USMCA Implementation Act. The 
report is submitted to the Committee on Finance of the Senate 
and the Committee on Ways and Means of the House of 
Representatives.

             TITLE VI--TRANSITION TO AND EXTENSION OF USMCA

                  SUBTITLE A--TRANSITIONAL PROVISIONS

Sec. 601: Repeal of the North American Implementation Act

    Section 601 repeals the NAFTA Implementation Act effective 
on the date on which the USMCA enters into force.

Sec. 602: Continued Suspension of the United States-Canada Free Trade 
        Agreement

    Section 602 continues the suspension of the U.S.-Canada 
Free Trade Agreement and provisions of the Canada-U.S. Free 
Trade Agreement Implementation Act.

       SUBTITLE B--JOINT REVIEWS REGARDING EXTENSION OF THE USMCA

    Overview: 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 concerns U.S. participation in the joint review mechanism.

Sec. 611: Participation in joint reviews with Canada and Mexico 
        regarding extension of the term of the USMCA and other action 
        regarding the USMCA

    Section 611(a) provides that the President shall consult 
with the appropriate congressional committees and stakeholders 
with respect to the Joint Review Mechanism.
    Section 611(b) provides that at least 270 days prior to a 
joint review, the Trade Representative shall seek public 
comment and hold a hearing prior to participating in a joint 
review. At least 180 days prior to the joint review, the Trade 
Representative shall report to the appropriate congressional 
committees an assessment regarding the operation of USMCA, the 
precise recommendation to be proposed at the review, the 
position of the United States on whether to extend the term of 
USMCA, and whether any prior attempts have been made to resolve 
any concerns that underlie the U.S. recommendation or position.
    Section 611(c)-(d) provides that the Trade Representative 
shall report and consult with the appropriate congressional 
committees after a lack of agreement on extending the term of 
USMCA or after a joint review has taken place.
    Section 611(e) contains definitions for terms used in this 
section.

                  SUBTITLE C--TERMINATION OF THE USMCA

Sec. 621: Termination of USMCA

    Section 621(a) provides that during any period in which a 
country ceases to be a USMCA country, the USMCA Implementation 
Act and any amendments made through the act shall cease to have 
effect with respect to that country.
    Section 621(b) provides that on the date on which the USMCA 
ceases to be in force with respect to the United States, the 
USMCA Implementation Act and any amendments made through the 
act shall cease to have effect.

              TITLE VII--LABOR MONITORING AND ENFORCEMENT

    Overview: This title includes provisions that cover the 
labor commitments in USMCA, including those secured in the 
Protocol of Amendment to the Agreement Between the United 
States of America, the United Mexican States, and Canada that 
was signed on December 10, 2019 in Mexico City.

Sec. 701: Definitions

    Section 701 defines ``labor attache,'' ``labor 
obligations,'' and ``Mexico's labor reform.''

 SUBTITLE A--INTERAGENCY LABOR COMMITTEE FOR MONITORING AND ENFORCEMENT

Sec. 711: Interagency Labor Committee for Monitoring and Enforcement

    Section 711(a) 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 responsible for monitoring compliance with 
the USMCA labor obligations, including the implementation of 
Mexico's labor reforms, and requesting that the Trade 
Representative take enforcement actions.
    Section 711(b) provides that the Interagency Labor 
Committee will be co-chaired by the Trade Representative and 
the Secretary of Labor, and shall include representatives from 
other agencies with relevant expertise.
    Section 711(c) provides that the Interagency Labor 
Committee will meet once every 90 days for the five years 
following the enactment of the USMCA Implementation Act, and 
once every 180 days thereafter.
    Section 711(d) provides that notwithstanding any other 
provision of law, the members of the Interagency Labor 
Committee may exchange information in order to carry out the 
title.

Sec. 712: Duties

    Section 712 establishes that the Interagency Labor 
Committee's duties include: coordinating the U.S. government's 
monitoring of the USMCA labor obligations, establishing an 
ongoing dialogue with the Government of Mexico regarding 
Mexico's implementation of labor reforms and compliance with 
USMCA, coordinating with the International Labor Organization 
and Government of Canada, and identifying priority capacity 
building activities in Mexico to be funded by the United 
States.

Section 713: Enforcement Priorities

    Section 713 requires the Interagency Labor Committee to 
review the list of priority sectors under Annex 31-A of the 
USMCA, and to suggest additional sectors to USTR. The 
Interagency Labor Committee is also required to establish and 
annually update a list of priority subsectors for enforcement.

Sec. 714: Assessments

    Section 714(a) requires the Interagency Labor Committee to 
complete biannual assessments of Mexico's compliance with the 
USMCA labor obligations in Annex 23-A. These assessments are 
for a 10-year period beginning on the date of the USMCA 
Implementation Act's enactment.
    Section 714(b) provides that 5 years after USMCA 
Implementation Act's enactment, the Interagency Labor Committee 
may consult with the appropriate congressional committees and, 
with their approval, modify the frequency of assessments to an 
annual basis.
    Section 714(c) provides that the assessments shall include 
a review regarding whether Mexico has provided adequate funding 
to enforce its labor reform, whether legal challenges to 
Mexico's labor reform have succeeded in Mexican courts, and 
whether Mexico has implemented various aspects of its reform 
consistent with the timeline announced by Mexico in a September 
2019 policy statement.

Sec. 715: Recommendation for Enforcement Action

    Section 715(a) requires the Interagency Labor Committee to 
recommend enforcements actions to the Trade Representative if 
it determines that a USMCA country has failed to meet its labor 
obligations.
    Section 715(b) provides the Trade Representative must 
determine whether to initiate an enforcement action within 60 
days of receiving a recommendation. 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.

Sec. 716: Petition Process

    Section 716(a) provides that the Interagency Labor 
Committee shall establish procedures for submissions from the 
public regarding a failure to comply with the USMCA labor 
obligations.
    Section 716(b) provides that 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. 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 within 60 
days 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 
Ways and Means and Finance Committees.
    Section 716(c) also establishes a petition process for 
allegations of non-compliance with the USMCA labor obligations 
not related to Annex 31-A.

Sec. 717: Hotline

    Section 717 requires the Interagency Labor Committee to 
establish a web-based hotline to receive confidential 
information regarding labor issues among USMCA countries from 
interested parties.

Sec. 718: Reports

    Section 718(a) requires the Interagency Labor Committee to 
submit a biannual report for the first five years after the 
USMCA Implementation 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.
    Section 718(b) provides that five years after the bill's 
enactment, the Trade Representative and the Secretary of Labor 
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(c) requires the Interagency Labor Committee to 
complete a five-year comprehensive assessment of Mexico's 
implementation of its labor reform. The assessment shall 
include a strategic plan and recommendations regarding areas of 
concern for purposes of the joint review conducted pursuant to 
Article 34.7 of the USMCA.

Sec. 719: Consultations on Appointment and Funding of Rapid Response 
        Labor Panelists

    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.

                   SUBTITLE B--MEXICO LABOR ATTACHES

Sec. 721: Establishment

    Section 721 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.

Sec. 722: Duties

    Section 722 establishes the duties for the labor attaches, 
which include assisting the Interagency Labor Committee in its 
monitoring efforts and submitting quarterly reports on Mexico's 
compliance with its labor obligations.

Sec. 723: Status

    Section 723 provides that the labor attaches shall remain 
employees or officers of the United States for purposes of 
allowances, privileges, rights, seniority, and other benefits.

           SUBTITLE C--INDEPENDENT MEXICO LABOR EXPERT BOARD

Sec. 731: Establishment

    Section 731 establishes the Independent Mexico Labor Expert 
Board (``Expert Board''), which 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.

Sec. 732: Membership; Term

    Section 732(a) provides for the selection of the membership 
of the Expert Board (12 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.
    Section 732(b) provides that the members of the Expert 
Board will serve an initial term of six years.
    Section 732(c) provides that if a majority of the Expert 
Board determines that Mexico is not in full compliance with its 
labor obligation, the Expert Board's term will extend for four 
years, and a new board will be selected in accordance with 
subsection (a).

Sec. 733: Funding

    Section 733 requires the United States to provide necessary 
funding to support the work of the Expert Board.

Sec. 734: Reports

    Section 734 requires the Board to submit an annual report 
to the Interagency Labor Committee, the Committee on Ways and 
Means and the Senate Finance Committee that will contain an 
assessment of Mexico's labor reform implementation efforts and 
how labor law are generally enforced in Mexico. The Board's 
reports may contain a determination that Mexico is not in 
compliance with its labor obligations.

                        SUBTITLE D--FORCED LABOR

Sec. 741: Forced Labor Enforcement Task Force

    Section 741(a) requires the President to establish a Forced 
Labor Enforcement Task Force (Task Force) within 90 days of the 
enactment of the USMCA Implementation 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.
    Section 741(b) provides that the Task Force will be chaired 
by the Secretary of Homeland Security and will be comprised of 
the Trade Representative, Department of Labor, and other 
agencies that the President determines appropriate. The Task 
Force shall meet on a quarterly basis.

Sec. 742: Timeline Required

    Section 742(a) requires the Task Force to establish 
timelines for responding to petitions alleging that goods are 
being imported by or with forced or child labor.
    Section 742(b) provides the Task Force shall consult with 
the Committee on Ways and Means and the Senate Finance 
Committee in establishing the timelines.
    Section 742(c) provides that 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.

Sec. 743: Reports Required

    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, including the number of 
instances merchandise was denied entry under the provision in 
the preceding 180 day period. The report shall also 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

Sec. 744: Duties Related to Mexico

    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 also required to report to the 
Interagency Labor Committee regarding its enforcement of child 
and forced labor in Mexico.

      SUBTITLE E--ENFORCEMENT UNDER RAPID RESPONSE LABOR MECHANISM

Sec. 751: Transmission of Reports

    Section 751 requires that reports issued by a rapid 
response labor panel under Annex 31-A of the USMCA be 
immediately submitted to the appropriate congressional 
committees, the Labor Advisory Committee, and, as appropriate, 
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.

Sec. 752: Suspension of Liquidation

    Section 752(a) provides the Trade Representative may 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.
    Section 752(b) provides that liquidation shall resume if 
the rapid response labor panel has determined 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.

Sec. 753: Final Remedies

    Section 753(a) provides that if a rapid response labor 
panel has found a denial of rights at a facility, the Trade 
Representative may, in consultation with the appropriate 
congressional committees, direct the Secretary of the Treasury 
to deny entry to goods, apply duties from which liquidation had 
been suspended, or any other remedy available under Annex 31-A 
of the USMCA.
    Section 753(b) provides that the Trade Representative shall 
promptly notify the Treasury Secretary if the denial of rights 
has been remedied.

           TITLE VIII--ENVIRONMENT MONITORING AND ENFORCEMENT

Sec. 801: Definitions

    Section 801 defines ``environmental law'' and 
``environmental obligations.''

   SUBTITLE A--INTERAGENCY ENVIRONMENT COMMITTEE FOR MONITORING AND 
                              ENFORCEMENT

Sec. 811: Establishment

    Section 811(a) provides that the President shall establish 
an Interagency Environment Committee for Monitoring and 
Enforcement (Interagency Environment Committee) to coordinate 
U.S. efforts to monitor and enforce environmental obligations.
    Section 811(b) provides that membership of the committee 
includes the Trade Representative who serves as chairperson, 
and representatives from the National Oceanic and Atmospheric 
Administration (NOAA), the U.S. Fish and Wildlife Service, the 
U.S. Forest Service, the Environmental Protection Agency, 
Animal and Plant Health Inspection Service (APHIS), U.S. 
Customs and Border Protection (CBP), the Department of State, 
the Department of Justice, the Department of Treasury, and the 
U.S. Agency for International Development (USAID)--and any 
other agencies the President determines to be appropriate.
    Section 811(c) provides that notwithstanding any other 
provision of law, the members of the Interagency Environment 
Committee may exchange information for purposes of carrying out 
this subtitle.

Sec. 812: Assessment

    Section 812(a) provides for the Interagency Environment 
Committee to carry out an assessment of the environmental laws 
and policies of USMCA countries 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.
    Section 812(b) provides that the assessment should include 
the environmental laws and policies of the USMCA countries with 
respect to which enhanced cooperation should be carried out.
    Section 812(c) provides that not later than 90 days after 
the date on which the Interagency Environment Committee is 
established, or the date on which the USMCA enters into force 
(whichever being earlier), the Interagency Environment 
Committee must submit a report containing the assessment under 
subsection (a) to the appropriate congressional committees and 
the Trade and Environment Policy Advisory Committee.
    Section 812(d) provides that the assessment must be updated 
after five years of the agreement being in force.

Sec. 813: Monitoring Actions

    Section 813(a) provides that the Interagency Environment 
Committee will undertake monitoring actions related to 
implementation of the USMCA environment obligations.
    Section 813(b) 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. Based on the findings, it may 
request enforcement actions under Section 814.
    Section 813(c) provides for the Interagency Environment 
Committee to review reports provided by U.S. environment 
attaches in Mexico, and assess the efforts of Mexico to comply 
with its environmental obligations.
    Section 813(d) provides that the United States can request 
verification of particular shipments from Mexico under the 
Environment Cooperation and Customs Verification Agreement 
between the United States and Mexico.

Sec. 814: Enforcement Actions

    Section 814 provides that the Interagency Environment 
Committee may request the Trade Representative to request 
consultations under the Environment or Dispute Settlement 
Chapter of the USMCA or may request the heads of other federal 
agencies identified in Section 815 to initiate monitoring or 
enforcement actions.

Sec. 815: Other Monitoring and Enforcement Actions

    Section 815 describes other existing U.S. government 
authorities that enforce U.S. environmental laws. For example, 
Section 815 identifies the Secretary of Commerce as having 
authority to take appropriate monitoring and enforcement 
actions under the Magnuson-Stevens Fishery Conservation and 
Management Act, and the Secretary of the Interior as having 
authority to take such action with respect to the Migratory 
Bird Treaty Act.

Sec. 816: Report to Congress

    Section 816 provides that no later than one year after the 
USMCA enters into force, and annually for the next four years, 
and biennially thereafter, the Trade Representative will report 
to the appropriate congressional committees 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.

Sec. 817: Regulations

    Section 817 provides that the head of any Federal agency 
described in this subtitle, in consultation with the 
Interagency Environment Committee, may prescribe such 
regulations as are necessary.

                       SUBTITLE B--OTHER MATTERS

Sec. 821: Border Water Infrastructure Improvement Authority

    Section 821(a) 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(b) also requires the EPA report to Congress 
annually on the activities carried out under this subsection.

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

    Section 822 provides that EPA, NOAA, and FWS may detail one 
employee to USTR to be assigned to United States Embassy in 
Mexico.

              SUBTITLE C--NORTH AMERICAN DEVELOPMENT BANK

Sec. 831. General Capital Increase

    Section 831 authorizes a capital increase for an additional 
150,000 shares in the North American Development Bank.

Sec. 832: Policy Goals

    Section 832 provides for the Secretary of the Treasury to 
direct the representatives of the United States to the Board of 
Directors of the NAD Bank to give preference to the financing 
of projects related to environmental infrastructure relating to 
water pollution, wastewater treatment, water conservation, 
municipal solid waste, storm water drainage, non-point 
pollution, and related matters.

Sec. 833: Efficiencies and Streamlining

    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 efficiency improvements to streamline the project 
certification process.

Sec. 834: Performance Measures

    Section 834(a) 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 provided added value to the region.
    Section 834(b) provides that the Secretary of Treasury 
shall submit a report on progress in imposing the performance 
measures in this section.

         TITLE IX--USMCA SUPPLEMENTAL APPROPRIATIONS ACT, 2019

    This title appropriates $843 million to implement, monitor, 
and enforce USMCA's labor and environment obligations, and to 
recapitalize the North American Development Bank (NADB).
           NADB funding is $215 million;
           Labor related funding is $240 million; and
           Environment related funding is $388 million.

             F. Vote of the Committee in Reporting the Bill

    In compliance with section 133 of the Legislative 
Reorganization Act of 1946, the Committee states that on 
January 7, 2020, H.R. 5430 was ordered favorably reported, 
without amendment, by a roll call vote of 25 ayes, 3 nays. 
Ayes: Grassley, Crapo, Roberts, Enzi, Cornyn, Thune, Burr 
(proxy), Portman, Scott, Lankford, Daines, Young, Sasse, Wyden, 
Stabenow, Cantwell, Menendez, Carper, Cardin (proxy), Brown, 
Bennet, Casey, Warner, Hassan, and Cortez Masto. Nays: Toomey, 
Cassidy, and Whitehouse.

                    II. BUDGETARY IMPACT OF THE BILL

    The relevant analysis by the Congressional Budget Office 
(CBO) regarding the USMCA Implementation Act are reprinted 
below.




          III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee states 
that the bill will not significantly regulate any individuals 
or businesses, will not affect the personal privacy of 
individuals, and will result in no significant additional 
paperwork.
    The following information is provided in accordance with 
section 423 of the Unfunded Mandates Reform Act of 1995 
(``UMRA'') (Pub. L. No. 104-04). The Committee has reviewed the 
provisions of H.R. 5430 as approved by the Committee on January 
7, 2020. The Committee has determined that the bill does not 
impose a Federal intergovernmental mandate on State, local, or 
tribal governments. The Committee has determined that the bill 
does not contain Federal mandates on the private sector.

                          IV. ADDITIONAL VIEWS

 ADDITIONAL VIEWS OF RANKING MEMBER RON WYDEN, SENATOR SHERROD BROWN, 
                         AND SENATOR TOM CARPER

    While we appreciate the collaborative work of Chairman 
Grassley to develop a consensus report, a number of items in 
this report deserve further elaboration.

                            LEGACY OF NAFTA

    Signed in 1994, NAFTA integrated three significant 
economies through reduced tariffs and non-tariff barriers that 
benefited many businesses and farmers in the United States, 
Mexico, and Canada. However, the effects of NAFTA were not 
uniformly positive for all businesses and workers in the United 
States as trade flows shifted to take advantage of lower 
tariffs, lower wages, and in some cases, lower regulatory 
standards. As time passed, it became clear that NAFTA's broken 
dispute settlement mechanisms, unenforceable labor and 
environmental standards, and lax auto rules of origin were not 
sufficient to protect American workers. In addition, as noted 
above, NAFTA was simply outdated insofar as it did not cover 
digital trade and other elements of the modern economy. For 
these reasons, it was appropriate to reconsider our trading 
relationship with Canada and Mexico and bring NAFTA into the 
21st century.

                         NEGOTIATIONS OF USMCA

    With regard to the USMCA negotiation process, we would 
emphasize that while the resulting agreement was broadly 
supported in the House of Representatives and the Senate, the 
process of developing an agreement, which contained the right 
balance of enforceable trade rules, often failed to adhere to 
the spirit of TPA 2015 to promote transparency and 
collaboration with Congress, which has the Constitutional 
authority over the United States' trade with foreign countries. 
Consultation and access to text are critical for ensuring 
Congress, and ultimately the public, understands and agrees 
with the Administration's negotiating positions. The Agreement 
as initially negotiated by the Administration failed to garner 
sufficient support to pass Congress. We commend the work of the 
House Democrats' Trade Working Group to ensure USMCA could 
receive broad bipartisan support. Canada and Mexico are two of 
the most important trading partners for the United States. 
Ultimately, the provisions negotiated by the House Democrats' 
Trade Working Group reflect that fact, as well as the need to 
support workers, consumers, businesses, and farmers in all 
three regions.

                           USMCA OBLIGATIONS

    Given the close and unique trading relationship in North 
America, we appreciate the innovative rules needed to ensure 
that both businesses and workers succeed under the new USMCA.

                          AUTO RULES OF ORIGIN

    In particular, the automobile rules of origin contain a 
number of new provisions focused on strengthening U.S. 
manufacturing and ensuring a robust and resilient industry. We 
continue to be concerned about the level of specificity 
provided to auto companies seeking to comply with these rules 
and the transition plans being put in place to allow for 
eventual compliance. Once rules are negotiated, it is critical 
that the information be provided to all relevant members of the 
industry, including workers and their union representatives, 
regarding what is needed to comply and when compliance is 
mandatory. We will continue to work with the Administration to 
ensure there is sufficient transparency and meaningful 
compliance with the new auto rules of origin.

                         LABOR AND ENVIRONMENT

    The NAFTA renegotiation benefited from 20 years of trading 
experience and a strong understanding of the U.S.-Mexico-Canada 
trading environment and the ways that NAFTA had failed to 
safeguard the interests of the United States. Chief among these 
was an absence of enforceable labor and environmental 
obligations. Further, the close proximity and trade 
relationship among NAFTA countries necessitated a new approach 
to these issues and a commitment on the part of the United 
States to hold Mexico and Canada to new, high standards on 
labor and the environment.
    With respect to labor, USMCA introduces the innovative 
rapid response mechanism designed by Senator Brown, Ranking 
Member Wyden, and others to address certain labor violations at 
the factory level, recognizing the persistence of exploitative 
labor practices in Mexico. Neither American nor Mexican workers 
can wait for state-to-state dispute resolution, and instead 
need new tools to quickly and effectively crack down on bad 
actors. In addition, the USMCA Implementation Act dedicates 
resources to labor enforcement and technical assistance to hold 
Mexico and employers operating in the country accountable for 
complying with the obligations and to support reforms required 
by the Agreement.
    Furthermore, we support the inclusion of significant 
funding for monitoring and enforcement of both labor and 
environmental obligations and view this funding as critical to 
implementation of the Agreement. The appropriations included in 
the bill will ensure that our government has the resources it 
needs to hold our trading partners accountable under USMCA. The 
funds are directed towards activities such as monitoring 
Mexico's implementation and enforcement of its labor laws; 
combating forced and child labor; ensuring compliance with 
Lacey Act prohibitions on trade in illegally taken wildlife and 
illegally harvested timber; combating illegal, unreported, and 
unregulated (IUU) fishing; engaging in environmental dispute 
settlement; and other priorities that will ensure full 
implementation of USMCA, promote a level playing field for U.S. 
workers, and help protect the North American ecosystem.

               ADDITIONAL VIEWS OF SENATOR PATRICK TOOMEY

    NAFTA was a groundbreaking free trade deal that eliminated 
almost all tariffs on products traded between the United 
States, Mexico, and Canada. The deal fundamentally reshaped 
North American economic relations, encouraging cooperation and 
integration between the three party countries.
    The American economy benefitted enormously from NAFTA. 
Regional tradegrew from roughly $290 billion in 1993 to more 
than $1.1 trillion in 2016.\12\ U.S. exports to Mexico alone 
grew fivefold. The Office of the U.S. Trade Representative 
(USTR) estimated by 2007 that NAFTA provided to the average 
family of four nearly $350 to $930 in annual benefits.\13\ 
Thanks to NAFTA, Canada and Mexico are the two largest 
destinations for U.S. exports, and American industry has 
flourished.\14\ GDP has grown significantly, with NAFTA being 
responsible for several billion dollars of added growth per 
year since implementation.
---------------------------------------------------------------------------
    \12\Figure 2. U.S. Merchandise Trade with NAFTA Partners: 1993-
2016. CRS, The North American Free Trade Agreement (NAFTA), https://
www.fas.org/sgp/crs/row/R42965.pdf.
    \13\USTR, NAFTA: An Annual Tax Cut and Income Gain for American 
Families, https://ustr.gov/sites/default/files/
Quantification%20of%20NAFTA%20Benefits.pdf.
    \14\Council on Foreign Relations, NAFTA and the USMCA: Weighing the 
Impact of North American Trade, https://www.cfr.org/backgrounder/
naftas-economic-impact.
---------------------------------------------------------------------------
    NAFTA also created high-paying jobs in diverse industries 
across the United States. An estimated fourteen million U.S. 
jobs rely on trade with Canada or Mexico,\15\ and these export-
related jobs pay on average 15 to 20 percent more than jobs 
focused only on domestic production.\16\ It was under NAFTA 
that the United States consistently set new records as the 
world's number one manufacturer and, in 2019, achieved the 
lowest unemployment rate in 50 years.\17\
---------------------------------------------------------------------------
    \15\U.S. Chamber of Commerce, https://www.uschamber.com/sites/
default/files/the_facts_on_nafta_-_2017.pdf.
    \16\Foreign Affairs, NAFTA's Economic Upsides: The View From the 
United States, https://www.foreignaffairs.com/articles/canada/2013-12-
06/naftas-economic-upsides.
    \17\Figure 2, Selected Countries' Shares of Global Manufacturing 
Value Added. CRS, U.S. Manufacturing in International Perspective, 
https://fas.org/sgp/crs/misc/R42135.pdf.
---------------------------------------------------------------------------
    NAFTA was a free, fair, and reciprocal trade agreement. 
That being said, NAFTA was due for a modernization. USMCA made 
some modest, constructive changes to NAFTA, such as in the 
areas of digital trade, dairy market access, and dispute 
settlement panel formation. Unfortunately, USMCA also made 
several large policy changes that were contrary to the 
objectives set forth by Congress under the Bipartisan 
Congressional Trade Priorities and Accountability Act of 2015 
(TPA 2015). These trade-restrictive policy changes should not 
be considered precedent for future trade deals.

                            RULES OF ORIGIN

    Primarily through increased Rules of Origin (ROO) 
requirements that are designed to diminish Mexico's competitive 
advantage in auto production, USMCA replaced NAFTA's 
reciprocal, free trade in autos and auto parts with a complex 
system of quotas and potential tariffs. These shortsighted 
regulations will hurt the economies of both Mexico and the 
United States. Besides increasing costs for American consumers 
and increasing complexity and cost of production for U.S.-based 
manufacturers, the new ROO provisions make U.S. auto production 
less competitive globally. Companies will likely respond by 
selecting suppliers in, and/or moving some production to, lower 
cost countries. The ROO provisions also negatively impact other 
areas of the U.S. economy. In fact, the U.S. International 
Trade Commission report on USMCA noted ``the trade 
restrictiveness of ROO is inversely related to its positive 
impact on the U.S. economy.'' Most concerning of these many 
changes was USMCA's requirement that at least 40% of the value 
of an automobile be produced in a factory where workers earn on 
average $16 per hour, an arbitrary wage mandate that will 
further inflate costs of production. These managed trade 
provisions, which hurt the U.S. economy and run counter to the 
spirit of a free trade agreement, should not be included in 
future trade deals.

                           MELTED AND POURED

    The Protocol of Amendment added a requirement that steel 
and aluminum be initially melted in North America (melted and 
poured) in order to qualify for preferential status under 
USMCA. This melt and pour requirement is to be phased in over 
seven years (for steel) and ten years (for aluminum) after 
USMCA's entry into force. Since this change was announced only 
several days prior to Congress taking up the implementing bill, 
the USITC was not able to formally evaluate the economic and 
downstream effects of this provision; however, by its nature, 
it will create ``winners and losers'' within the U.S. steel and 
aluminum industries, pitting steel and aluminum producers 
against steel- and aluminum-using manufacturers. Steel and 
aluminum producers and users are both a source of high-paying 
manufacturing jobs. This provision is unnecessary, costly, and 
should not be included in future trade deals.

                                 LABOR

    USMCA's protocol of amendment added in extensive labor 
provisions forcing U.S. taxpayers to pay $45 million a year to 
compel Mexico to facilitate unionization across their country. 
For the first time in a trade agreement, allegations of a 
violation of a foreign country's labor laws will be assumed to 
have conferred an unfair trade advantage to Canada and Mexico, 
``affecting trade or investment between the Parties, unless the 
responding Party demonstrates otherwise.''\18\ Violations of 
Mexico's labor laws (as adjudicated by the ``rapid response'' 
panels) lead to tariffs and even embargoes on goods, at least 
until the facility adjudicated to have been in violation agrees 
to cede to the union's demands. Additionally, the various 
committees and panels formed by USMCA to monitor the 
implementation and enforcement of Mexico's labor reform all 
must provide justification for any decision not to impose 
tariffs, but are rarely if ever required to justify their 
decision to impose tariffs, creating a clear bias in favor of 
restricting trade. All of these provisions risk upsetting the 
careful balance struck between labor considerations and 
expanding market access in TPA 2015's negotiating objectives. 
Future free trade agreements should focus on increasing free 
trade, not advancing the political agenda of organized labor.
---------------------------------------------------------------------------
    \18\USMCA, Chapter 23--Labor; https://ustr.gov/sites/default/files/
files/agreements/FTA/USMCA/Text/23-Labor.pdf.
---------------------------------------------------------------------------

      ADDITIONAL VIEWS OF SENATORS PATRICK TOOMEY AND BILL CASSIDY

    Though USMCA made several beneficial modernizations to 
NAFTA, its passage was fraught with process fouls, none of 
which should be considered precedent for future trade deals. 
Article I, Section 8 of the United States constitution 
unambiguously assigns to Congress the responsibility for 
regulating commerce and foreign trade.
    Since the Trade Act of 1974, Congress has delegated some of 
its responsibility through the use of special rules and 
procedures to facilitate consideration of trade agreements, 
most recently through Trade Promotion Authority, in the 
Bipartisan Congressional Trade Priorities and Accountability 
Act of 2015 (TPA 2015). However, TPA's delegation of 
negotiating power is not a reassignment of constitutional 
responsibility to the executive branch; instead it is a 
procedural matter, ``enabling the President to negotiate 
reciprocal reductions of nontariff barriers while maintaining 
Congressional authority over changes to U.S. law'' (S. Rept. 
114-42). Congress additionally retains the power to make the 
final decision as to whether to approve the negotiated 
agreement. To ensure a swift process, members agreed to curtail 
their own ability to debate and amend the implementing 
legislation as well as its corresponding trade agreement. 
However, these self-imposed restrictions and delegation of 
power to the executive branch are conditioned upon the 
President's fulfilling certain statutory requirements and 
obligations in negotiating trade agreements. These requirements 
and obligations serve the purpose of maintaining Congress's 
constitutional role overseeing trade policy, ensuring that 
Congress is consulted on the direction of the agreement and 
kept updated on the negotiation's proceedings.
    In USMCA, the administration did not meet all of these TPA 
obligations. Firstly, as the Committee Report notes, the 
provisions of an FTA are typically settled and agreed upon 
several months prior to Congressional consideration, allowing 
the administration and Members of the relevant congressional 
committees to have time to thoroughly consider the final text 
of the FTA and to discuss what legislative and administrative 
actions would be necessary for implementation.
    In the case of USMCA, the timeline of consideration 
violated TPA requirements and thus did not provide sufficient 
time for consideration of the final text of the agreement. 
USMCA was originally ``signed'' on November 30, 2018, and the 
``text of the agreement'' for that version of the agreement was 
submitted to Congress on May 30, 2019. However, on June 13, 
2019, House Speaker Nancy Pelosi appointed a Working Group of 
House Democrats to conduct confidential negotiations with the 
administration regarding changes to USMCA required to secure 
their support. On December 10, 2019, the House Democrats' Trade 
Working Group and the administration reached a deal that 
secured Democratic support. This deal included changes that 
altered the final text of USMCA. New provisions, including on 
labor, environment, and rules of origin were added. Other 
sections, like intellectual property protection for biologics, 
were struck entirely from the deal. These changes requested by 
the House Democrats' Working group were so extensive that they 
required a new final text to be re-signed by all party 
countries, on December 10, 2019 in Mexico City. The 
implementing bill, which included provisions to implement the 
new sections of USMCA as approved by the three parties on 
December 10, was sent by the administration to Congress three 
days later on December 13, 2019.
    Section 106 (a)(1)(D)(ii) of TPA 2015 requires that any 
agreement shall enter into force if and only if the President, 
at least 30 days before submitting the implementing bill, 
submits to Congress a copy of the final, legal text of the 
agreement. In USMCA, the final text of the Agreement was signed 
on December 10, 2019 and yet on December 13, 2019, President 
Trump transmitted to Congress the implementing legislation--a 
mere three days later, instead of the 30 days required under 
TPA 2015.
    There is a strong rationale and legislative history behind 
this provision in TPA 2015. The 30-day requirement was newly 
added in TPA 2015, in order to ``help ensure that Congress is 
given adequate time and documentation to fully understand a 
trade agreement subject to this bill and inform the 
consideration of legislation to implement that agreement'' (S. 
Rept. 114-42). Trade authority is a delegated power, and the 
consultation, notification, and reporting requirements of TPA 
are designed to achieve greater transparency in trade 
negotiations and to maintain the role of Congress in shaping 
trade policy. This lack of regard for TPA rules and timing 
procedures should not be considered precedent for future trade 
deals. The TPA timeline should be adhered to in order to grant 
fast-track status to future trade deals.
    A second administration violation of TPA was USMCA's 
addition of an Appropriations title to the implementing 
legislation, granting $843 million in discretionary 
appropriations to support the changes to U.S. law made within 
the implementing bill. The Senate's ``fast track'' procedures 
allow qualified trade agreements to bypass rule XXII--an 
abrogation of members' right to unlimited debate and 
amendments--only because there are both procedural protections 
and strict limits on the content permitted in a trade 
agreement. Sec. 103(b)(3)(B)(ii) of TPA 2015 states that only 
provisions strictly necessary or appropriate to implement the 
final trade agreement are permitted in the implementing bill, a 
provision that is intended to prevent extraneous legislative 
provisions from `hitching a ride' on the parliamentary 
privilege attached to implementing bills. The Senate Committee 
report accompanying TPA 2015 further explains the intention 
behind this provision, stating ``the trade authorities 
procedures should apply only to those provisions in an 
implementing bill that are strictly necessary or appropriate to 
implement the underlying agreement, as stated in the Senate 
Finance and House Ways and Means Committee reports accompanying 
the Trade Act of 2002. . . . As has been recognized in the 
past, to apply the procedures more broadly would encroach on 
Congress's constitutional authority to legislate.''
    Yet Title IX of the USMCA implementing bill (``USMCA 
Supplemental Appropriations Act of 2019'') directly 
appropriates funds, which is neither strictly necessary nor 
appropriate to implement the underlying agreement. As noted 
above, TPA 2015 gives authority only to make changes in 
existing laws or new statutory authority required to implement 
the agreement--it does not permit provisions on new budget 
authority. Appropriations are done by Congress through specific 
appropriation legislation that authorizes the relevant agencies 
to make payments from the federal Treasury and provide budget 
authority to an agency for specified purposes. Under the 
standing rules of the House and Senate, funding must be 
authorized through legislative committees prior to being 
appropriated through appropriations committees.
    A review of the CBO cost estimates for each of the 16 most 
recent trade bills (dating back to the US-Israel Trade Act of 
1985) shows that none of associated implementing bills 
appropriated funds. Though some had spending effects, those 
resulted from changes to existing authorities--not new 
appropriations within an implementing bill. There is one 
example--the Central America-Dominican Republic Free Trade 
Agreement (CAFTA-DR)--in which funds were appropriated to 
achieve the terms of the trade agreement, but these 
appropriations were done through a separate appropriations 
agreement (the Foreign Operations Appropriations Bill)--not in 
the implementing bill itself. The CAFTA-DR agreement authorized 
appropriations, but did not directly appropriate funds.
    Additionally, Title IX of the USMCA implementing bill 
(``USMCA Supplemental Appropriations Act of 2019'') 
inappropriately designates appropriated funds as ``emergency'' 
funding, again violating the ``strictly necessary or 
appropriate'' standard required for expedited consideration. 
Emergency funding is intended for purposes that are sudden, 
urgent, unforeseen, and not permanent. The funding provided in 
the USMCA implementing legislation fails all of these criteria. 
Designating funds for these purposes as emergency funds is not 
appropriate within an implementing bill, and is also not 
strictly necessary for achieving the terms of USMCA. 
Appropriating within an implementing bill, and especially 
giving inappropriate emergency designation to appropriated 
funds, should not be considered precedent for future trade 
deals.

                 ADDITIONAL VIEWS OF SENATOR TIM SCOTT

    The Administration sought a renegotiation of the original 
NAFTA agreement to modernize the agreement and address some of 
its perceived deficiencies. To this end, a critical goal was 
the creation of a new, more stringent set of origin rules 
governing motor vehicle trade throughout the region.
    Throughout the USMCA negotiations and after, the entire 
U.S. auto industry worked diligently with USTR to understand 
these new rules, which depart in significant ways from the 
NAFTA rules and from any other FTA previously negotiated. The 
complexity and stringency of these rules led several automakers 
to signal they would require more than the three-year timeframe 
for full implementation and compliance, and these companies 
have submitted alternative staging requests for an additional 
two years in which to fully comply. Following the submission of 
these requests (and the completion of the Uniform Regulations), 
USTR staff made it known that a critical rule involving core 
parts would be applied differently than the industry had 
earlier been led to believe.
    For months prior to this reinterpretation, automakers were 
told by USTR staff that ``core parts'' determined to be 
originating using any of the approaches allowed under the rules 
governing such parts would be considered originating for the 
purpose of calculating the finished vehicle regional value 
content (RVC). Based on this interpretation, automakers began 
making investment decisions and supply chain adjustments, and 
taking other necessary compliance steps. However, after the 
July 1, 2020 USMCA entry into force date, without formal notice 
to the industry and contrary to the understanding of the 
industry and our USMCA trading partners, USTR suddenly insisted 
that two of the approaches allowed for the purpose of 
calculating ``core parts'' value--the key parts calculation and 
the super core calculation--could not be used to support claims 
that such parts were originating when calculating the finished 
vehicle RVC.
    Once negotiated, the success of agreements like this rests 
on industry's access to reliable and consistent information as 
well as decision-making processes that provide as much 
transparency as possible. Simply put, moving the goalposts on 
such a vital set of calculations now jeopardizes American 
competitiveness and risks countless jobs and future 
opportunities for hard-working Americans in the process.

  ADDITIONAL VIEWS OF SENATORS TODD YOUNG, RICHARD BURR, AND PATRICK 
                                 TOOMEY

    USMCA as originally negotiated by the Administration 
included groundbreaking provisions to support America's 
innovators in the biopharmaceutical industry. Importantly, it 
obliged the Parties to provide 10 years of protection for test 
and other data for biologic medicines which would have resulted 
in higher international standards, adequate protections for 
innovators, and utmost regard for consumers. The United States 
provides 12 years of protection pursuant to the Biologics Price 
Competition and Innovation Act, which had broad bipartisan 
support. A 10-year period of protection was already a 
compromise among those who wanted USMCA to reflect the twelve-
year period of such protection required in U.S. law--consistent 
with Trade Promotion Authority's dictate that the provisions of 
any trade agreement governing intellectual property rights that 
is entered into by the United States reflect a standard of 
protection similar to that found in United States law--and 
those who sought a shorter term.
    Certain critics in Congress and in the stakeholder 
community argued that including any mandated minimum period of 
research data protection for biologic medicines in a trade 
agreement would limit U.S. policy flexibility. They argued the 
United States would not have the freedom to reduce the period 
of such protection in the United States from the current twelve 
years to below the ten-year period mandated in the USMCA. To 
respond to this criticism, USTR proposed to the House 
Democrats' Trade Working Group a proposal that would have 
preserved U.S. policy flexibility. This proposal was for a so-
called ``ratchet'' mechanism in which the minimum period for 
research data protection for biologic medicines mandated in the 
USMCA would automatically be reduced to whatever period the 
United States changed its law to require if that period were 
below ten years.
    Regrettably, the House Democrats' Trade Working Group 
rejected this proposal that would have preserved U.S. policy 
flexibility, and raised the intellectual property protection of 
our two most important trading partners closer to our own. 
Ultimately, the Administration agreed to remove the provision 
entirely from the USMCA, despite support for the provision 
among many. That change satisfied the expediency of politics at 
the expense of good long-term policy for U.S. innovators and 
reduced the overall benefit of the USMCA for the United States.
    Removing the biologics provision is a severe blow to 
America's highly innovative biotechnology industry. An 
astounding 71% of all biologic medicines being developed come 
from small, emerging biotech companies. Emerging companies are 
responsible for more than half of biologic drugs under 
development. Nearly half of the total global pipeline of new 
medicines is comprised of biologic medicines. They are some of 
the most innovative and promising for patients, including 
patients with Alzheimer's, cancer, and rare debilitating 
diseases. These medicines are also some of the most difficult 
and costly to develop. On average, it costs $2.6 billion to 
develop a new medicine and the total investment in research and 
development related to emerging cures and treatments was $71.4 
billion in 2017. USMCA as originally negotiated reflected these 
intensive cost factors impacting consumer access. The 
researchers innovating these medicines cannot succeed without 
strong, global intellectual property standards.
    The unfortunate impact of eliminating this provision is the 
precedent it sets in other major markets, including China, and 
the message it sends to free-riders throughout the world that 
America will not stand by its pre-eminent biopharmaceutical 
industry and its life-saving innovations. The USMCA should not 
set the standard for future trade agreements in this important 
respect.

    ADDITIONAL VIEWS OF SENATORS ROBERT MENENDEZ AND MARK R. WARNER

    This report must take note of the inappropriate and 
unprecedented manner in which President Trump treated our 
partners, Canada and Mexico, during the USMCA negotiations.
    In 2018, President Trump imposed tariffs on steel and 
aluminum imports from several countries, including Canada and 
Mexico, claiming that imports from these countries posed a 
threat to national security. Canada is a critical ally, a key 
partner in defense and intelligence activities, and a country 
with which the United States shares an interconnected defense 
industrial base. Canadian officials were rightly outraged by 
President Trump's labeling of Canada as a national security 
threat. That action has taken a severe toll on U.S.-Canada 
relations.
    In May 2019, President Trump announced via Twitter a tariff 
on goods imported from Mexico that would increase steadily 
unless Mexico stopped the flow of migrants into the United 
States. President Trump then extended his demands against 
Mexico beyond immigration, insisting Mexico stop an 
``invasion'' of drug dealers and cartels. Although President 
Trump did not follow through on his threat, that behavior was 
insulting to Mexico and made the United States a less reliable 
trading partner in the eyes of many nations. In addition, the 
President's past insistence that Mexico pay for a border wall, 
aggressive rhetoric on migration, and insults against Mexicans 
have made it more difficult for the United States and Mexico to 
work constructively to address common threats.
    President Trump failed to treat Canada and Mexico with 
dignity and respect throughout the negotiating process. That 
behavior may make it harder for the United States to reach 
agreement with our trading partners on future enforcement 
disputes that may arise under USMCA. While the President may 
claim that these actions helped secure a better trade deal, 
most members of the Committee know this to be false. This 
agreement was concluded in spite of, not because of, the 
President's ill-conceived tactics. They should not be repeated.

   ADDITIONAL VIEWS OF SENATORS TOM CARPER, BEN CARDIN, AND SHELDON 
                               WHITEHOUSE

    Certain elements of this report related to USMCA's 
Environment Chapter and the USMCA Implementation Act require 
further elaboration. First and foremost, we are disappointed 
that USMCA does not explicitly speak to climate change, one of 
the most pressing issues facing the world today. It is our view 
that American domestic and foreign policy must aggressively 
address climate change through actions including recommitting 
the United States to the Paris Agreement and ratifying the 
Kigali Amendment to the Montreal Protocol, and our FTAs should 
reflect such an approach.
    In addition, it is our view that the USMCA Implementation 
Act's appropriations for monitoring and enforcement of our 
trading partners' environmental commitments under USMCA are 
both necessary and appropriate to implement the Agreement. In 
our view, future implementing bills should follow the precedent 
set by the USMCA Implementation Act and provide the resources 
necessary to ensure that the environmental obligations in our 
trade agreements can be fully carried out.
    We also strongly support the improvements in USMCA over 
NAFTA--particularly language in the Protocol of Amendment that 
(1) creates a presumption that violations of USMCA 
environmental obligations affect trade and investment and (2) 
closes a loophole carried over from NAFTA that would have 
prevented environmental enforcement by allowing Parties to 
block dispute settlement panels. These improvements ensure that 
the Parties' obligations under USMCA's Environment Chapter, 
including commitments under seven multilateral environmental 
agreements, can be fully enforced.
    Finally, we wish to highlight the importance of new 
environmental monitoring and enforcement bodies and mechanisms 
created by the USMCA Implementation Act. These include the new 
Interagency Environment Committee that oversees implementation 
of USMCA's environmental obligations; a new mechanism to 
trigger environmental reviews that gives stakeholders an 
expanded role in environmental enforcement matters; the 
establishment of environment-focused attaches in Mexico City; 
and additional reporting requirements to better assess the 
status of Mexico's environmental laws and regulations. In 
conjunction with the dedicated funds for environmental 
monitoring and enforcement, these new mechanisms will help 
ensure that those that violate the USMCA's environmental rules 
can be held accountable. We are closely watching how this and 
future Administrations use these tools and hope they can serve 
as a model for other trading relationships.

                 ADDITIONAL VIEWS OF SENATOR BEN CARDIN

    I want to expand on one important modernization in USMCA. 
The Agreement included the first-ever standalone chapter on 
small and medium-sized enterprises (SMEs). While previous trade 
agreements have included provisions on market access for SMEs, 
the inclusion of a standalone chapter is an essential 
improvement to our trade agreements and should be considered as 
a model going forward. Furthermore, the SME chapter explicitly 
includes language to ensure promotion of SMEs owned by diverse 
and under-represented groups, including women, indigenous 
people, youth and minorities. It is critical this chapter's 
provisions on diverse and under-represented groups be carried 
out under the terms of the Agreement.

               ADDITIONAL VIEWS OF SENATOR MARK R. WARNER

    Robust trading relationships improve our nation's economy, 
and I'm optimistic that this trade agreement will help American 
farmers, ports, manufacturers, retailers, and workers. Overall, 
I'm confident that the Agreement will provide the consistency 
and stability the business community needs.
    However, I want to note that I have serious concerns with 
the inclusion of safe harbor language modeled on Section 230 of 
the Communications Decency Act (Section 230). Section 230 
represents a 1990s approach to internet policy--one that failed 
to foresee the structure, business models, and market 
concentration of today's internet platforms. Congress has begun 
an important, bipartisan debate about whether Section 230 is 
working as intended, and many--including prominent civil rights 
groups--believe that Section 230 has allowed internet 
intermediaries to ignore the misuse of their platforms by bad 
actors, even as they're repeatedly used to harm consumers, 
suppress voting, and facilitate racial and gender 
discrimination. Congress amended Section 230 for the first time 
in 2018. Just two years later, over a dozen bills have been 
introduced to amend this 1996 law. These efforts include 
proposals from bipartisan members of Congress, the Department 
of Commerce's National Telecommunications and Information 
Administration, and the Department of Justice. The Chairs of 
both the Senate Commerce Committee and the Senate Judiciary 
Committee have sponsored bills amending Section 230. In the 
United States House of Representatives, the Chair and Ranking 
Member of the committee of jurisdiction have expressed serious 
reservations with including Section 230 in our trade 
agreements.
    Within the context of this robust and active debate, 
including safe harbor provisions similar to Section 230 of the 
Communications Decency Act into our trade agreements--which has 
not been done in a single free trade agreement since the law 
was first enacted in 1996--was a mistake. Congress has begun a 
serious review of the underlying premises of Section 230 in 
light of substantive changes in how consumers interact with 
technology, ever-wider interpretations of the immunity the law 
confers by courts, and clear abuses of the law by platforms. It 
is my hope that USTR recognizes this ongoing and widespread 
legislative effort and refrains from negotiating for the 
inclusion of intermediary safe harbor provisions in future 
agreements, at least until Congress is able to build an 
effective policy framework for these 21st century problems.

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

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                  [all]