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House Green-Lights New North American Trade Deal

A day after impeaching him, the House of Representatives handed President Donald Trump a victory Thursday by approving a new trade agreement between the U.S., Mexico and Canada.

WASHINGTON (CN) – A day after impeaching him, the House of Representatives handed President Donald Trump a victory Thursday by approving a new trade agreement between the U.S., Mexico and Canada.

Billed as a replacement for the North American Free Trade Agreement, the USMCA was signed in November of last year by President Donald Trump, Canadian Prime Minister Justin Trudeau and former Mexican President Enrique Pena Nieto.

House Democrats, however, only recently signaled their approval of the agreement, saying last week that they would vote to ratify the deal after negotiating with the White House.

Democrats initially took issue with enforcement of labor and environmental provisions and some rules governing intellectual property for pharmaceuticals.

“There is no question of course that this agreement is much better than NAFTA,” House Speaker Nancy Pelosi, D-Calif., said. “But in terms of our work here it is infinitely better than what was initially proposed by the administration.”

The House approved the USMCA in a 385-41 vote Thursday.

Because NAFTA dissolved the majority of trade barriers between the United States, Mexico and Canada, President Trump and many Democratic lawmakers alike have said the agreement incentivized U.S. companies to move their factories to Mexico where they could exploit low-cost laborers and then ship their products back without tax.

In comparison, the USMCA is considered pro-labor. Among other measures, Mexico is required to make it easier for workers to unionize, with the aim of boosting wages so the country is less attractive for U.S. companies to move factories south.

Automobiles will qualify for zero tariffs if 75% of their parts were made in Mexico, the U.S. and Canada, which is an increase from 62.5% under NAFTA. Additionally, 40% of car parts are required to be made by workers making at least $16 an hour by 2023.

Canada will import more American dairy products under the USMCA, which Trump pushed for heavily to give a boost to U.S. farmers.

The agreement also includes provisions on intellectual property, extending the copyright length from 50 to 70 years after the author’s death. Environmental provisions are aimed at protecting marine wildlife from overfishing and pollution.

The deal is subject to review every six years, at which time the three countries can decide whether to extend it beyond the initial 16-year period.

Democrats were particularly concerned with text in the original agreement dealing with pharmaceuticals and their intellectual property protections. The first version protected drugs from generic competition for 10 years, but that provision is now gone. Another measure that would have allowed protections for three more years on older drugs, if pharmaceutical companies found additional uses for that drug, was also scrapped.

“The White House draft contained unacceptable giveaways for Big Pharma that would have locked in high prescription drug prices. Democrats have eliminated these handouts to big corporations and improved access to life-saving medicines,” Pelosi said from the House floor Thursday. “The USMCA is far from perfect, but there’s no denying that the trade rules in America are now fairer because of the hard work of so many people and our perseverance.”

Spotlighted by House Minority Leader Kevin McCarthy, R-Calif., discussion of the deal on the House floor Thursday was a sharp contrast to Wednesday’s bitter debate over impeaching President Trump.

McCarthy, touting the resilience of Republicans to bring the USMCA to a vote, said his party never relented on trying to push the bill through the House. Of all the times the agreement was discussed in the House, 91% of that time the issue was brought up by Republicans, he said.

“Our economy is booming, exceeding expectations on a regular basis. Thanks to this president and Republicans in Congress pushing pro-growth policies, we’re living through the best economy in a generation,” McCarthy said. “The ratification of the USMCA will guarantee the trajectory continues to move in the same positive direction.”

Representative Richard Neal, a Massachusetts Democrat who chairs the House Ways and Means Committee, said during debate the deal was a result of more than a year of negotiations — most of which centered on strengthening employment enforcement provisions.  Those mechanisms were the crux of the agreement, Neal said, as NAFTA lacked measures to protect workers.

“As I noted many times over the past year, I did not vote for the original NAFTA. The chief reason was the lack of enforceability mechanisms,” Neal said. “NAFTA has been symbolic of our broken promises to these workers. Over 25 years of NAFTA there have been 39 petitions filed documenting the exploitation of workers and zero enforcement actions taken to remedy those violations.”

Representative John Lewis, D-Ga., chairman of the Ways and Means Subcommittee on Oversight, said that when NAFTA originally came up in the House 26 years ago, he opposed the bill with every bone in his body. The USMCA offers a path to create a new trade model, he said.

“NAFTA failed our workers. It failed our Mexican brothers and sisters. It failed Mother Earth. NAFTA destroyed the hopes and dreams of a generation. It started a race to the bottom,” Lewis said Thursday.

Trump had threatened a 5% tariff against Mexico in May while negotiating the parameters of the agreement, which he warned could grow to 25% if Mexico did not slow the flow of immigrants into America. However, he suspended those tariffs days before they were set to take effect.

Categories / Economy, Government, International

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