• US President announces impending tariffs against goods imported from Mexico
  • Move could jeopardise passage of United States-Mexico-Canada Agreement
  • Negotiated text contains a number of provisions on GIs and border enforcement

Last night US President Donald Trump announced his administration’s intention to impose a series of escalating tariffs on all goods imported from Mexico, in a move designed to spur his country’s southern neighbour to take further action on immigration. The move is one for rights holders to follow closely as it could ultimately have significant impact on trademark practice and procedures across North America.

In a statement issued yesterday, President Trump escalated his immigration enforcement actions, hitting out at Mexico’s “passive cooperation” in allowing a “mass incursion” into the US, which “constitutes an emergency and extraordinary threat to the national security and economy of the United States”. In response he invoked the authorities granted by the International Emergency Economic Powers Act and announced that, as of 10 June, his administration will impose a 5% tariff on all goods imported from Mexico – with a threatened escalation to come: “If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the tariffs will be removed. If the crisis persists, however, the tariffs will be raised to 10% on July 1, 2019. Similarly, if Mexico still has not taken action to dramatically reduce or eliminate the number of illegal aliens crossing its territory into the United States, tariffs will be increased to 15% on August 1, 2019, to 20 percent on September 1, 2019, and to 25 percent on October 1, 2019.”

The political reaction has been swift, with reports that legal challenges to the plan could soon be launched. Notably, tariffs have become Trump’s weapon of choice against perceived uncooperative states, with resulting impact for IP. For example, over on IAM, Bing Zhao and Jacob Schindler have published an in-depth and compelling series of reports reflecting on the realities behind the China-US trade war headlines and rhetoric, which have centred on technology and intellectual property. Yesterday’s announcement is firmly focused on the immigration issue but could have a significant impact on the IP landscape if it jeopardises the recently negotiated United States-Mexico-Canada Agreement (USMCA). 

As we reported previously, on 1 October 2018 it was announced that the United States, Canada and Mexico had reached agreement on a new $1 trillion trade deal to replace the current North American Free Trade Agreement (NAFTA). The road to that agreement has been a long and winding one, with the treatment of geographical indications (GIs) having been a long-term roadblock. Having overcome these hurdles, the final agreement contained extensive stipulations when it comes to intellectual property, especially in relation to border enforcement as well as GIs.

The section devoted to GIs provides an administrative framework for their recognition in all three countries, as well as mechanisms for their denial, opposition and cancellation – including the ability to object on the basis that a term is generic. In a statement, the Office of the US Trade Representative claimed that the USMCA will “provide important procedural safeguards for recognition of new [GIs], including strong standards for protection against issuances of GIs that would prevent US producers from using common names”. Turning to border enforcement, the new deal is set to empower customs officials to initiate border measures against suspected counterfeit goods that are in transit, imported or admitted into, or destined for export or exiting from a free trade zone or a bonded warehouse. Officials will be able to initiate such measures without a request for assistance on file. Customs officials will also be permitted to detain and destroy suspected counterfeit trademark goods or pirated copyright goods following a determination that the goods constitute infringement.

The negotiated text was, in most part, welcomed by US rights holders and associations. For example, the Consortium for Common Food Names (CCFN) claimed the agreement “breaks new ground with better geographical indications policy as defending common food names becomes a US priority”. Meanwhile, while lamenting that it didn’t include a requirement for Canada and Mexico to join the Singapore Treaty, INTA stated that it “is a major enhancement over NAFTA and engages more in specifics, which is important for spelling out procedures that must be undertaken to afford more comprehensive IP protection to rights holders” (our previous coverage, with reaction form US, Mexican and Canadian practitioners is available here).

Yesterday’s announcement of tariffs now threaten the overall USMCA deal, which requires low tariffs on its signatories. CNN reports: “If Trump makes good on a tariff threat against Mexico, it is not clear how that would affect the deal, which the administration is pushing Congress to ratify.”

Of course, moves to ratify the agreement could come after the new tariffs are lifted, removing that as an obstacle. But even then, passage of the USMCA, in its current form, is not guaranteed. Ironically, on the same day as he announced the new tariffs on Mexico, the White House triggered a process that would allow President Trump to submit the trade dealto Congress after 30 days. House Speaker Nancy Pelosi quickly slammed the move, stating: “The Trump Administration’s decision to send Congress a draft statement of administrative action before we have finished working with US Trade Representative Lighthizer to ensure the USMCA benefits American workers and farmers is not a positive step.  It indicates a lack of knowledge on the part of the Administration on the policy and process to pass a trade agreement…. We all agree that we must replace NAFTA, but without real enforcement mechanisms we would be locking American workers into another bad deal.  A new trade agreement without enforcement is not progress for the American worker, just a press release for the President. We have been on a path to yes, but it must be a path that leads to an agreement that delivers positive results for American workers and farmers.”

In short, the USMCA in its current form may be different to that which is eventually passed into law. However, the escalation of the immigration war with Mexico may mean that it does not even get that far. With the deal having a significant impact on IP practice in the three countries, Mexico’s reaction to the new tariff threat is one for the trademark community to follow closely.