The USMCA will now be sent to Trump’s desk to be signed into law. Trump said Wednesday that he’ll do so next week.
Some Democrats, including Senate Minority Leader Chuck Schumer and Sens. Kamala Harris of California, Cory Booker of New Jersey and Bernie Sanders of Vermont, voted against the pact for not doing enough to protect American jobs or address environmental issues.
„Despite the fact that it includes very good labor provisions, I am voting against USMCA because it does not address climate change, the greatest threat facing the planet,“ Schumer said.
Passage of the USMCA comes just a day after Trump signed a so-called phase one trade agreement with China — another major focus of the president’s trade agenda that should appeal to his base in manufacturing states. The China deal includes increased purchases of U.S. goods and adds new restrictions, but it fails to address long-standing concerns over Beijing’s industrial policy.
„It’s like the World Series and Super Bowl all in one week,“ said Sen. Rob Portman (R-Ohio), a former U.S. trade representative, on the Senate floor.
But the USMCA will not go into full effect until Canada approves the pact when its House of Commons reconvenes in late January. Canadian Prime Minister Justin Trudeau lost his legislative majority in the October election, but the country’s Conservatives are expected to lend Trudeau’s Liberal Party enough votes to pass the deal.
Mexico was quick to pass the revised deal, but the U.S.’ southern neighbor still has to deliver on fully implementing its landmark labor reforms that ensure workers have access to organize and participate in independent unions.
Many Democrats — and surprisingly, many labor unions — ultimately got on board after securing changes that make the USMCA one of the most progressive trade agreements ever negotiated by either party.
Democrats worked into the deal stronger labor enforcement provisions that will help ensure companies operating in Mexico boost workers’ rights and give the U.S. the power to punish them if they violate labor rights.
Some of the top labor changes that won over Democrats include provisions that will allow the U.S. to file complaints against Mexican factories suspected of violating workers’ union rights. The revised USMCA would allow the U.S. to be part of a multinational team that verifies whether factories are complying and can penalize them if they do not.
Mexico had to make significant concessions in order to land the deal — and that meant a series of intense and often heated talks with U.S. Trade Representative Robert Lighthizer.
Mexico was largely concerned certain proposals violated the country’s sovereignty, particularly a Democratic ask for the U.S. to be able to send inspectors to factories in Mexico suspected of not living up to their obligations. Mexico ultimately agreed to a toned-down version of that request.
Brown, who helped craft the labor enforcement language, acknowledged he doesn’t know how long it will take to see the effects of the deal, but he expects complaints will start coming in soon after the deal enters force.
Those early complaints — and how the U.S. responds to them — will “send a message to companies that this is the stuff that’s really going to be enforced. We want … the Mexican government to know that early,” Brown said.
The final deal was the product of almost six months of negotiations between the Trump administration and House Democrats to address prevailing Democratic concerns on the pact’s enforcement, environment, labor and pharmaceutical provisions.
Democrats succeeded in getting the Trump administration to drop a provision establishing a 10-year protection period for biologic drugs, which opponents say would have allowed drug companies to keep prices high. That change left some Republicans and business groups disappointed, but not enough to withdraw support for the deal.
Still, the deal is not expected to significantly increase trade within the region. The original NAFTA, which Trump has long regarded as the “worst trade deal ever made,” already eliminated most tariffs between the U.S., Mexico and Canada.
“It’s a modest upgrade from what we had before, but of course, Trump is overstating the deal. And he’s going to get away with overstating because Democrats want to oversell it on how they got all these improvements,” said Bill Reinsch, a trade expert with the Center for Strategic and International Studies.
“Everybody is overselling it,” Reinsch added.
The USMCA, which Trump has called “the best and most important trade deal ever made by the USA,” would raise U.S. GDP by $68.2 billion, or 0.35 percent, by the sixth year after it enters into force, according to the independent U.S. International Trade Commission.
Still, passage of USMCA is a big bipartisan win for Trump just before the heavily partisan impeachment trial formally begins on Capitol Hill.
One of the biggest changes from NAFTA to USMCA that Trump has long touted is tighter rules on how North American autos and auto parts qualify for reduced tariffs. Those changes, which aim to increase car production within the region, will require that companies make significant and costly changes to how they make their cars. Auto manufacturers are being given three to seven years, depending on the type of car, to fully comply with the complicated new requirements.
The deal also includes new provisions on digital trade, which tech groups say will reduce costs and complications for global companies.
But above all, lawmakers, economists and trade experts have emphasized that the new deal offers some much-needed certainty for companies and workers in all three countries. Trump had long threatened to withdraw from the original NAFTA, a move that would have devastated the economies of all three countries.
“It’s a net good. It’s definitely an upgrade,” Reinsch said, adding that it’s also a significant deal in that “it was a textbook in getting something through a Congress that hasn’t exactly been sympathetic to trade agreements in the past.”
Approval of the pact comes just a day after Trump celebrated completion of a preliminary trade deal with China that deescalates trade tensions but preserves many of the imposed tariffs. Checking off USMCA and a phase one China deal clears the way for Trump’s trade team, led by Lighthizer, to tackle trade talks with the European Union, United Kingdom and other countries.
Lighthizer will continue to lead talks with Beijing for a more comprehensive phase two deal that tackles remaining thorny issues, such as China’s massive government subsidies. But Trump has already said he’s in no rush to secure that deal, and his top allies have warned that the next phase might not conclude until after November’s presidential election.
Lawmakers and business groups have been particularly vocal in calling for more certainty with Mexico and Canada — two major U.S. allies and trading partners — in the face of the ongoing trade war with China, which has resulted in tariffs on billions of dollars worth of goods.
But some progressives and free traders on Capitol Hill were vocal in criticizing the revised deal. The majority of Democrats to oppose the deal did so over frustration that the USMCA does not tackle climate change even after House Democrats negotiated to strengthen environmental protections in the deal. The USMCA does not mention climate change — an unsurprising omission given the Trump administration’s views on the issue.
„Trade deals like the USMCA are 1 of our best opportunities to secure hard commitments on global emission drops,“ Rep. Alexandria Ocasio-Cortez wrote in a tweet thanking Schumer for his ‘no’ vote. „The USMCA lasts *years* & makes ZERO reduction commitments.“
Sen. Pat Toomey (R-Pa.), an ardent free trader and only Senate Republican to oppose the deal, argued that the deal will actually limit trade through measures that „sunset“ the deal after 16 years, weaken protections for U.S. investors and apply new supply chain requirements.
The USMCA includes a „whole series of protectionist measures that are designed to diminish trade and investment,“ Toomey said on the Senate floor.
Source: politico.com
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