USMCA Part Three: What to Do about Joint Review

The United States-Mexico-Canada Agreement (USMCA) joint review process is scheduled to begin on July 1, 2026, but the time to prepare is now. Embedded trade compliance professionals should already be doing scenario analysis—pulling data, calculating the supply chain impacts of potential changes, and helping their companies to strategize accordingly. Readers who wish to pursue their interests through formal channels may submit written materials to the government during the public comment period, which should open no later than October 1, 2025. United States Trade Representative (USTR) Jamieson Greer will consider public comments as he drafts his joint review recommendations, due to Congress by the end of December. Prudent stakeholders may choose to begin their work early, and broaden its scope, by reaching out to legislators and relevant executive agencies, either directly or indirectly through industry associations, lobbyists, consultants, and attorneys. The President and USTR are charged with defending US interests, including yours, in the actual joint review negotiations.

Any subject is fair game, in particular because the Trump administration will likely use the threat of tariffs as a general-purpose bargaining tool. Whether you would like to include specific language in the USMCA or persuade the administration to factor your interests into its negotiations, you should participate. Outside the avenues of participation listed above, you can wait until some aspect of the USMCA or its review process causes you a redressable injury and then litigate or you can preemptively restructure your business to withstand the incoming waves of tariffs and retaliations—or perhaps there will be some sort of process for seeking case-by-case exceptions or remedies, as with Section 232 tariffs.

All of these ways to participate are worthwhile. But this article’s goal is to prime readers—not only for USMCA joint review process, but also for what lies beyond in trade policy—by calling out who is involved and who is not. It is about the USMCA’s (and other trade agreements’) participatory structures, and whether they contribute to the kind of “worker centered” trade policy that both of the competitive 2024 presidential candidates promised. It will be of greatest interest to those who find formal channels too narrow, and participation too shallow, for representatives in trade negotiations to meaningfully defend their interests.

President Biden, Vice President and former presidential candidate Harris, and President Trump all promised a trade policy that works for everyone—not just for investors or multinational corporations or industries favored for national security or other policy reasons, but for all ordinary people. They promised a common prosperity. Both the previous and current administrations have recognized the negative impacts of free trade agreements on workers, self-sufficiency, and supply chain resilience. Both administrations have proposed to mitigate these impacts by using trade policy to boost domestic manufacturing through global competition, especially with China, in sectors of the economy that they deem critical to national security. Despite these apparent similarities, there are important differences between the administrations’ approaches. The previous article in this series anticipated that Harris’s trade policy would have expanded on former USTR Katherine Tai’s “worker centered” approach. Tai’s approach aimed to achieve its version of common prosperity by producing the things that the world needs for economic growth in the context of climate change; outcompeting philosophically incompatible political-economic systems such as China’s; and safeguarding workers’ interests by elevating labor, environmental, and other standards within a network of allied supply chain partner countries. Under Harris, trade policy would have relied on multilateralism and gone hand-in-hand with a domestic industrial policy that subsidized growth in industries critical to national security such as renewable energy, electric vehicles, semiconductors, and critical minerals.

A different set of priorities powers the Trump administration’s approach. The previous article highlighted five trade policy recommendations from former USTR Robert Lighthizer’s 2023 book No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers. Lighthizer, who laid the groundwork for the Trump administration’s trade policy, prioritizes:

1. Compelling reciprocity by vigorously enforcing existing trade remedies (e.g., antidumping and countervailing duties);
2. Demanding fairness under threat of unilateral action (e.g., imposing Section 301 tariffs or threatening to withhold market access during USMCA negotiation);
3. Setting minimum standards to cancel out unfair advantages (e.g., weak labor and environmental regulations or currency manipulation);
4. Incentivizing domestic production, but ideally without subsidies (e.g., by creating an investor-friendly regulatory environment); and
5. Attacking the trade deficit (i.e., creating a surplus, where the value of exports from the US exceeds the value of imports to the US).

Overall, these recommendations prioritize a sort of “fairness” judged by whether trade partners purchase an equal value of goods from the US as the US purchases from them, and whether trade partners maintain a competitive advantage in global markets through domestic policies that the administration views as market-distorting. Tariffs, in this framework, are an all-purpose bargaining tool for granting or restricting access to US markets. Although Ambassador Lighthizer, to many observers’ surprise, is not part of the current administration, his basic framework seems to remain intact. Current USTR Jamieson Greer is his protégé, after all, and equally emphasizes each of the above priorities, as well as competition with China.[1] But President Trump has appointed a whole team of economic advisers with distinct views on trade, and announced his preference that the Commerce Secretary “lead our Tariff and Trade agenda, with additional direct responsibility for the Office of [USTR]”.[2] Regardless of whether the law upholds that reporting structure (see Section 141 of the Trade Act of 1974), the de facto hierarchy of advisers will persevere.[3] Stakeholders hoping to anticipate and influence the outcome of the USMCA joint review process, or trade policy more broadly, will therefore benefit from an understanding of the President’s advisers and their views.

The current Commerce Secretary is Wall Street financier and artificial intelligence (AI) investor Howard Lutnick. He is a former supporter of the Democratic Party and a current supporter of broad tariffs, harsh measures against China, and cryptocurrency.[4]Like Lighthizer, Lutnick frames tariffs in terms of “fairness” in the balance of trade. “Finally, someone’s going to protect the American worker,” he recently proclaimed.[5] “If we said [to places like Europe and Japan], ‘We’re going to tariff you the way you tariff us,’… [then] they’re going to come and negotiate, and their tariffs are going to come down, and finally Ford and General Motors are going to be able to sell into these places.”[6]

Although Lutnick favors tariffs over the style of industrial policy that the previous administration championed, he is not averse to government support for critical industries. In 2022, as Chairman and CEO of investment firm Cantor Fitzgerald, he teamed up with former Treasury Secretary Steven Mnuchin to acquire the Uruguayan Earth-observation satellite company Satellogic via merger with a special purpose acquisition company (SPAC).[7] Through the merger, Mnuchin and Lutnick aimed to create “new types of markets”, both government and commercial, related to data analysis in solar, climate change, supply chain, energy, food security, and other critical industries. Satellogic is more of a data company than a space company, and has partnered with both Elon Musk’s SpaceX and Peter Thiel’s Palantir. Regarding national policy objectives, Lutnick’s support for Satellogic’s work suggests an underlying belief that supremacy in data technology correlates to competitiveness and prosperity. “[If] you can count every tree [and] literally remap the earth every day,” Lutnick argues, then you can unlock enormous economic decision-making power for policymakers—perhaps even the ability to “end the concept of climate change“. “Together with [Secretary Mnuchin] helping us walk into these great potential clients… [Satellogic] is going to completely change the way people view space imaging.” And because technology firms such as Satellogic can gather unprecedented quantities of data, they can offer it to consumers—governments, insurance companies, farmers, and so on—at very economical prices.

As Commerce Secretary, Lutnick oversees more than a dozen bureaus, including the Bureau of Industry and Security (BIS) and the International Trade Administration (ITA), and is responsible for creating and enforcing trade and other policies meant to foster economic growth and opportunities for all Americans, including managing export restrictions on technology, distributing subsidies under programs such as the CHIPS and Science Act, and regulating AI. “The sooner the market […] squares with the [Federal Reserve],” Lutnick says, the sooner these technology initiatives can take off.[8]

In close and continuous consultation and cooperation with the Federal Reserve, former Soros Fund Management partner and current Treasury Secretary Scott Bessent manages US fiscal policy and public debt. As an investor and hedge fund manager, Bessent’s expertise lies primarily in global financial markets, not trade policy per se, but as one of the administration’s top economic advisers he is tasked with defending its trade strategy before the Federal Reserve and global financial authorities. Bessent is particularly attentive to the relationship between his work and the trade deficit. “Interventions at the macroeconomic level, like broad-based tariffs, will be more effective than microeconomic interventions like industrial policy,” he recently wrote, gesturing toward Biden administration initiatives such as the Inflation Reduction Act (IRA), which dedicated public dollars to domestic manufacturing and clean energy production.[9] Bessent has recommended that the administration place countries into different “buckets” based on whether their currency regulations, trade and security agreements, and other policies satisfy Lighthizer’s concept of “fairness.” Countries with “unfair” policies would fall into buckets with high tariff rates. Countries with “fair” policies would fall into buckets with low tariff rates. To ensure predictability for the market, he says, the government should clearly lay out what actions a trade partner would need to take to move between buckets.

Despite his preference for these kinds of macroeconomic interventions, Bessent is also sensitive to sectoral needs. For example, he expressed heightened sensitivity to the needs of corn and soybean farmers during his confirmation hearing, explaining that his own family is “involved in the farming business.” Having previously derived a portion of his wealth from several thousand acres of cropland that he owned in North Dakota, he is motivated to pressure China to increase imports of agricultural commodities from the US, a condition of the “Phase I” deal from President Trump’s first term that China has never satisfied. “The American farmers have been very loyal,” Bessent remarked. “Ninety percent of rural voters voted for President Trump, so they should know that their interests are his interests.”[10]

Similarly attentive to financial markets is Hudson Bay Capital Management investment strategist, cryptocurrency advocate, and chairman of President Trump’s Council of Economic Advisers (CEA) Stephen Miran. Holding a PhD in economics from Harvard, Miran leads the White House’s research on domestic and international economic policy matters, as well as relevant interagency coordination. He traces Americans’ “deep unhappiness with the prevailing economic order” to the “persistent overvaluation of the dollar and asymmetric trade conditions.”[11] Responding to the administration’s dueling policy preferences to preserve the US dollar’s strength and status as global reserve currency and to reverse the trade deficit, he suggests that both are possible through tariffs—and without increasing prices to US consumers.

Many trade practitioners have long wondered what the administration means when it says that China, or any other exporter, pays for tariffs. Miran offers an explanation: Citing a recent study that found that the 2018-2019 US-China tariff war depreciated the renminbi[12], Miran argues that tariffs should theoretically strengthen the tariff-imposing country’s currency relative to the exporting country’s currency. As a result, “American consumers’ purchasing power isn’t affected… exporters’ citizens [become] poorer… [and] the exporting nation [therefore] ‘pays for’ or bears the burden of [tariffs].”[13] The economic model that ensures this “currency offset”, Miran acknowledges, relies on numerous assumptions about unpredictable variables that determine whether tariffs are inflationary. But, taking the long view, Miran points out that even if there is no currency offset and the burden does fall on American consumers, higher prices will over time “incentivize a reconfiguration of supply chains,” meaning that “American producers will have improved competitiveness selling into the American market”.[14] He does not specify whether those producers would manufacture their goods within American borders, but he does estimate that the administration’s overall approach of combining tariffs with low taxes and aggressive deregulation can “make America a more attractive place to invest and hire than other countries”[15] for all potential employers, highlighting as one possible opportunity the President’s openness to Chinese foreign direct investment (FDI) in automobile manufacturing and other US industries.[16] Readers may recall precedents such as Smithfield in Iowa, Foxconn in Wisconsin, or Fuyao Glass in Ohio.

All considered, tariffs appear to play a leading role in the Trump administration’s version of a “worker centered” trade policy, and to replace the Biden administration’s overall industrial policy. Two of the administration’s National Economic Council (NEC) advisers, Chair Kevin Hasset, and special assistant Cale Clingenpeel, have claimed that Biden, Harris, and Trump were always “singing from the same hymnal” on tariffs.[17] President Biden did retain President Trump’s tariffs, but a closer look at relevant officials’ priorities and perspectives, as presented above, belies Hasset and Clingenpeel’s claim. Former Biden CEA chair Jared Bernstein, whom Miran replaced, publicly remarked in 2023 that investors and corporate interests had captured the trade negotiation process. Even neoliberal bogeyman and Obama NEC Director Larry Summers, Bernstein observed, has acknowledged that “’the globalization agenda […] was set by large companies that successfully play one country against another,’” concluding that “globalization offers opportunities to a fortunate few to avoid taxes and regulations that are not available to everyone else.”[18] The previous administration’s “worker centered” trade strategy aimed to correct this imbalance, combining tariffs with multilateral standard-setting and subsidies for industries critical to national security in the era of climate change; the current administration aims to harness it, using tariffs to grant or restrict access to US markets depending on the “fairness” of trading partners’ domestic policies and incentivizing financial investment through tax-slashing and competitive deregulation. Hasset and Clingenpeel might have overlooked these and other deep divergences when they equated tariff rates with trade policy, but if they had made the same claim with regard to the process of making trade policy, then they would have been onto something.

Finding a way in

            Ambassador Tai’s “worker centered” approach to trade, as an element of the previous administration’s broader industrial policy, relied on bilateral and multilateral negotiations. Examples include the Indo-Pacific Economic Framework for Prosperity, the US-Kenya Strategic Trade and Investment Partnership, the Joint Declaration Against Trade-Related Economic Coercion and Non-Market Policies and Practices, the Mineral Security Partnership, and the International Technology Security and Innovation Fund, among many others. Notably, these negotiations aimed to create productive alliances, and were driven by relationship-building through shared standards, values, and goals rather than tariffs and market access. Whatever its mandate, the office of USTR leads or stewards negotiations, serving at the pleasure and direction of the President, who develops his trade strategy with assistance from his cabinet and other advisers—the people introduced above—and within parameters established by the Constitution and Congress.

At the beginning of this article, readers learned that they can attempt to influence the USTR through public comment, lobbying, and outreach before he submits his joint review recommendations to Congress and then heads into negotiations with his counterparts from Mexico and Canada, where he will take direction from the President and perhaps, in this administration, from the Commerce Secretary. Considering both administrations’ promise to deliver a trade policy that improves workers’ lives, readers might reasonably wonder about the ability of the USTR, a lone appointed representative, to defend workers’ interest. If you make your living in a field or an office, at a grain elevator or on an assembly line, moving freight or clearing shipments, in purchasing or engineering, as an attorney or virtually any other type of laborer, or owning a small or medium-sized business with some connection to global supply chains, then international trade affects your interests. Trade policies have already impacted your life, in many cases directly. And USMCA joint review will touch you. But even after reading this article, even knowing how to influence the process, are you confident that you would be able to do so effectively? And if your answer is ‘yes,’ do you believe that the USTR will be able to use your feedback to defend your interests?

Historically, questions of democratic accountability and legitimacy in trade policy have focused on the proper division of responsibility between Congress and the executive branch. Although the Constitution grants Congress the power to “lay and collect [duties]” and to “regulate commerce with foreign nations”,[19] it has delegated a great deal of responsibility to the President over time. Trade Promotion Authority (TPA), also known as “fast track” authority, is a classic example. TPA grew out of the Reciprocal Trade Agreements Act of 1934 which, for the first time, ceded part of Congress’s tariff-setting authority to the President, empowering the President to negotiate trade deals and effectively tying the executive’s broader policy priorities to trade—and particularly to trade liberalization, as the main bargaining chip was reciprocal reductions in tariff rates and other trade barriers. This system, later codified as TPA in the Trade Act of 1974, does not give the President free reign in trade negotiations, as any trade agreement requiring changes to US law (such as USMCA) cannot take effect without congressional approval. Instead, TPA functions as a sort of pre-authorization, a set of parameters for negotiation within which the President knows he can maneuver.

Some observers have argued that trade agreements have too deep an impact on the American people, not to mention the global economy, to bypass the deliberation involved in full legislative procedures via TPA. A similar critique of free trade agreements (FTAs), including USMCA, is that they function as a sort of eternal TPA, setting terms that never expire, liberalizing capital flows and securing their freedom from congressional scrutiny. This enduring quality that trade agreements have, in fact, was one of Lighthizer’s core trade concerns and the reason he championed USMCA’s joint review process.

But Tai’s “worker centered” negotiations with supply chain allies and Lighthizer’s “Phase I” deal with China illustrate a different trend and display a form of executive discretion beyond what TPA or FTAs permit. Kathleen Claussen, Professor of Law at Georgetown, calls the deals that arise from such negotiations—conducted without congressional oversight, testing the boundaries of the president’s constitutional authority—“trade executive agreements” (TEAs). In recent decades, the executive branch has increasingly made use of TEAs to achieve a variety of political and economic goals, not limited to equal tariff treatment but extending to numerous other policy priorities. “Since the 1990s,” Claussen explains, “TEAs have been distinctly legislative or regulatory in that they create rules for private parties, for US government actors, or for foreign government actors.”[20] These rules may relate to any number of non-tariff barriers to trade, from food safety and intellectual property rights to environmental protections and labor standards. Claussen points out that more than a dozen US agencies under Commerce, Treasury, and other departments oversee and regulate trade-related subject matter. In her view, “TEAs are unorthodox instruments in the administrative state and ought to be examined as such.”[21]

            Without the congressional preauthorization or parameters of TPA or an FTA, trade negotiations are restricted to matters that the partner countries’ delegates can resolve outside of legislative processes. As a result, TEAs are a limited tool, useful primarily for achieving specific, narrow objectives. Lighthizer saw this “silo effect” as a strength. While negotiating the “Phase I” deal with China, for example, he “was able to isolate the issues over which USTR had authority from other irritants in the relationship”, which allowed him to make progress in spite of general tensions.[22]  Tai appears to have taken advantage of the same basic strategy, attempting to secure international commitments in areas of clear executive authority (e.g. labor and environmental standards, supply chain security) through frameworks rather than agreements, per se, leaving complementary legislative reform to the domestic political process (e.g. IRA, CHIPS and Science Act). An important outcome of this approach was to coordinate trade agreements with domestic policies, keeping them siloed according to constitutional and statutory limitations, but incrementally constructing a coherent industrial policy meant to boost and secure US manufacturing capacity–and without sacrificing the benefits of tariffs.

            Even when the executive branch chooses to exercise its trade authority conservatively, TEAs present a deeper version of the democratic accountability question in trade policy. As Claussen observes, “we lack a sense of the role of bureaucrats as compared to political appointees in TEAs’ drafting and promotion, or how interest groups and foreign countries activate and motivate them.” Nor, she argues, do we have “a clear sense as to how these TEAs influence trade volumes and supply chain configurations.”[23] Well-financed entities with disproportionate access to executive offices, such as USTR or Commerce or Treasury, might be pleased with their representation in TEAs. But those entities’ interests do not necessarily align with yours, or mine, or anyone else’s. By bypassing congressional oversight, TEAs shield well-financed entities from exposure and force the rest of us to rely on a single vote for a single person, the President, to defend our interests as ordinary working people.

In his 2000 book The America We Deserve, Trump wrote that as President he would appoint himself to the position of USTR.[24] By publicly threatening to unilaterally impose tariffs on Canada and Mexico in the lead-up to joint review, contingent on those countries’ acquiescence to certain changes to their domestic policy, President Trump seems to have blurred the line between President and USTR—and between TEAs and FTAs, including USMCA. But even within congressionally approved joint review procedures and other statutory limitations, there is a lack of transparency around executive decision-making in trade. As noted above, USTR takes direction from the President, and now perhaps from the Commerce Secretary. In addition, USTR chairs and administers the Trade Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC), an extensive interagency process for coordinating trade policy among 21 executive branch agencies, from the Department of Agriculture and the Environmental Protection Agency to the Department of Labor and the Department of Defense. “USTR has an outsized influence in the TPSC process… [and can even] redirect other agency actions in the shaping of TEAs,” Claussen notes. “Sparse public discussion of the deliberative process in that setting means we know little about what actually goes on” in what she calls the “foreign commerce bureaucracy”.[25] By resting authority over trade policy within these decision-making structures, Congress yielded an impressive degree of unilateral power to the executive. Through those structures, using tariffs and TEAs, the President has broad authority to achieve a wide range of policy objectives, so long as they are narrow enough that they do not require legislative reform. The current administration’s trade strategy self-consciously replaces congressionally-backed industrial policy with this form of executive authority.

Structural inclusion through USMCA

            Notwithstanding the analysis above, Ambassador Lighthizer negotiated—and Ambassador Tai enthusiastically defended—a mechanism for worker representation in USMCA: the Facility-Specific Rapid-Response Labor Mechanism (RRM). In Lighthizer’s framework, the RRM is a tool for canceling out unfair advantages by enforcing minimum labor standards. As the previous article in this series explained, the “RRM allows any USMCA partner country to impose tariffs or other penalties on goods and services imported from facilities believed to have denied workers’ collective bargaining rights, and to suspend liquidation of duties temporarily while the matter is under investigation.”[26] In practice, the RRM is only fully available for use against Mexican facilities, as USMCA’s terms subordinate complaints against US and Canadian facilities to those countries’ domestic administrative remedies. The RRM is also available only against facilities competing in what the partner countries deem to be “priority sectors”. So far, cases have been largely limited to the automobile sector, an industry with ample representation in trade spaces. Overall, the theoretical effect of the RRM’s design is to directly protect some workers in specific sectors in Mexico, and to indirectly benefit US workers in general by disincentivizing a race to the bottom in labor standards between US and Mexican firms.

Partner countries identify labor violations through a complaint system. The government may initiate complaints on its own, and the Interagency Labor Committee for Monitoring and Enforcement (ILC), which USTR co-chairs with the Department of Labor, also runs a web-based hotline where individual workers may submit complaints anonymously. However, interest groups account for the majority of complaints so far. Unfortunately, despite “hundreds of thousands of dollars of US assistance in Mexico and dozens of RRM cases,” a recent study found “no evidence that working conditions [improved] in the Mexican auto sector” overall.[27] Working conditions did improve, however, for workers who received direct assistance from the US government through USMCA’s remediation plans—and “all facilities that faced RRM investigations and remediation plans had workers who were assisted by US unions and [non-governmental organizations, or] NGOs.”[28] Overall, the RRM seems to have protected some workers in Mexico, but only where US unions and NGOs augmented their associational power. It does not seem to have benefited workers more generally, on either side of the border.

            Nevertheless, former International Labor Organization (ILO) attorney and University of Georgia School of Law Assistant Professor Desirée LeClercq, who spent four years working for Lighthizer’s USTR Office and co-authored the study cited above, believes that the Trump administration is likely to defend the RRM, presumably throughout the USMCA joint review process. Not only has USTR Greer publicly expressed support for the RRM but, as LeClercq notes, it also “fits squarely within Trump’s objectives to ensure Mexican facilities pay workers the same wages and offer the same types of (costly) workplace benefits as US-based facilities,” eliminating the “unfair advantages” of union suppression, low wages, and mistreatment of workers in terms of production cost.[29] Highlighting the above critique that the RRM protects only “workers in Mexico who are privileged to have an inroad to US stakeholders” such as influential unions and NGOs, LeClercq also suggests that the mechanism would be more effective if the administration took steps to ensure “that workers throughout the trade sectors that compete with workers in the [US] have protected opportunities to build their power and fight for better working conditions.”[30] In other words, to achieve its trade priorities, the administration should invest in making the RRM more transparent and available to all workers in all industries—not just to a narrow slice of the best represented workers.

The administration might try to achieve “fairness” in other ways, consistent with its use of TEAs. For instance, it might suspend preferential treatment under USMCA Article 23.3 or 23.5, attempt to set favorable precedents by initiating strategic RRM cases from the top-down, or use tariffs to apply a more general sort of pressure. LeClercq has speculated that because President Trump is “less beholden” to unions and NGOs than President Biden, he might not have the “same motivation to restrict enforcement [of labor standards through the RRM] for political gain.”[31] However, LeClercq also points out that “trade agreements do not secure commitments to black-letter rules” or compel compliance through threats to withhold market access by imposing tariffs. “Rather, they incorporate […] process-oriented rights that member countries domesticate through active consultations between governments and their workers and employers.”[32] If President Trump and his “foreign policy bureaucracy” continue to make trade policy in a way that excludes all but the most powerful stakeholders, then they will fail to protect workers on the ground. And in that case, if LeClercq is right that the RRM is consistent with the administration’s broader strategy, then it will also fail to enforce standards in a way that achieves the USTR’s priorities.

            The RRM, and President Trump’s transactional approach to trade generally, operate on the assumption that “states will comply with international labor rights as long as the penalties outweigh the benefits of labor exploitation”.[33] In reality, however, as LeClercq’s work suggests, excluded actors are “less likely to comply with their international labor rights commitments than included actors.”[34] Excluded foreign actors, in particular, “cannot predict the costs of noncompliance because they cannot predict how the US administration intends to interpret labor rights under the agreement [and because they have] numerous reasons to question the legitimacy of US enforcement actions”.[35] In addition to operating on the flawed assumption that penalties compel compliance, and in spite of Ambassador Tai’s “worker centered” rhetoric, the Biden administration’s TEA-centered trade strategy was perhaps as “secretive and exclusory” as the current administration’s.[36] This combination of flawed behavioral assumptions and a lack of either transparency or inclusion in policymaking processes, not to mention enforcement, is a structural issue that transcends administrations and appears to have predictable results.

            LeClercq offers several examples of these results from the previous three administrations. In 2015, the Obama administration withdrew preferential market access for Eswatini (a small country, landlocked by South Africa) over the government’s exploitation of workers, in particular women. Eswatini did not agree to the US’s suggested labor reforms. Instead, it simply shifted its exports to South Africa, which did not include labor standards in its trade agreements. “Seven years later,” LeClercq reports, “wages and working conditions [had declined, and] decent jobs ha[d] all but disappeared. The Eswatini government and its factories, on the other hand, ha[d] continued to prosper under readily-available market opportunities and lower labor costs.”[37] In 2019, the Trump administration suspended trade preferences for Thailand, again based on alleged violations of labor rights. Thailand made no reforms. Instead, the threat “provoked the Thai government to encourage affected sectors to find ‘new markets’ and engage in ‘cross-border e-commerce.’”[38] In 2021, the Biden administration took a different kind of action, this time through the RRM, when it bypassed the Mexican government and negotiated a labor agreement directly with a company in Mexico, Tridonex, against which the AFL-CIO and other US groups had filed a complaint. The Mexican government, the business community, and organized labor in Mexico reacted poorly. The Mexican government publicly denounced the US for acting prematurely and unilaterally, also pointing out its own mistreatment of “Mexican migrant [workers] in the agricultural and food processing industries.”[39] The business community similarly denounced the administration, complaining that it “did ‘not allow for the facility to be included in the consultation or remediation efforts resulting from a review’ and failed to offer ‘an opportunity for the facility to submit evidence or attempt to remediate the problem itself.’”[40] And the independent union that had been trying to organize the Tridonex plant—the group whose rights Tridonex had violated—said that it had not been consulted about the agreement at all and did not approve.

            The common thread that runs through these examples, shedding light on fundamental structural flaws in policy-making processes in question, is the procedural exclusion of the most important stakeholders. The intended beneficiaries, workers, do not define the problem—nor do their representative associations, if they exist. They do not create policy goals. They do not help design, review, or implement policies, nor do they provide feedback about the policies’ performance following implementation. They cannot even send delegates to observe the decision-making process. There is no seat for them at the table. Even employers, such as Tridonex, find no empty chairs—at least not until the executive branch and its foreign counterparts, through appointed functionaries, have already crafted the bulk of the bargain behind closed doors. From a strategic governance perspective, a critical weakness of excluding key stakeholders from policy-making processes is that it fails to embed the resulting policy within the parts of society that it is meant to affect, placing responsibility for its success entirely on the decision-makers’ shoulders. And decision-makers who achieve their policy goals by threat of enforcement—for instance, by restricting market access—lose whatever leverage they had over their negotiating partners once they pull the enforcement trigger. As LeClercq’s examples above demonstrate, those partners’ reactions “risk imposing disproportionate costs” on the policies’ supposed beneficiaries—particularly when, in the case of labor, “the corporations within those [partner countries] merely find new markets that are less concerned with labor standards” or do not otherwise attempt to impose on domestic operations.[41] As a result, the policy fails to meet its goals—regardless of whether they are motivated by human rights concerns or the trade deficit. The USMCA joint review process as currently conceived does nothing to address this core structural weakness.

As a remedy, LeClercq recommends integrating stakeholders into trade policy and procedure by requiring that they establish participatory consultative mechanisms. “Textually,” she suggests, rather than attempting to impose standards through pure leverage or zero-sum negotiating tactics, the US “should secure commitments from counterpart governments to establish or maintain consultative machinery.”[42] For example, through joint review, the parties could begin to address the government, business, and labor concerns raised in the Tridonex case by requiring that representatives from all three groups in all member countries review complaints submitted through the RRM and discuss solutions before taking action. LeClercq points to the ILO and the Trade and Technology Council (formed between the US and European Union under the Biden administration) as potential models, noting that they already have forums for multilateral negotiations within a tripartite structure, reserving seats at the table for government, business, and labor representatives.

Although this particular reform would help to legitimize the RRM’s outcomes and increase its utility to a broader range of stakeholders, it does not answer the question of how to include stakeholders in the trade policy-making process more broadly. Within the RRM itself, a combination of additional reforms and improvements to existing mechanisms could deepen stakeholder involvement in useful ways. For example, LeClercq suggests maintaining a public portal for workers and employers to submit complaints and feedback, mandating public announcements of upcoming labor negotiations and advance calls for participation, providing technical and financial support for participation and compliance, and opening additional avenues for civil society participation. Together, these suggestions could dramatically improve the RRM’s function and effectiveness, not to mention its legitimacy as part of an overall trade policy that works for everybody. And if LeClercq is correct that they would enhance standards enforcement in line with the current administration’s goals, then they might be theoretically achievable through joint review. But they do not create space for stakeholders in joint review, outside of the notice-and-comment period, nor do they deter the executive’s unilateral use of TEAs. This article concludes, therefore, by introducing some ideas about how to move toward a more democratic trade policy in what appears to be a new era in international trade.

Beyond inclusion, towards a democratic industrial policy

            This article has mentioned “industrial policy” numerous times. It has also insinuated that both the previous and current administrations developed one, arguing that the former’s policy was comprehensive while the latter’s policy is essentially rooted in presidential authority over tariffs. And finally, this article has attempted to demonstrate how the executive branch has accumulated unilateral power over industrial policy through trade over time, at the expense of ordinary people’s economic interests. Industrial policy, though often equated with centralized economic control through direct subsidies and accused of “picking winners and losers”, is “a deliberate attempt [by government] to shape different sectors of the economy to meet public aims.”[43] It is nothing more and nothing less. For most of living memory, the US’s overall industrial policy has been to avoid having one—or rather, to avoid centralized orchestration of the economy, instead striving to uphold structures that allow production to freely follow consumption. Under this neoclassical supply-and-demand model, the government has generally favored minimalist policy interventions, attempting to influence production only where markets are “inefficient” or distorted in ways that prevent supply from meeting demand at mathematically expected “free market” prices. Perhaps most markedly in trade, Trump and Biden both seem to have departed from this well-worn model—the first Trump administration by imposing tariffs on entire industries and countries, the Biden administration by combining import and export controls with standards-focused multilateral agreements and subsidies for critical industries, and the second Trump administration by imposing or threatening to impose even more tariffs.

All three administrations have made extensive use of their congressionally granted authority in trade, imposing or maintaining tariffs through Sections 201, 232, 301, and other trade remedies. And although the current administration has renounced the previous USTR’s “worker centered” approach to a trade strategy, it has not renounced the TEAs on which that approach depended, and through which the executive can exploit the ambiguities of its unilateral authority. On the contrary, the current administration appears to have concentrated an even greater degree of unitary executive authority within the “foreign policy bureaucracy”, blurring the distinction between President and USTR to position tariffs as an all-purpose bargaining tool—even attempting to use the International Emergency Economic Powers Act (IEEPA) to impose tariffs by declaring a national emergency, in dalliance with a virtual “state of exception” in trade.[44]

No matter who is in office, the question of democratic legitimacy stands as long as policy-making remains exclusory and revolves around executive authority. Based on the premise that government has become “disproportionately responsive to the interests of the wealthiest segments of society” in recent decades and that the cost of meaningful participation in regulatory and administrative procedures, such as USMCA joint review, “structurally favors […] the highest-resourced participants”, legal scholars Amy Kapczynski and Joel Michaels envision an industrial policy built around democratic mechanisms such as LeClercq’s participatory, consultative processes. [45] In a democracy founded on the “radical premise that ‘the people rule themselves’,” they argue, policy “should respond to a broader set of values than competitiveness and efficiency… [and] reflect public interests [beyond those of] industrialists or a political elite.”[46]

Kapczynski and Michaels suggest that mechanisms such as LeClercq’s can scale up, advancing democratic values by strengthening “countervailing power”. They define countervailing power as “the organized capacity of structurally disadvantaged groups to exercise collective influence,” in this case over the economy—and specifically in the area of international trade.[47] Different parts of society, they elaborate, can play different roles in creating durable countervailing structures such as LeClercq’s consultative machinery—namely Congress, agencies, and non-government actors.

            The legislative branch, most obviously, could pass laws to weaken unilateral executive authority in trade. It could also build countervailing power into administrative structures by amending relevant agencies’ implementing legislation. Concretely, Kapczynski and Michaels recommend that Congress design roles within agencies for disempowered stakeholders, such as labor and other non-government actors, where they are part of the process of selecting agency leadership.[48] Just as Congress has created “privileged vantagepoint[s] into administrative decision-making” for corporate actors—such as the Small Business Administration or the Export-Import Bank— Kapczynski and Michaels argue that Congress could create similar structures within agencies through which labor and other stakeholders could exert influence.[49] But most immediately, Congress could start by amending the RRM. Through joint review, elected representatives (on relevant congressional committees), USTR, and foreign counterparts could deliberate over LeClercq’s (or similar) consultative machinery and negotiate a compromise, as they did in 2020, that improves the RRM from both workers’ and government’s perspective. As an illustration, within Kapczynski and Michaels’ framework, expanding access to RRM’s reporting mechanisms—even doing nothing more than actively advertising them to relatively disempowered groups—might be a step in the direction of “build[ing] those groups’ resources to exercise countervailing power in other domains.”[50]

Congress could also expand access to the USMCA itself, for example by requiring more inclusive, ILO-like, multi-stakeholder involvement in future joint reviews. But USTR is also capable of making this sort of change. Agencies, as Kapczynski and Michaels point out, have substantial regulatory discretion on their own, and could use it to build democratic machinery. Instead of relying on governments or corporations to implement and enforce labor standards following negotiation or enforcement—as in the above anecdotes about Eswatini, Thailand, and Mexico—Congress or USTR could, through trade agreements or investment treaties, “employ countervailing organizations in lieu of private [parties] to administer industrial policy programs on the ground.”[51] For example, in a Tridonex-like situation, the RRM could create roles for government, business, and labor representatives in complaint review, solution design, monitoring, and ongoing enforcement. There are many models for this, including advisory committees, whose scope of activity could be broadened to fold a broader range of stakeholders into all phases of the policy-making process. To address representational issues, such as domination of advisory committees by industry associations, think tanks, and more powerful labor groups, Kapczynski and Michaels’ suggestions include choosing representatives from lists generated by relevant stakeholder groups.[52] Either Congress or USTR could implement any of the ideas above in some form.

            Finally, Kapczynski, Michaels, and LeClercq all stress the importance of associational power—the ability of organized workers to pursue their interests collectively. “A democratic industrial policy requires not only an empowered state,” Kapczynski and Michaels emphasize, “[i]t also requires forms of countervailing power that can help hold the state and the private sectors to account, as well as generate feedback loops that sustain the long-term investments that industrial policy requires.”[53] When workers—in the US or abroad—build associational power by coordinating efforts through organizational structures, they strengthen their ability to lobby Congress and to exert pressure on businesses such as Tridonex, or any other RRM target. “By acting as ‘repeat players’ in governance debates,” Kapczynski and Michaels note, “organizations can hone long-term negotiating strategies and identify potential political allies.”[54] Especially if structurally supported by consultative mechanisms, as LeClercq has proposed, “consistent participation […] can bolster its stature in the eyes of its counterparties, granting it credibility to make commitments that make [them] more willing to negotiate.”[55] Again, if LeClercq is correct that labor standard enforcement through the RRM is a way of achieving the current administration’s balanced trade goal—a key part of its version of an industrial policy—then this form of associational power will pull in the same direction.

            The success and durability of a democratic industrial policy that “reflect[s] public more than concentrated private interests”, Kapczynski and Michaels argue, depend on the “mobilization of diverse constituencies to support it.”[56] But even with governmental and organizational support for associational power, they warn, representativeness remains a problem, as union and NGOs have their own “hierarchies of influence” and are not “fully accountable to all members.”[57] As this article related above, US union and NGO involvement has been indispensable to successful RRM complaints against labor abusers in Mexico, while Mexican labor organizations—not to mention less well-represented US sectors—have remained on the bench. As a correction to this form of sidelining , Kapczynski and Michaels “envision iterative cultivation of multiple and overlapping associations” of interest groups, sector by sector rather than a “peak-level organization” to bargain with.[58] Although they do not elaborate, these “overlapping associations” in a USMCA context would presumably come from automotive, oil, electronics, medical device, agriculture, and other high trade volume industries.

USMCA joint review is right around the corner, and there is a lot to debate. No matter what industry you work in, or what kind of work you do, the current and previous administrations promised you a trade policy that serves your interests—not just the interests of large investors, corporations, and industries favored for national security or other policy reasons. What happens next will affect you, so now is the time to take a seat at the table.

[1] Palmer, Doug et al, Trump picks Lighthizer acolyte to be his trade chief, Politico (November 26, 2024), https://www.politico.com/news/2024/11/26/jamieson-greer-trade-representative-trump-00191181

[2] Palmer, Doug, Trump says Lutnick will oversee USTR, trade and tariffs from Commerce perch, Politico Pro (November 19, 2024), https://subscriber.politicopro.com/article/2024/11/trump-says-lutnick-will-oversee-ustr-trade-and-tariffs-from-commerce-perch-00190455

[3] Palmer, Doug, Why demoting USTR could be bad for Trump’s trade agenda, Politico Pro (December 6, 2024), https://subscriber.politicopro.com/article/2024/12/trump-team-still-wont-say-if-ustr-will-stay-in-the-cabinet-00193058

[4] Faux, Zeke and Todd Gillespie, Commerce Nominee Lutnick Is Backer of Outlaws’ Favorite Cryptocurrency, Bloomberg (January 18, 2025), https://www.bloomberg.com/news/features/2025-01-18/trump-commerce-nominee-lutnick-is-backer-of-outlaws-favorite-cryptocurrency

[5] Trump, Donald J, Howard Lutnick Explains How President Trump Will Use Tariffs to Protect the American Worker, YouTube (September 16, 2024), https://www.youtube.com/watch?v=hnjo7H7xipc

[6] Squawk Box (@SquawkCNBC), X (October 24, 2024), https://x.com/SquawkCNBC/status/1849460440415219773

[7] Schwartz-Ziv, Miriam et al, Unraveling the Web: How Big Tech Uses SPACs to Skirt Antitrust Laws, U. Pa. J. Bus. L. 26 (3), 634 (October 01, 2024), https://ssrn.com/abstract=4988216

[8] Bloomberg Technology, Why Mnuchin, Lutnick Teamed Up on Satellite Investment, YouTube (January 18, 2022), https://www.youtube.com/watch?v=ztp47Fe-uKs

[9] Bessent, Scott, A Trump adviser on how the international economic system should change, The Economist (October 23, 2024), https://www.economist.com/by-invitation/2024/10/23/the-international-economic-system-needs-a-readjustment-writes-scott-bessent

[10]  Hearing to Consider the Anticipated Nomination of Scott Bessent, of South Carolina, to be Secretary of the Treasury, US Senate Committee on Finance (January 16, 2025), https://www.finance.senate.gov/hearings/hearing-to-consider-the-anticipated-nomination-of-scott-bessent-of-south-carolina-to-be-secretary-of-the-treasury

[11] Miran, Stephen, A User’s Guide to Restructuring the Global Trading System, Hudson Bay Capital (November 2024), https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf

[12] Jeanne, Olivier and Jeongwon Son John, To what extent are tariffs offset by exchange rates?, Journal of International Money and Finance 142 (April 2024), https://www.sciencedirect.com/science/article/abs/pii/S0261560624000020

[13] Miran, supra note 11, at 16

[14] Id. at 17

[15] Id. at 24

[16] Bloomberg News, Trump Welcomes China to Build Cars in US in Departure From Biden, Bloomberg (July 19, 2024), https://www.bloomberg.com/news/articles/2024-07-19/trump-welcomes-china-to-build-cars-in-us-in-departure-from-biden

[17] Hasset, Kevin and Cale Clingenpeel, Harris’s Uncertainty and the Risk of Recession, Wall Street Journal (September 25, 2024), https://www.wsj.com/opinion/kamala-harris-uncertainty-and-risk-of-recession-her-views-remain-a-question-mark-c4b0f675?mod=e2two

[18] Policy briefing with Jared Bernstein and Heidi Shierholz, Worker-Centered Policy in the US and Global Economy, Economic Policy Institute (September 27, 2023), https://www.epi.org/event/whats-next-worker-centered-policy-in-the-us-and-global-economy/

[19] United States Constitution, Article I, Section 8

[20] Claussen, Kathleen, Trade’s Mini-Deals, Univ. of Miami School of Law Institutional Repository (Winter 2022), https://repository.law.miami.edu/cgi/viewcontent.cgi?article=1985&context=fac_articles

[21] Id at 369

[22] Id at 356

[23] Id at 369

[24] Cited in Alden, Edward, The Roots of Trump’s Trade Rage, Politico (January 16, 2017), https://www.politico.com/magazine/story/2017/01/the-roots-of-trumps-trade-rage-214639/

[25] Claussen, supra at 365

[26] Braumiller, Adrienne and Gavin Andersen, Navigating Trade Waters: A Deep Dive into the USMCA Joint Review Process and Its Impact on China and Mexico – Part Two: The Mexico-US Trade Landscape and Harris’s Potential Vision, JD Supra (October 8, 2024), https://www.jdsupra.com/legalnews/navigating-trade-waters-a-deep-dive-8293284/

[27] LeClercq, Desirée, Alex Covarrubias-V, and Cirila Quinteros Ramírez, Enforcement of the United States-Mexico-Canada Agreement (“USMCA”) Rapid Response Mechanism: Views from Mexican Auto Sector Workers, Cornell University School of Industrial Labor Relations Center of Applied Research on Work (CAROW) Report (November 8, 2024), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5013741

[28] https://ielp.worldtradelaw.net/2024/11/whither-the-worker-centered-trade-policy.html

[29] Ibid

[30] Ibid

[31] Spiegelman, Margaret, Under Trump, hope—and recommendations—for the stronger use of RRM, Inside US Trade (December 5, 2024), https://insidetrade.com/share/181792

[32] LeClercq, Desirée, A Worker-Centered Trade Policy, Colum. J. Transnat’l L. Vol. 61, No. 3 (2023), 740, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4539027

[33] Id at 741

[34] Id at 742

[35] Ibid

[36] Id at 750

[37] Id at 765

[38] Id at 764

[39] Id at 774

[40] Ibid

[41] Id at 765

[42] Id at 787

[43]   Kapczynski, Amy and Joel Michaels, Administering a Democratic Industrial Policy, 18 Harv. L. & Pol’y Rev. (2024), 282, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4711216

[44] See Agamben, Giorgio, State of Exception (Stato di eccezione), translated by Kevin Attell, Univ. of Chicago Press (2005)

[45] Kapczynski, supra note 43, at 305

[46] Id at 294

[47] Id at 283

[48] Id at 329

[49] Id at 333

[50] Id at 335

[51] Id at 329

[52] Id at 330

[53] Id at 304

[54] Id at 306

[55] Ibid

[56] Id at 308

[57] Id at 311

[58] Ibid