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As U.S.M.C.A. Takes Effect, Much Remains Undone

WASHINGTON — President Trump’s promised rewrite of trade terms between the United States, Canada and Mexico officially goes into effect on Wednesday. But while the president claims victory in reworking the North American Free Trade Agreement, putting its provisions into practice is far from done.

Company executives, government officials and union leaders around the continent have been scrambling to comply with the United States-Mexico-Canada Agreement, which overhauls a trade deal that has governed commerce among the three countries for more than 26 years.

The Trump administration and other supporters have welcomed the revised pact as providing much-needed changes to previous trade rules, including bigger incentives to manufacture products in North America, new guidelines for digital trade and stronger labor protections for Mexican workers. And the official start of the new agreement puts to rest much of the uncertainty Mr. Trump created for businesses by repeatedly threatening to walk away from the deal altogether.

But many of the deal’s requirements, like expanding worker rights or opening up the flow of agriculture, have not been fully met, or still need to be phased in over the coming months and years.

Industries as varied as automobiles and agriculture are still struggling to understand recent guidelines from the U.S. government and certify that their products satisfy the trade deal, which requires some industries to buy more materials and components from North America and provide the government detailed information on their sourcing and wages.

The three-country pact, which was reached after more than two years of negotiations, sought to change Mexico’s labor rules to ensure that workers had the freedom to form unions and bargain for better wages. But those changes are still winding their way through the Mexican legal system, under threat from powerful companies and politicians. American labor leaders warn that the deal’s protections for workers — which made it a model trade agreement in the eyes of Democrats and were largely responsible for winning their support — could still falter.

Michael Wessel, the staff chairman of the Labor Advisory Committee that counsels the administration on trade issues, said that while much public attention had focused on the drama of negotiating the U.S.M.C.A., “the really hard work of making the provisions effective, ensuring that workers’ rights are advanced and that the competitive landscape changes is ahead of us.”

“Making sure we don’t lose sight, and action, on the changes that need to be implemented, monitored and enforced will be a day-by-day fight,” Mr. Wessel added.

“Today as #USMCA enters into force, many improvements must be made to fulfill its promises,” Richard Trumka, the president of the AFL-CIO, wrote on Twitter. “We will fight to ensure that the #USMCA doesn’t become another #NAFTA.”

The Trump administration has taken an aggressive approach to rewriting and enforcing trade rules. The U.S.M.C.A., a comprehensive deal that covers the country’s most important trading partners, is the biggest test so far of Mr. Trump’s ability to change global trade terms in America’s favor.

Administration officials say they are gearing up to use the new deal as a way to challenge Canadian and Mexican business practices that harm American interests.

In a congressional hearing on June 17, Robert E. Lighthizer, the United States trade representative, said that he had pushed to have the agreement go into effect on July 1, even during a pandemic, so that the new rules could be enforced. In a sign of how fraught the new trade deal could be, Mr. Lighthizer said the United States was looking at a number of issues “that are quite troubling.”

Like many Democrats, Mr. Lighthizer has criticized America’s past trade agreements for both enabling American factories to move overseas and lacking tools to crack down on those who would violate the rules. Over months of negotiations with Canada, Mexico and congressional Democrats, Mr. Lighthizer forged a coalition and worked out changes to the trade deal that won broad bipartisan support.

That included sweeping changes to Mexico’s labor system, which would try to break the corrupt unions that help many companies control their workers in Mexico, and replace them with freely organized unions that could negotiate better wages and working conditions. That in turn would benefit American workers, by giving them a more level playing field to compete.

Mr. Lighthizer pointed to Mexico’s refusal to accept American biotech products — like genetically modified corn and other crops — as one area where the United States could bring a case under the new trade deal. Mexico’s labor reforms and treatment of American media companies are also garnering U.S. scrutiny. Mr. Lighthizer told lawmakers that his agency would take action “early and often” to combat violations of the agreement’s labor rules, which are meant to improve wages and working conditions, particularly in Mexico.

Mr. Lighthizer also indicated that the United States, which won access to Canada’s dairy market as part of the deal, was monitoring that sector for potential violations of the agreement. And the administration is considering renewing tariffs on Canadian aluminum exports.

Another new part of U.S.M.C.A. that was crucial for winning the support of Democrats and labor leaders was its “enforcement provisions,” which give governments, unions and workers the ability to report violations of the agreement, and to try to seek redress.

One of these systems allows the countries to bring cases against one another about labor rights or a wide variety of other issues. Another fast-acting, labor-specific system allows unions, workers and other parties to report labor violations, which may lead to factory inspections and even products from the offending company being blocked at the U.S. border.

“We’ve always talked about agreements that don’t have teeth, and this one has some teeth,” said Ben Davis, the director of international affairs for the United Steelworkers union. “Maybe not a full mouthful, maybe not as sharp as we need it, but it has some teeth, and we’re all waiting to see how that plays out.”

Mr. Lighthizer has said that these provisions will help to reverse a long-running trend, where manufacturers have moved out of the United States to take advantage of lower wages and laxer working conditions in Mexico.

“It wasn’t economics in my judgment, it was industrial policy down there,” Mr. Lighthizer said in the June 17 hearing, about companies outsourcing to Mexico. “We’ve turned that around.” Congressional Democrats and labor leaders say it’s too early for the Trump administration to declare victory, pointing to Mexico’s half-finished labor reforms.

At that hearing, Richard E. Neal, a Democratic congressman from Massachusetts, said there had been “serious deficiencies” in how Mexico was enacting its labor reforms.

“We’re going to hold people’s feet to the fire,” said Representative Rosa DeLauro, Democrat of Connecticut and one of the Democratic negotiators.

Mexico passed a sweeping labor law in 2019 aimed at meeting the pledges it had made to Canada and the United States in its new trade deal by giving workers more ability to organize and bargain. But since the labor law was passed, violence against Mexican labor activists has continued, and hundreds of lawsuits have been filed challenging the constitutionality of these reforms.

If the Mexican Supreme Court rules that the labor law is unconstitutional, Mexico could be in violation of a major portion of the trade pact, and could face tariffs or other punitive actions from the United States and Canada.

Union leaders are preparing a list of labor cases they could bring under the new agreement’s dispute settlement provisions, including that of a Mexican labor lawyer, Susana Prieto Terrazas, who was arrested while trying to establish an independent union. But it remains to be seen what kind of punishment the independent panels that review these cases could hand down, if any.

“Implementation is only as good as they’re willing to enforce it,” said Representative Jimmy Gomez, Democrat of California. “We’re going to be paying attention, very closely, to how the agreement is implemented.”

“The promise of the U.S.M.C.A. is that it was righting the wrongs of NAFTA,” he added. “But if they’re not willing to use it, or if they’re taking steps to undermine it, then it’s for naught.”

For companies that are scrambling to comply with the trade pact’s voluminous rules for how they source their products and share information with the government, much remains uncertain as well.

Many businesses that were working to enact the changes required by the U.S.M.C.A. had to put everything on hold for the pandemic, said Richard Mojica, a lawyer with Miller & Chevalier’s International practice. Companies have also been trying to digest hundreds of pages of new detailed industry guidance, which the administration only released in June.

“It’s absolutely a scramble,” Mr. Mojica said.

Ann Wilson, the senior vice president for government affairs at the Motor & Equipment Manufacturers Association, which represents auto parts suppliers, said companies were facing significant costs to meet the new rules at a particularly trying time, in the midst of a pandemic and economic recession.

“Many of these companies are still laying off people, furloughing people, and they’re still trying to grapple with these requirements,” Ms. Wilson said.

But companies will have a grace period to adapt to the new regulations.

U.S. Customs and Border Protection, which monitors imports at American ports, has already indicated that, for the next six months, it will focus on helping companies to meet the rules, rather than punishing them if they unwittingly break them.

“I think both parties are going to be learning for a while,” Mr. Mojica said.

Emily Cochrane contributed reporting.

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President Trump signs executive order temporarily suspending work visas for H-1B holders

President Donald Trump signed an executive order temporarily halting work visas like the H-1B visa program for highly-skilled workers, cutting off a critical source of foreign labor for tech companies already complaining about tech talent shortages.

Visa-holders already in the U.S. and those applicants who have already received a visa are exempt from the ban. The restrictions are intended to last until the end of the year, which would disrupt the government’s typical process of awarding new visas at the beginning of the national fiscal calendar in October.

Officials from the Trump administration told the Wall Street Journal that the move is intended to protect American jobs, but executives in the technology industry have long warned that visa restrictions would hurt the nation’s ability to compete in industries that have both strategic and financial significance as engines of economic growth.

Tech officials have even cited immigration curbs as a factor that would force companies to relocate more of their operations overseas in an effort to hire and retain top technology talent.

“The technology industry is working overtime to keep Americans connected during a global pandemic by providing food delivery services, telehealth care, collaborative business solutions, and ways for families and friends to stay connected,” said Linda Moore, the president and chief executive of the tech industry’s lobbying group, TechNet, in a statement. “Looking forward, technology will continue to be crucial to the rebuilding of our economy. Today’s executive order only hinders the ability of businesses to make decisions on how best to deploy their existing workforce and hire new employees. This will slow innovation and undermine the work the technology industry is doing to help our country recover from unprecedented events.”

According to news reports, officials expect these new restrictions to last until the end of the year, and expand the immigration bans that the President put in place in April that blocked family members of U.S. citizens from immigrating and slashed the number of visas available to high-skilled  workers looking to immigrate to the US.

Estimates provided to the Wall Street Journal indicate that roughly 525,000 people will be unable to enter the country as a result of the expanded travel restrictions including 170,000 green card holders barred from entering the U.S. since April. The Trump administration official quoted by the Journal called the initiative an “America-first recovery” that would potentially open up 500,000 jobs for out-of-work Americans.

Technology executives are already voicing their displeasure with the reported ban. “Banning all H1B [sic] visas means CEOs like me have to open offices and hire more people in countries like Canada that allow immigration. This visa ban is morally wrong and economically stupid,” wrote Anshu Sharma, the chief executive officer of the technology startup Skyflow.

Investors are also up-in-arms about the decision’s impact on America’s ability to compete.

“Whether his administration realizes it or not, they creating a significant handicap for US innovation. Our most innovative and impactful portfolio companies and many of their employees started as H-1b holders,” wrote Stonly Baptiste, the co-founder of technology investment fund, Urban.us. “We literally couldn’t have built our portfolio in an environment without H-1B. And we’re not even an immigrant focused fund.”

Also on the chopping block are H-2B visas, which are used to let short-term seasonal workers in landscaping and non-farm jobs into the country, J-1 jobs for short-term workers like camp counselors and au pairs and L-1 visas for corporate company transfers.

“By limiting the talent pool for American companies, the US government is hindering our ability to build strong, defensible organizations,” wrote Andy Coravos, the chief executive officer of the healthcare-focused startup Elektra Labs, in a direct message. “The Trump Administration’s Executive Order to suspend foreign work visas is not only based in fear, but also perpetuates fear within our community, and is not in our society’s best interest.”

Healthcare workers, coronavirus researchers, food supply workers in food packaging are all exempt from the visa suspensions.

Technology executives aren’t the only ones coming out against the tighter immigration rules. A group of nine Republican senators including South Carolina’s powerful senior senator, Lindsey Graham, and Texas Senator John Cornyn, issued a joint letter on May 27, which pleaded with the President to reconsider the rumored immigration restrictions.

“Guest workers are needed to boost American business, not take American jobs,” they wrote.

Update June 22: Linked to the published Executive Order.

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Workforce training app developer Poka adds strategic investor Schneider Electric

Poka, a workforce training app and software service for industrial companies, has added SE Ventures, the venture capital arm of the European energy and automation conglomerate Schneider Electric to its roster of backers.

The company has raised over $23 million in funding so far for its application and software services package that provides training and tips for workers on the factory floor.

The company said it would use the new funding to expand its global marketing through new distribution strategies and speed up its product development.

Since 2014, Poka has been selling its services to companies including Bosch, Danone, Mars, The Kraft Heinz Company, Johnson & Johnson and Stanley Black and Decker, the company said.

Previous backers of the Quebec City, Canada -based company include Robert Bosch Venture Capital, Groupe Leclerc, and CDPQ, according to the company.

For Poka, demand is driven by the combination of increasing automation and an aging workforce creating a skills gap in industrial facilities.

Poka was designed specifically to address the challenges and needs of large global manufacturers — many of whom are clients of Schneider Electric,” said Poka chief executive Alex Leclerc in a statement. “Our partnership gives us global reach within our target markets and provides value to our joint customers by offering them a more complete path to digital transformation.”

For SE Ventures general partner Grant Allen, the replacement of aging technologies around communication and knowledge-sharing in manufacturing facilities represented an obvious investment opportunity. “The tools and systems used to communicate, capture and share knowledge in commercial production facilities are largely outdated, leaving workers without the necessary information to be effective and safe,” said Allen.

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Edtech’s newest unicorn, ApplyBoard, lands $1.4B valuation with fresh funding

Brothers Martin, Meti and Massi Basiri all left Iran to study abroad in Canada. After struggling with every aspect from the visa process to grade conversions, the brothers saw an opportunity to make the transition to study internationally more seamless. So, they started Applyboard in 2015 at University of Waterloo’s Velocity Garage.

ApplyBoard has two main parts of its business. First, the company helps international students search and apply from a single platform to universities and colleges across the world. Similar to how American students use the Common App to apply to schools, ApplyBoard seeks to be the college undergrad application for international students, and serve as a marketplace. It is free for students.

The other part of ApplyBoard’s business is on the university side. The startup makes money from revenue-sharing agreements with colleges and universities. If a student attends a college from using their services, ApplyBoard gets a cut of the tuition.

While the SaaS-enabled startup did not disclose revenue, it said it took in $300 million in sales last year.

Five years after founding, ApplyBoard has helped assist over 100,000 students across 110 countries to study internationally. Today, the Ontario-based startup announced it raised $75 million (USD) at a $1.5 billion valuation, making it the latest edtech unicorn.

Unlike most of the reported rounds we’ve been covering these days, this round was closed at the end of March in the thick of the pandemic for Canada, co-founder Martin Basiri told TechCrunch . It means that ApplyBoard’s new valuation is yet another example of how edtech as a sector is feeling dollar sign momentum from COVID-19.

The pandemic has forced millions of students to learn from home, putting tech companies at the forefront of making remote education possible. ApplyBoard, said Basiri, had a 200% month-over-month surge of new schools signing up for its service.

“A lot of investors noticed the importance of our digital platform that can do such an important job,” said Basiri.

While most unicorns in the edtech space hail from the B2C space, like Duolingo and Udemy, the story with ApplyBoard shows that there is promise in selling to large businesses. Across the world, colleges have been turning to alternative marketing channels as campus tours and limited travel hurts their exposure to international students.

The new round was led by Drive Capital. Other participating investors include Fidelity Investments Canada ULC, Business Development Bank of Canada, Anthos Capital, Artiman Ventures, and Plug and Play Tech Center. ApplyBoard plans to hire 100 more employees, atop its existing 400 staff.

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