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Trump’s New Nafta Is Losing Time to Find Path in Congress


Mar 26, 2019, by Jenny Leonard, Andrew Mayeda and Mark Niquette

(Bloomberg)

For President Donald Trump’s new North American trade accord to become law, he’ll need the help of a political rival with a track record of blocking such deals.

In 2008, Nancy Pelosi was House Speaker when Democratic lawmakers denied President George W. Bush’s request for a vote within 90 days on a trade pact with Colombia. The rejection delayed approval of deals the Bush administration negotiated with South Korea and Panama, though all three were later ratified.

Once again Speaker, Pelosi will play a pivotal role for Trump’s renegotiated accord with Mexico and Canada, renamed the United States-Mexico-Canada Agreement, which isn’t one of her legislative priorities. It’s a change of pace from the frenetic year of negotiations that led to the deal being signed by leaders from all three countries in November.

“If the House doesn’t want to move on this, it doesn’t have to move. So it’s really up to her,” said Edward Alden, a trade expert at the Council on Foreign Relations.

Left-Tilting Tent

Pelosi is expected to only move the deal through the House if she can find a critical mass of her caucus supporting it and if she extracts concessions unrelated to trade from the White House in return, senior congressional aides say.

Asked to comment, Pelosi’s office referred to remarks she made this month in which the speaker said she and other Democrats are still weighing USMCA’s provisions on the environment, labor, pharmaceuticals and enforcement before deciding whether to support it.

With 60 new Democratic members who still have to familiarize themselves with their districts’ priorities and the content of the trade deal, the biggest challenge is educating lawmakers, the aides said. U.S. Trade Representative Robert Lighthizer is expected to meet with freshman members in the coming weeks to make his case.

Lighthizer has been wooing Democrats to support the updated version of the North American Free Trade Agreement. Sympathetic groups could include the New Democrat Coalition, which includes 100 lawmakers who back pro-growth policies.

He may face a tougher challenge on the party’s left flank. Outspoken rookie lawmakers such as Alexandria Ocasio-Cortez, who identifies as a democratic socialist and backs a sweeping spending plan to reduce carbon emissions called the “Green New Deal,” have driven the Democratic agenda since the November election.

“That’s the most amorphous piece of this: When is the caucus happy enough that she feels confident moving this? Hard to say,’’ said the National Foreign Trade Council’s Vanessa Sciarra, referring to Pelosi.

Kevin Brady, the top Republican on House Ways and Means Committee, said on Tuesday there may be a House vote on the pact “this summer” once Democrats’ concerns are addressed.

Labor, Drugs

Some Democrats are calling for changes to sections of USMCA dealing with labor standards and drug patents.

The pact commits Mexico to reform its labor laws to allow workers to engage in collective bargaining. But senior Democrats have said the commitments are lacking teeth without adequate enforcement provisions.

America’s biggest federation of labor unions, the AFL-CIO, has said it won’t support USMCA in its current form, and would oppose it if the business community forced a “premature” vote. “What we hear on the Hill is the same thing we’re saying: It’s not ready to be voted on,” AFL-CIO President Richard Trumka said on Bloomberg TV Friday.

Democrats also aren’t enthusiastic about a drug patent provision that would force Mexico and Canada to extend protection for biologic drugs, warning it could raise prices for consumers.

Steel, Aluminum

Mexico and Canada have warned they may not ratify USMCA unless the U.S. lifts tariffs on steel and aluminum. The duties are also unpopular with lawmakers from Trump’s own Republican Party.

Chuck Grassley, the chairman of the Senate finance committee, said the agreement wouldn’t be considered as long as the duties remain in place.

The administration is considering replacing the tariffs with quotas, which are equally, if not more, unpopular with many lawmakers as well as Mexico and Canada.

The Trump administration can make tweaks to the agreement to mollify concerns. But major revisions would require reopening talks with Mexico and Canada, a scenario Lighthizer has ruled out.

Canadian Foreign Minister Chrystia Freeland met with Lighthizer and Democratic lawmakers Monday in Washington, where she discussed USMCA and urged for the removal of metals tariffs.

Time may also not be on Trump’s side. A report on the pact’s economic impact is expected in mid-April. In the weeks that follow, the administration has to submit legislation to implement the agreement. But if the deal isn’t passed by Congress’s August recess, it may be doomed to languish until after the presidential election in November 2020.

‘Heavy Lift’

Senator Ron Johnson of Wisconsin said Republicans tried to press the administration to ratify the deal when his party controlled the House because passage would become more difficult once Democrats took over at the start of this year. “It’s going to be a heavy lift, I fear,’’ Johnson told Fox News.

The president has repeatedly threatened to withdraw from the existing Nafta to pressure lawmakers to approve his new deal, a plan that Pelosi made clear is “not a good idea.” On Friday, Trump said if congressional Democrats don’t ratify USMCA, his alternative would be to “maybe go pre-Nafta” with trade practices in North America.

But with a strong economy expected to be one of Trump’s campaign talking points, he may be more hesitant now to pull the plug.

“It’s pretty clear that he’s not willing to take that gamble, given the effect that would have on markets ahead of the 2020 election,” said Alden, of the Council on Foreign Relations.



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