US to Push for Lower Trade Gap in NAFTA Talks

Democrats Hold Out on USMCA as Trump Walks Back Mexico Tariffs

June 10, 2019
Canada, Mexico, U.S. Republicans offer support for trade deal.

President Donald Trump’s decision not to impose tariffs on Mexico removed one obstacle for Congress to approve his North American trade deal, but his administration has more work to do to smooth the final stages of the accord’s ratification.

Trump accepted Mexico’s offer of tougher immigration enforcement as sufficient to dissuade him from levying a 5% charge on all Mexican imports. The move late Friday deflated tensions with Mexico and, as far as Canada is concerned, clears a path for the U.S.-Mexico-Canada trade agreement to move forward, Canadian Finance Minister Bill Morneau said Sunday on Bloomberg TV.

That leaves House Democrats as the last major stakeholders still to get on board. Speaker Nancy Pelosi’s decision on when (and whether) the deal will get a vote depends on talks with the Trump administration to address Democrats’ concerns, according to a senior Democratic aide.

“We’re not ready,’’ Representative Debbie Dingell, a Michigan Democrat, said Sunday on Fox News. “The votes in the House are not there yet until these changes take place.’’

During last week’s uncertainty over trade with Mexico, most Democrats publicly separated USMCA deliberations from Trump’s tariff plan, which means that removing the tariff threat doesn’t necessarily clear the way for a new deal to replace the North American Free Trade Agreement. Dingell said she wants changes to the agreement’s labor, environmental and enforcement provisions that would satisfy her skeptical colleagues.

Deciding against the Mexican tariffs does, however, help the president with his own party -- especially in the Republican-led Senate.

Revamped NAFTA

Finance Committee Chairman Chuck Grassley of Iowa warned last week that the USMCA -- Trump’s top legislative priority this year -- would be in peril if the president went ahead with the Mexican tariffs.

House Republicans for weeks have said the revamped trade deal, which updates but doesn’t fundamentally alter the decades-old NAFTA, would pass the House if only Pelosi would put it on the floor. Louisiana Representative Steve Scalise, a top member of GOP leadership, renewed that call Friday after Trump said he won’t impose tariffs on Mexico, lauding the breakthrough that “puts us in a better position to make USMCA a reality.”

The lawmaker working groups that Pelosi appointed to negotiate with U.S. Trade Representative Robert Lighthizer are beginning to drill down on the details of how to resolve Democrats’ outstanding issues, according to the aide, who asked not to be named when talking about internal discussions.

Pelosi has repeatedly said that her members “want to get to yes,” but only if the agreement resolves their doubts. Democrats have pushed Mexico to pass and swiftly implement labor reforms that would, among other things, allow workers there to vote for union representation with a closed ballot.

2020 Timing

Trade in general has become a complicated ideological and electoral issue since Trump in his 2016 campaign denounced NAFTA as the worst example of globalism run amok with little regard for U.S. workers. Trump’s position sets him apart from free-trade Republicans, and it also creates a dilemma for 2020 Democratic candidates. Democrats traditionally have been more skeptical than Republicans when it comes to free trade.

The 2020 presidential race also squeezes the timing for a vote on the bill to implement the USMCA. Lawmakers of both parties have warned that passing such a deal will be politically tricky in an election year. That means the best chance for a vote would be before Congress recesses in August to avoid typical end-of-the-year budget fights, according to North Carolina Representative Mark Meadows, a close Trump ally.

“Hopefully, we can get together and make sure that happens in the latter part of July,’’ Meadows said on Fox News’s “Sunday Morning Futures.’’

Even amid rising tensions from Trump’s tariff threat, Mexican President Andres Manuel Lopez Obrador has reaffirmed his support for the new NAFTA deal. Its prospects in Mexico’s Congress are good, given the support of Lopez Obrador, whose party controls the nation’s legislative branch. Major opposition parties also want it to be enacted.

Nonetheless, the tariff confrontation may have created lasting damage to ties between the two countries. Republicans previously pleaded with Trump to remove steel and aluminum tariffs on Canada and Mexico, and they’ve publicly worried about the lasting impact of changes to global commerce as a result of Trump’s multi-front trade wars.

Even as Trump retains some bipartisan support for taking a hard stance against Chinese trade practices, few lawmakers wanted him to rip up the accord with Mexico and Canada without a replacement. The USMCA came together after more than a year of painstaking negotiations.

Senator Thom Tillis, a North Carolina Republican who’s up for re-election in 2020, said he has “no doubt’’ there’s enough support in the Senate to ratify the agreement. With help from pro-trade Republicans, Tillis said Sunday on Fox, the Democratic-led House should be able to pass it as well.

“Now that we’ve gotten the threat of tariffs out of the way, I hope that Speaker Pelosi will put that on the House floor,’’ he said.

By Anna Edgerton

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Licensed content from Bloomberg, copyright 2016.

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