House Speaker Nancy Pelosi announced a breakthrough Tuesday in the negotiations for the U.S.-Mexico-Canada Agreement on trade, paving the way for a House vote on the trade deal negotiated by President Trump that he has long lobbied Congress to approve.
“It is infinitely better than what was originally proposed by the administration,” Pelosi said of Tuesday’s deal.
A top Democratic aide told the Washington Examiner the House could vote as soon as next week to approve the deal, known as USMCA. “Things will have to move quickly, but yes it is possible,” the aide said.
The House is scheduled to adjourn on Dec. 20. Trade deals typically require time for review by lawmakers, but Democrats are eager to move the deal to the Senate and to score a big legislative win after weeks of impeachment hearings. The trade deal is a major concern among voters, particularly in key swing districts.
U.S. Trade Representative Robert Lighthizer, the administration’s main negotiator, traveled to Mexico Tuesday to meet with officials there as well as Canadian officials to firm up USMCA’s final details.
Democrats said the accord came after provisions were added addressing labor law enforcement, environmental standards, and prescription drugs, satisfying their members.
“This is a transformative agreement,” said House Ways and Means Committee Chairman Richard Neal of Massachusetts, who has been the lead congressional negotiator, said. “Our constant emphasis was on enforceability, enforceability, and enforceability, we fixed that.”
Democrats said they also won the removal of several provisions that they said would have led to an increase in drug prices.
AFL-CIO President Richard Trumka announced early Tuesday that the nation’s largest labor federation had endorsed USMCA, removing the last major barrier to passage. House Democrats had previously feared union backlash if they backed the deal. Trumka said the long negotiations between House Democrats and the Trump administration had created “enforceable labor standards — including a process that allows for the inspections of factories and facilities,” which had been the labor movement’s primary goal for the deal.
Trumka also praised Lighthizer, calling him “a straight shooter and an honest broker as we worked toward a resolution.”
“It all came down to the labor enforcement. That’s the reason why Trumka and others are supporting it,” Sen. Rob Portman, an Ohio Republican, told the Washington Examiner. Portman, who served as U.S. Trade Representative during the George W. Bush administration, was briefed on the deal Tuesday by Lighthizer.
“It’s got to be considered a major rewrite of NAFTA. There’s so much trade between our countries that any change to the terms and tariffs is significant,” Portman said. “It locks down a North American pact that has a lot of improvements.”
The business community was cautiously optimistic. The Chamber of Commerce praised the deal but noted that it was only a “handshake” at this point and urged Congress to codify it quickly. “We are optimistic this development will open the door to final approval of USMCA on a bipartisan basis by the end of the year,” it said.
The National Association of Manufacturers said the deal was not as expansive as they had hoped, but would nevertheless “deliver increased certainty for manufacturers — especially for the 2 million manufacturing workers whose jobs depend on North American trade.”
The trade deal would replace the 1993 North American Free Trade Agreement, essentially updating the old agreement. Replacing NAFTA is a victory for Trump, who has, for years, argued the old agreement was a terrible deal for the United States.
The new version requires that 75% of an automobile’s parts must be made in North America to be duty-free, up from 62.5%. In addition, the deal says that at least 40 to 45% of a car’s components must be made by factory workers earning at least $16 an hour or its equivalent. The measures are meant to limit Mexico’s competitive advantage on labor costs.
USMCA also expands access to Canadian dairy markets for U.S. farmers, among other provisions.
The USTR touted the deal’s new standards for digital trade, which will prohibit tariffs on data and requirements for localization of data. The administration called it a “firm foundation for the expansion of trade & investment in innovative products & services.”
The deal strips out exclusivity marketing rights for biologic drugs that were included in the earlier drafts of USMCA, effectively preserving the status quo under NAFTA. The drug industry agreed to the removal in order to retain the deal’s protections for intellectual property, according to a source with knowledge of the negotiations.
The announcement followed several months of drawn-out negotiations between Democrats and the White House. Democrats demanded extensive modifications to the underlying deal, arguing that it lacked strong enforcement mechanisms, especially on its labor rights provisions.
Mexico had balked at language that would have allowed inspectors into the country’s factories, arguing it was a violation of national sovereignty. The final version of the deal retains the on-site inspections, but gives Mexico a means to appeal charges of labor violations to an arbitration panel. In addition, the U.S. will contribute $45 million over four years to bolster Mexico’s labor enforcement infrastructure, allowing it to hire more administrative law judges and inspectors. Canada will also contribute toward strengthening Mexico’s labor enforcement, though that amount could be determined.
Labor enforcement became a contentious issue during negotiations. Mexico passed new labor laws to comply with the deal, and Mexican President Andres Manuel Lopez Obrador vowed in writing to enforce the provisions. Democrats, backed by organized labor, nevertheless contended that enforcement fell short.
Another $75 million over four years will be allocated by the U.S. to the North American Development Bank, a U.S.-Mexico institution that backs environmental protection projects.
The underlying deal between the U.S. Canada and Mexico was reached in October of 2018 and signed on Nov. 30 of that year. The White House had initially hoped to pass the trade deal in the summer. USMCA’s supporters feared that if debate continued into 2020, the deal could fall by the wayside because of the distractions caused by impeachment proceedings and the 2020 elections.
Early in the debate, Trump threatened to pull the U.S. out of the NAFTA deal if Democrats refused to accept USMCA. The administration subsequently pulled back from that threat. Democrats initially called for negotiations with Canada and Mexico to be reopened, but both countries’ leaders rejected further talks.
Republicans at times accused Pelosi of “moving the goalposts” and of being under the thumb of organized labor, which has long opposed free-trade agreements as bad for U.S. workers.
“Dems delayed #USMCA for too long. But finally — after months of relentless advocacy from Republicans — we’re one step closer,” said House Minority Leader Kevin McCarthy.
Pelosi maintained that Democrats wanted “to get to yes” and kept up talks between key House members and White House officials. U.S. Trade Representative Robert Lighthizer was the administration’s main negotiator.
