July 9, 2020

Washington Wire: NAFTA Round 2 Talks Conclude with Difficult Path Forward


NAFTA Round 2 Talks Conclude with Difficult Path Forward  

Negotiators concluded this past weekend their second round of NAFTA negotiations in Mexico City, as talks prove more difficult than some anticipated. While meetings are moving at a lighting pace, progress remains slow ahead of the next round in Ottawa on September 23-27. Most observers believe it is now highly unlikely all three sides will reach an agreement by the end of December, as previously targeted. Mexico in particular is under pressure as they face July 2018 presidential elections while U.S. domestic concerns loom large as well with the November 2018 mid-term elections potentially influencing votes on Capitol Hill if a new agreement is sent to lawmakers for approval.
U.S. trade laws require the administration to formally notify Congress of certain changes, which trigger a six month review period before Capitol Hill can ratify a new agreement. This means as of today, the very earliest a final agreement could see a Congressional vote is late March, and sources indicate, the six-month notification is now unlikely by the end of September. Major sticking points remain Rules of Origin content requirements, which, sources indicate the U.S. would like to increase from 62.5% for automotive to over 70%. Canada is also seeking to force President Trump’s hand on climate change by requiring enforceable environmental provisions as they also target Mexico seeking wage increases. Even issues once considered as less controversial are taking longer to address, further depressing optimism for a rapid solution that prevents disruptions in the markets with uncertainty. One Voice filed comments with the administration in June mentioning Rules of Origin, State Owned Enterprises, currency valuations, removing red tape at the border, and avoiding changes in the agreement that would disrupt successful business models and customer arrangements.



Federal Court in Texas Invalidates Obama Overtime Rule
Last week, agreeing with business groups and 21 states contesting it, a Texas U.S. District Judge ruled against the new federal overtime rule released last year by the Obama administration. The rule sought to double the white-collar salaried overtime exemption from $23,660 annually to $47,476, or $913 per week. In striking down the rule, the judge noted the massive salary increase set at a level so high it could wind up including management workers who are intended to be exempt from overtime protections.
While stating the previous administration set the level too high, DOL contended it could use a salary threshold in overtime pay regulations. Though the judge acknowledging the agency had the right to use a salary test, he specified the agency must base overtime eligibility on a combination of workers’ responsibilities and wages. The Trump administration is currently seeking public information on a new threshold, and One Voice plans to work with DOL on creating a feasible overtime rule.



Office of Management and Budget Stays Implementation of Revised EEO-1 Form
On August 29th, the White House Office of Management and Budget, sent a memorandum to the acting chair of the Equal Employment Opportunity Commission (EEOC) halting implementation of the new EEO-1 form that requested data on wages and hours worked from businesses with 100 or more employees and federal contractors with 50 or more workers. In a statement, the White House said, “OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”
Businesses criticized the revised EEO-1 form as an unrealistic means for combating wage disparities between men and women. Manufacturing business coalitions are supportive of decreasing the wage gap, however, the new EEO-1 form would have increased frivolous lawsuits filed without improving wages of women. Due to this action, EEOC will use its previously approved EEO-1 form.



EPA Reconsidering Fuel Efficiency Standards for Cars and Light Trucks
The Environmental Protection Agency published notice in the Federal Register it is reconsidering fuel efficiency standards for 2022-2025 model year cars and light trucks and is seeking written comment through October 5th. As part of its initial regulations in 2012, the Obama administration agreed to complete a midterm evaluation in 2018 to determine if meeting the standards was still feasible. However, in 2016, the EPA decided to issue their midterm review early and, just days before President Obama left office, kept the requirements it had set in place in 2012 for model years 2022-2025. EPA plans on making a new Final Determination concerning the appropriateness of the standards by April 1, 2018. In addition, some in the automotive industry are pushing back against changes to MY2021 standards as potential disruptive to existing operations.



Department of Labor Proposes an Extension for Exemptions to the Fiduciary Rule
Last week, DOL announced a proposed rule change postponing the full implementation deadline for its Fiduciary Rule by 18 months, moving it to July 1, 2019. While the rule became effective June 9, 2017, its deadline for implementing the Best Interest Contract (BIC) Exemption and Principal Transactions Exemption, among other requirements, was set for January 1, 2018. The additional time will allow DOL to finish revising the rule. An expected revision will be removing the class action non-waiver requirement in order to qualify for a BIC Exemption or a Principal Transactions Exemption.