US House set to approve North American trade deal

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US House set to approve North American trade deal

The vote, which comes a day after House Democrats voted to impeach President Donald Trump, is expected on Thursday afternoon.

The House Ways and Means Committee advanced the US-Mexico-Canada Agreement on Tuesday, indicating broad support. The trade pact will replace the 1994 North American Free Trade Agreement.

Trump pledged for years to quit or renegotiate NAFTA, which he blames for the loss of countless U.S. factory jobs to low-wage Mexico.

Pelosi said she was not worried about Democrats handing Trump a political victory on USMCA as they’re trying to remove him from office.

“It would be a collateral benefit if we could come together to support America’s working families, and if the president wants to take credit, so be it,” Pelosi said during House floor debate. “That would not stand in the way of this.”

CONCESSIONS FOR DEMOCRATS

The changes negotiated by Democrats, which include tighter environmental rules, will also set up a mechanism to rapidly explore labor rights abuses at Mexican factories. They’ve earned the support of many US labor unions that have opposed NAFTA for decades.

US Trade Representative Robert Lighthizer made a concession by dropping a requirement for 10 years of data exclusivity for biologic drugs, a supply that Democrats feared would keep drug prices high and that they called a”giveaway” to large drugmakers.

Some of the most ardent trade skeptics in Congress have voiced support of the bargain, such as Representative Debbie Dingell, who represents an autoworker-heavy district in southeastern Michigan. Dingell said in television interviews that she would back the bill, even though she was skeptical it would bring automobile jobs back to Michigan.

“A no vote is a return to the failed policy of the old NAFTA, the status quo, rather than this more modernized version,” Kind said in floor debate.

DIGITAL, AUTOS, CURRENCY

The new agreement modernizes NAFTA, including language that preserves the U.S. model for internet, digital services and e-commerce development, industries that didn’t exist when NAFTA was being negotiated in the early 1990s.

But the biggest changes need increased North American content in cars and trucks built in the region, to 75% from 62.5% in NAFTA, with new mandates to use North American aluminum and steel.

In addition, 40% to 45% of automobile content must come from high-wage areas paying more than $16 an hour – namely the United States and Canada. Some vehicles assembled in Mexico mainly with elements from Mexico and beyond the area may not qualify for US tariff-free access.

The US Congressional Budget Office estimated earlier this week that automakers will pay almost $3 billion more in tariffs over the next decade for cars and parts that won’t meet the greater regional content rules.

SENATE CONCERNS

The Republican-controlled U.S. Senate is not expected to take up USMCA until January. Senate majority leader Mitch McConnell has said that consideration of this measure would likely follow an impeachment trial in the Senate.

Some of the provisions that attracted Democratic support in the House have alienated at least one Senate Republican free trader. Republican Senator Pat Toomey said he couldn’t support USMCA due to the automotive high-wage content rule, which he called a”complex, onerous minimum wage requirement” that he said would make the U.S. car industry less competitive.

“That means, I believe, fewer American jobs in this industry,” Toomey said in a speech at the American Enterprise Institute.

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