Senate Approves New Trade Deal With Mexico and Canada

President Donald Trump, Canada’s Prime Minister Justin Trudeau, right, and then-Mexican President Enrique Pena Neto, left, participate in the USMCA signing ceremony on Nov. 30, 2018, in Buenos Aires, Argentina. (AP Photo/Pablo Martinez Monsivais)

WASHINGTON (CN) — The Senate voted 89-10 on Thursday to send a new trade agreement between the U.S., Mexico and Canada to President Donald Trump’s desk.

Billed as a replacement to the North American Free Trade Agreement, Senate Majority Leader Mitch McConnell said from the floor Thursday that experts predict the so-called USMCA will yield 176,000 new jobs for Americans.

Trade with both Mexico and Canada directly supports 12 million American jobs, McConnell said, and has pumped billions of dollars of revenue into the U.S. economy annually. Both Mexico and Canada buy one-fourth of all U.S. agricultural products, he added.

“Take my home state of Kentucky as one example. Mexico and Canada buy $300 million of agricultural exports from Kentucky growers and producers every year. They buy $9.9 billion of our state’s manufacturing exports,” McConnell said. “Commerce with our neighbors is essential across the board.”

The USMCA was first signed in November 2018 by Trump, Canadian Prime Minister Justin Trudeau and then-Mexican President Enrique Pena Nieto. House Democrats rejected that draft, and only signed off on it last month after negotiating labor, environmental and intellectual property provisions of the deal with the White House.

The House approved the agreement in a largely bipartisan vote, 385-41. Speaker of the House Nancy Pelosi, D-Calif., said the version her chamber passed was “infinitely better than what was initially proposed by the administration.”

The previous trade agreement, NAFTA, dissolved the majority of trade barriers between the United States, Mexico and Canada.  President Trump and many Democratic lawmakers alike have said it 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.

The USMCA, by contrast, 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.

Senator Bernie Sanders, I-Vt., spoke out against the new trade deal during debate on the Senate floor, saying the deal locks in provisions that could devastate family farms and other union-protected industries.

He said he supports neither NAFTA nor the USMCA.

“Mr. President, I not only voted against NAFTA in 1993, but I marched against it,” Sanders said.

But Senator Ron Wyden, D-Ore., said the USMCA is good for workers because Democrats had stopped the Trump administration from going ahead with “business as usual on trade enforcement.”

“If you write a trade agreement with weak enforcement, particularly on labor and environmental issues, my view is you sell out American workers in key industries, whether it’s automobiles, whether it’s technology, whether it’s manufacturing, you basically set up a race to the bottom on cheap labor,” Wyden said.

Another provision of the deal will see Canada importing more American dairy products, 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.

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 USMCA 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.

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.

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