Trump’s new NAFTA faces skeptics in now- Democrat-led House

Trump’s new NAFTA faces skeptics in now- Democrat-led House

WASHINGTON — President Donald Trump spent more than a year browbeating the leaders of Canada and Mexico into agreeing to a rewrite of North American trade rules. And on Friday, leaders of those two nations are set to sign the pact at the Group of 20 summit in Buenos Aires, Argentina.

Now, Trump faces what could prove a more formidable foe: His own Congress.

Emboldened by their takeover of the House starting next year, many Democrats say they want the new agreement to strengthen its protections for American workers from low-wage Mexican competition. Yet any such changes could raise new objections from Republican free traders who want to limit the ways the pact could restrict corporate practices in North America.

What Trump had hailed as a triumph for his administration — a newly named U.S.-Mexico-Canada Agreement to replace the 24-year-old North American Free Trade Agreement, which he’d long condemned as a job-killer for Americans — now faces a hazier future.

“It’s going to be a very tough sell,” said Democratic Rep. Bill Pascrell of New Jersey, top Democrat on the House subcommittee that oversees trade issues.

Leaders of the three countries agreed to the USMCA just hours before a U.S.-imposed Sept. 30 deadline. Yet the legislatures of the three countries must still ratify it. Many trade analysts say the new NAFTA isn’t very different from the old one despite Trump’s claim that it would “transform North America back into a manufacturing powerhouse.”

“It’s really the original NAFTA,” said Mickey Kantor, a partner at the law firm of Mayer Brown and U.S. trade representative in the Clinton administration.

For years, it was the Democrats who complained about NAFTA, which tore down most trade barriers between the U.S., Canada and Mexico. They argued that it encouraged U.S. companies to close factories, lay off American workers and move to Mexico to capitalize on cheap labour. By contrast, pro-business Republicans defended the deal, which they said encouraged an explosion in trade among the three North American countries that benefited all three.

But Trump campaigned as a different kind of Republican. He called NAFTA a “disaster” and dispatched U.S. Trade Rep. Robert Lighthizer to negotiate a new version, threatening to abandon the regional trade bloc entirely if he couldn’t get what he wanted.

Lighthizer worked to win Democratic support. And the USMCA includes provisions meant to address criticisms of the deal it replaces. For example, it requires that 40 per cent of cars eventually be made countries that pay autoworkers at least $16 an hour — that is, in the United States and Canada and not in Mexico — to qualify for duty-free treatment. It also requires Mexico to pursue reforms of labour law to encourage independent unions that will bargain for higher wages and better working conditions for Mexicans.

And when the NAFTA replacement was announced, Senate Democratic leader Chuck Schumer of New York said that Trump “deserves praise for taking large steps to improve” on NAFTA.

John Murphy, senior vice-president for international policy at the U.S. Chamber of Commerce, which supports the new trade deal, argued that it includes features that were intended to address Democratic concerns about how American workers would be affected.

“The possibility of building a bipartisan coalition for this agreement is there,” he said.

But with Democrats in charge of the House and exerting more influence in Congress, a coalition might be harder to assemble.

“This deal hasn’t met the mark,” said Celeste Drake, trade policy specialist at the AFL-CIO. “We’re not really done here.”

Drake and other critics say the requirement for labour reforms in Mexico isn’t enforceable and needs to be given more teeth. And they oppose a provision that gives manufacturers of biologics — ultra-expensive drugs produced in living cells — 10 years of protection from generic competition. Without competition, critics say, pharmaceutical companies could drive up prices and make health care even costlier for Americans.

“NAFTA 2.0 is also stuffed with handouts that will let big drug companies lock in the high prices they charge for many drugs,” Democratic Sen. Elizabeth Warren of Massachusetts said in a speech Thursday announcing her opposition to USMCA. “The new rules will make it harder to bring down drug prices for seniors and anyone else who needs access to life-saving medicine.”

U.S. trade rules are supposed to force Congress to give trade agreements an up-or-down vote — no nitpicking allowed. But there are ways to bypass those restrictions. Congress could, for example, pressure the Trump administration into negotiating a so-called side letter with Mexico to toughen protections for union organizers.

Robert Martinez Jr., president of the International Association of Machinists and Aerospace Workers, for example, called Thursday for new language to ensure that any Mexican labour reforms “will be effectively enforced.” He also wants provisions in the pact that would discourage the outsourcing of U.S. jobs to Mexico to include not only automakers but also such industries as textiles, electronics and call centres.

President Bill Clinton negotiated such a side letter to win congressional approval for the original NAFTA, which was largely negotiated by his Republican predecessor, President George H.W. Bush.

Republicans are sounding objections, too. Two weeks ago, 46 Republican lawmakers sent a letter to Trump opposing a USMCA provision, included at Canada’s insistence, that requires the three countries to protect LGBT employees from discrimination in the workplace.

The old NAFTA remains in place until USMCA takes effect. But Trump could tighten the pressure on Congress by threatening to withdraw from NAFTA if lawmakers balk at the new version. That “New NAFTA or No NAFTA” approach would disrupt the operations of companies that have built regional supply chains on the assumption that goods can cross borders within the trade bloc duty-free. It could also rattle financial markets.

Philip Levy, senior fellow at the Chicago Council on Global Affairs and a trade official in President George W. Bush’s White House, said it might actually work to Trump’s benefit if Democrats kill the deal or leave it in limbo.

“President Trump has seriously overhyped this agreement,” Levy said. “It won’t deliver” the job gains he’s promised.

“If you kill it, you leave him with the myth: ‘I would have delivered all these wonderful things if only those swampland Democrats hadn’t blocked it,” Levy said.

There is precedent for Democratic obstruction of trade agreements: When Democrats last controlled the House, for instance, Speaker Nancy Pelosi managed to delay for years a U.S. trade agreement with Colombia, a priority of President George W. Bush.

What’s more, Levy said, Democrats may well be reluctant to hand Trump a victory a year before the 2020 presidential election — and lose an issue that “has been a rallying cry for them for more than 20 years.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Lieutenant Commander Nicole Robichaud welcomes members of the Liberian Coast Guard aboard Her Majesty’s Canadian Ship (HMCS) Moncton for training with Royal Canadian Navy off the coast of Monrovia, Liberia, Africa on Neptune Trident on March 25, 2017. (Contributed photo by Corp. Ryan Moulton).
Red Deer-raised woman finds her sea legs as commander in the Royal Canadian Navy

Cdr. Nicole Robichaud started out as a local sea cadet

Rode
Feddema adds size and grit to RDC basketball Queens

Iris Feddema has known for several years what she wanted her future… Continue reading

A local photographer captured the contrails of two planes that crossed in the sky over north Red Deer on Wednesday. (Photo contributed by Eric Fischer)
Photo: Planes criss-cross over Red Deer

A local photographer captured the contrails of two planes that crossed in… Continue reading

Red Deer Public Schools will not pilot the new draft curriculum at its elementary schools. (File photo contributed by Red Deer Public Schools)
UPDATED: Red Deer Public Schools says no to piloting new curriculum

Alberta Teachers’ Association support school boards

A man injects hydromorphone at the Providence Health Care Crosstown Clinic in the Downtown Eastside of Vancouver, B.C., on Wednesday April 6, 2016. THE CANADIAN PRESS/Darryl Dyck
NDP lawmaker tables bill to decriminalize drug use as overdose deaths soar

NDP lawmaker tables bill to decriminalize drug use as overdose deaths soar

Conservative leader Erin O'Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Low-carbon bucks: Conservatives pitch consumer carbon pricing through savings account

Low-carbon bucks: Conservatives pitch consumer carbon pricing through savings account

Deputy Chief Public Health Officer Howard Njoo responds to a question about vaccines during a weekly news conference, Thursday, Jan. 14, 2021 in Ottawa. Njoo says a faster vaccine ramp-up alone would likely not have thwarted the third wave of COVID-19 in many parts of the country. THE CANADIAN PRESS/Adrian Wyld
Ottawa’s COVID-19 vaccine point man aims to ensure more predictability for shipments

Ottawa’s COVID-19 vaccine point man aims to ensure more predictability for shipments

Evan Siddall is pictured in Ottawa on September 21, 2017. Former head of Canada Mortgage and Housing Corp. Evan Siddall has been named as the next chief executive for Alberta Investment Management Corp. He will succeed Kevin Uebelein. THE CANADIAN PRESS/Sean Kilpatrick
AIMCo names former CMHC head Evan Siddall as next chief executive

AIMCo names former CMHC head Evan Siddall as next chief executive

A for sale sign is shown in by new homes in Beckwith, Ont., just outside Ottawa, on Wednesday, Jan. 11, 2018. THE CANADIAN PRESS/Sean Kilpatrick
Canadian home sales up 76% year-over-year, set new March record: CREA

Canadian home sales up 76% year-over-year, set new March record: CREA

WestJet president and CEO Ed Sims addresses the airline's annual meeting in Calgary, Tuesday, May 7, 2019. THE CANADIAN PRESS/Jeff McIntosh
WestJet CEO Ed Sims finds Air Canada aid package ‘bittersweet’ as talks drag on

WestJet CEO Ed Sims finds Air Canada aid package ‘bittersweet’ as talks drag on

The TMX broadcast centre is shown in Toronto on May 9, 2014. THE CANADIAN PRESS/Darren Calabrese
S&P/TSX composite, Dow Jones and S&P 500 set record highs as mood rises on economy

S&P/TSX composite, Dow Jones and S&P 500 set record highs as mood rises on economy

A man wearing a protective face mask to help prevent the spread of COVID-19 checks his phone as the sun sets in English Bay in Vancouver on April 5, 2021. Canada's existing mobile phone services and consumer groups will get a landmark ruling from the CRTC this afternoon. The regulatory ruling could shift some of the market power held by Rogers, Bell and Telus, which collectively have more than 90 per cent of the country's subscribers. THE CANADIAN PRESS/Jonathan Hayward
CRTC to allow smaller wireless players better access to national networks

CRTC to allow smaller wireless players better access to national networks

Most Read