USMCA Mandates Change

November 28th, 2019

The USMCA, the United States – Mexico – Canada Agreement and replacement for NAFTA, is a trilateral trade agreement that, when passed in the next few months, will enhance North American economic activity, will increase protection for intellectual property, and will screw over the Canadian civil service.

Readers will recall our coverage of the Canadian Standards Association’s (CSA) ongoing violations of NAFTA.  The NAFTA provisions the CSA’s been violating aren’t watered down in the USMCA.  Rather, the USMCA’s equivalent provisions are a lot more dangerous to the civil service.  The CSA’s really screwed with USMCA.  How so?

As reported, “ice hockey helmets [in Canada] must meet the requirements of standard Z262.1, entitled Ice Hockey Helmets, published by the Canadian Standards Association, as amended from time to time.”  This quote is from Federal Regulation SOR-2016-186.

First, note that all helmets, regardless of manufacturer, must comply specifically with CSA’s regulations.  No other helmet regulation from, say, a US or Mexican regulatory body, is acceptable.  That’s a no-no. 

Next, note the “Accepted-as-Amended” provision of the last line of the regulation.  We’ve reported on these before; they give CSA the power to change the law to their liking, for whatever reason and however often they like, without Parliamentary vote or even notification.  That’s legislative power folks, without oversight.

Well, the hockey helmet thing is just an example, there’s no shortage of such examples, but it’s a relatable example, so we’ll run with it.  Here’s the problem….

“Members shall ensure that in respect of technical regulations […] any Member shall be accorded treatment no less favourable than that accorded [to any other] originating in any other country.”

This is from the Technical Barriers to Trade subsection of USMCA.  It’s not the only such reference.

“Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.” – TBT 2.2

“Members shall give positive consideration to accepting as equivalent technical regulations of other Members, even if these regulations differ from their own”. – TBT 2.7

“Procedures are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. “ TBT – 5.1.2

See what’s going on?  The USMCA does not accept legislated monopolies, single specific standards to keep out US / Mex equivalent products.  Yet that’s exactly what CSA’s got going, all the time.

“Conformity assessment procedures are undertaken and completed as expeditiously as possible and in a no less favourable order for products originating in the territories of other Members than for like domestic products.”  - TBT 5.2.1

So they can’t rig the regs to shut out US products or to boost revenues by artificially increasing product testing to specifically CSA standards.

And the Canadian mandate that helmets, amid the massive pile of other products, must be CSA labeled -specifically CSA labeled?

“In order to avoid disrupting North American trade, […] each Party shall ensure that its technical regulations concerning labels 1) accord treatment no less favorable than that accorded to like goods of national origin; and 2) do not create unnecessary obstacles to trade between the Parties.”

Nope, they can’t mandate their own labels anymore either.  This could be mighty costly to CSA.  Have you considered how much business CSA would lose if they couldn’t force people to deal with them?

Then the biggie;  “No Party shall accord any preference to the consideration or use of standards that are developed through processes that […] treat persons of any of the Parties less favourably than persons whose domicile is the same as the standardization body.” 

That, friends, is terminal to CSA’s comfy monopolies.

Then it gets worse for CSA.  Much worse. 

The USMCA is awfully specific in matters of transparency in the drafting of regulations.  None of it is helpful to CSA; all of it requires massive change at CSA, mostly the costly kind.  For instance…

“If a Party prepares or proposes to adopt a technical regulation or conformity assessment procedure […] the Party shall: 1) publish the proposed technical regulation or conformity assessment procedure; 2) allow persons of another Party to submit written comments during a public consultation period on no less favorable terms than it provides to its own persons; and 3) publish and allow for written comment in accordance with subparagraphs (1) and (2) at a time when the authority proposing the measure has sufficient time to review those comments and, as appropriate, to revise the measure to take them into account”.  USMCA Article 11.7 – Transparency

So how do you suppose CSA will reconcile the above public posting and public consultation requirements with their current practice of refusing public posting and ignoring public consultation? 

The USMCA is unrelenting on this point. 

From the same section; “Each Party shall publish the final technical regulation or conformity assessment procedure and an explanation of how it has addressed substantive issues raised in comments submitted in a timely manner.”

And again;  “Each Party shall ensure that its central government standardizing body’s work program, containing the standards it is currently preparing and the standards it has adopted, is published”.

The USMCA requires “sufficient time” between the announcement of a new regulation and its enforcement, this to give people time to learn of the new law and adapt their practices to comply with it.  And how much time does USMCA require?  “Each Party shall normally allow 60 days….”

Even their Annexes reinforce the 60-Day Public Review requirements; “Before adopting a standard, the standardizing body shall allow a period of at least 60 days for the submission of comments on the draft standard by interested parties within the territory of a Member of the WTO.”  Annex 3: Substantive Provisions

Readers will recall that we sought an injunction against CSA due to their violation of Canada’s 60-Day Public Review laws.  The Court Ruled that indeed, CSA was “clearly” in violation of law.  The USMCA, once passed, will require exactly what Canadian law has required, what the Court Ruled CSA’s been ignoring, and what neither US nor Mexico will ignore going forward.

Readers may also recall the civil service’s rather tepid argument that they had indeed complied with full public review by posting snipets of changed text, intermittently and at random intervals, over a period of three years.  The USMCA doesn’t allow this.

“Each Party, when making a notification under Article 2.10 or Article 5.7 of the TBT Agreement, shall at the same time transmit electronically the notification and text of the technical regulation or conformity assessment procedure, or an online address where the text of the measure can be viewed”.  USMCA Article 11.7 – Section 15

Note the wording; “…and text of the technical regulation.”  That’s the whole thing folks, not just some selected snipets of amendment.

See?  Screwed.

And what of Manson’s Law?  Well, any Ruling or legislation that delegitimizes the public nature of national regulations is a non-started with USMCA.  Of course, it’s already a non-starter with Canadian governments, the Court, the civil service itself, it’s negotiators and legal counsel, and so on.  But there are impressive compliance provisions in the USMCA. 

We’re pleased as punch over the regulatory provisions of USMCA text and its compliance procedures.  As the Canadian civil service doesn’t control the Courts of the other USMCA Parties, well, we’ve got some tantalizing enforcement options coming in 2020. 

There’s something sweet about bureaucrats being screwed over by other bureaucrats on the basis of breaches of bureaucratic text drafted by, in part, their own bureaucrats.

I’m a fan of irony.