The House voted Thursday to pass President Trump’s U.S.-Mexico-Canada Agreement on trade, granting the White House a policy win just one day after impeaching the president.
The trade deal, passed 385-41, would replace the 1993 North American Free Trade Agreement.
Speaker Nancy Pelosi called USMCA a trade agreement that will serve as a model for future ones and transcended partisan politics. “If we can come together to support America’s working families and the president wants to take credit, so be it. That won’t stand in the way of our passing this,” she said.
Rep. Kevin Brady, a Texas Republican who led the GOP effort to pass the deal, admitted he was initially a skeptic that the deal could ever be reached. “Like other presidential candidates, Trump pledged to renegotiate NAFTA. Unlike others, he delivered,” Brady said.
House passage of the trade deal came too late in the year for the Senate to hold its vote. Senate Majority Leader Mitch McConnell has said the deal will be voted on next year. It is expected to pass.
Scrapping NAFTA was a major goal of Trump’s, who said it benefited U.S. trade partners at the expense of the domestic economy. He initiated efforts to renegotiate it shortly after taking office and reached agreement on the underlying deal with Canada and Mexico in late 2018. The deal, though, became stalled in the Democrat-majority House.
Pelosi initially refused to allow a vote on the deal. She argued that it lacked strong enforcement measures, especially regarding labor rights. The White House, led by U.S. Trade Representative Robert Lighthizer, engaged in extensive negotiations with the Democrats and Mexican officials to reach a compromise.
Democrats insisted that the deal was vastly improved by the lengthy negotiations. Mike Thompson of California said the initial deal was stripped of provisions that would have benefited the pharmaceutical industry at the expense of consumers and praised the compromise on labor rights. “This is a good bill because we made it a good bill,” Thompson said.
Some Republicans argued the lengthy delay was purely political. “Had they not been obsessed with impeaching President Trump, we could have had this deal last year,” said Rep. Liz Cheney of Wyoming.
Trade-skeptic Democrats argued the changes to the deal were still insufficient. “Mexican workers are still being treated like chattel. American jobs are still flowing to other countries,” said Rep. Bill Pascrell of New Jersey.
Mexico passed new labor rights laws earlier this year to conform with the deal, and Mexican President Andres Manuel Lopez Obrador vowed in writing to Democrats to enforce the provisions. A deal was finally reached earlier this month when all three sides agreed on a factory inspection system. The House Ways and Means Committee passed the deal Tuesday by voice vote.
USMCA keeps most of the elements of NAFTA intact, but it 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 40-45% of a car’s components must be made by factory workers earning at $16 an hour or its equivalent. The measures are meant to limit Mexico’s competitive advantage on labor costs.
The deal also expands access to Canadian dairy markets for U.S. farmers, among other provisions. It protects digital trade by ensuring the free movement of data across borders.
“We applaud Speaker Pelosi and the White House for working together to broker this agreement that is in the best interests of America. We urge the Senate to now take quick action to also ratify this agreement,” said Farmers for Free Trade, an ad hoc group that advocated the deal’s passage.
USMCA obligates the United States to contribute $45 million over four years to Mexico for the purposes of building up its legal system’s labor rights enforcement. Factory monitoring would be done by three-member panels. Mexico would choose one person, the U.S. the second, and both countries would jointly pick a third. Labor Department officials would be established in U.S. embassies as attaches to advise the panels.
A study of USMCA by the International Trade Commission found that it would have a modest positive effect on the economy. It would raise U.S. gross domestic product by $68 billion, about 0.35%, and add 176,000 jobs, an increase of 0.12% in employment nationwide. Its largest benefit to the economy is ending uncertainty over trade policy.
