Democratic senators demand worker gains in USMCA review

A group of Democratic senators will issue a set of demands to U.S. Trade Representative Jamieson Greer ahead of a mandatory joint review of the U.S.-Mexico-Canada Agreement this summer.

In a letter led by Sen. Tammy Baldwin, D-Wis., and shared exclusively with CNBC before being sent later Wednesday, 15 Democrats wrote to Greer to "insist that any revised agreement must deliver meaningful and measurable gains for American workers."

The USMCA, struck during President Donald Trump's first term, is up for review on July 1. While initially touted by Trump as "the fairest, most balanced, and beneficial trade agreement we have ever signed into law," the president has soured on the pact lately — slapping Mexico and Canada with tariffs during his second term.

Greer has also, in testimony to Congress in December, said that "a rubber stamp of the Agreement is not in the national interest," meaning that significant changes may be required to reapprove the agreement or disapprove and enter into a cycle of yearly reviews.

The Democrats are demanding new provisions on the labor front of the agreement, asking that Greer use the review to "lift all boats by ensuring that both Canada and Mexico fully comply with their labor commitments."

The letter writers targeted seven priorities they would like to see addressed in the review. First was business relocations to Mexico. They said the USMCA has fallen short on keeping businesses in the U.S., pointing to manufacturing wages in Mexico, which they say create a wage gap that is leading to offshoring.

"With workers in the Mexican automotive and electronics manufacturing sectors still only earning $3 to $5 per hour and Mexican manufacturing worker pay lower than in China, U.S. companies continue to offshore at alarming rates and use the threat of offshoring to depress U.S. wages," the senators wrote.

The lawmakers also called on Greer to push for Mexico to enforce its labor laws, a failure which they say has "both harmed Mexican workers and contributed to a persistent wage gap with American workers that leads to offshoring."

The Democrats also asked Greer to find new ways to enforce bans on goods created with forced labor, which they say all parties have failed to enforce.

"The joint review should identify concrete actions all three parties can take to improve enforcement, including regular public reporting on enforcement data and protocols to share intelligence underpinning enforcement actions," they wrote.

Addressing Chinese investment, which also came up as an issue during Trump's recent trip to Beijing, is also among the Democrats' demands. They called to curb Chinese investment in Mexico specifically, alleging Chinese companies are setting up manufacturing facilities to skirt strict U.S. trade laws.

"It is critical to address this loophole in the review of the Agreement to prevent its use as a backdoor to the North American economy by third-party actors, particularly our adversaries," they wrote. "Combatting China's unfair trade practices will take global cooperation, and the review can present a model of how countries can work together to counter this threat."

Another way the Democrats suggested countering China's advance into the North American supply chain is by introducing new rules of origin requirements for additional sectors. China's pervasiveness in components for manufactured goods like autos has recently become an issue in Washington.