Final Terms of NAFTA Replacement Could be Finalized Next Week, Top Mexican Negotiator Says

Date: December 2, 2019
Source: Washington Post

MEMA Industry News Editor’s Note: MEMA supports the United States-Mexico-Canada Agreement (USMCA) and is urging the U.S. Congress to pass the agreement without delay. The USMCA will provide economic certainty and opportunity for manufacturing growth in the United States and throughout the region. This economic certainty is essential to preserve and enhance vital North American supply chains for the U.S. automotive sector. That in turn allow U.S. suppliers to be competitive in the global mobility marketplace. Please contact Bill Frymoyer and Leigh Merino for more information.

The final terms of a new trade deal among the United States, Mexico and Canada could be completed next week, the top Mexican trade negotiator said Friday, making it possible that Congress could approve the pact by the end of December.

Jesús Seade, Mexico’s undersecretary for North America, spoke in Ottawa after meeting with Canadian Prime Minister Justin Trudeau and Canada’s top trade negotiator, Chrystia Freeland. Seade and Freeland also met earlier this week in Washington with U.S. Trade Representative Robert E. Lighthizer.

Lighthizer has spent months in secretive negotiations with House Democrats deputized by Speaker Nancy Pelosi (D-Calif.) on devising a new trade deal to replace the 25-year-old North American Free Trade Agreement, a top goal for President Trump.

The Trump administration reached an agreement with the governments in Canada and Mexico last year, but it must be approved by the House and the Senate before the changes can become official.

Democrats have pressed the White House to refine the deal, particularly related to how violations of its terms would eventually be enforced. The White House has been vetting Democrats’ demands by the Mexican and Canadian governments to make sure everyone would be in agreement with the final product.

“There are important issues still being looked at, but a lot of issues have already been overcome,” Seade said.

“If the amendments suggested are acceptable improvements, then there’s no reason why we should not be shaking hands next week,” he said.

Seade’s comments are notable, but House Democrats have not publicly signaled that talks have concluded.

“There’s no agreement yet,” said Henry Connelly, a spokesman for Pelosi.

Seade said that if all goes well, ratification of the deal is possible this year, a timeline Pelosi has also described as her goal.

Pelosi and House Democrats led by Ways and Means Committee Chairman Richard E. Neal (D-Mass.) have been holding out for changes that would ensure enforcement of the agreement in a way that would help American workers and prevent further outsourcing of U.S. jobs overseas. Trump has accused Democrats of delaying a vote on the measure, but Democrats have countered that they were waiting for Trump to provide final details of the agreement.

Seade said Friday that enforcement, which has been the watchword for House Democrats, “means lots of things and nothing, because nobody has ever defined it.” But he insisted that Mexico has agreed to implement “a major, deep labor reform.”

Seade said that major improvements have also been negotiated to dispute settlement provisions, seen as weak in NAFTA.

Trudeau tweeted Friday after meeting with Seade, “The partnership between Canada & Mexico is strong, and so is our commitment to implementing the new NAFTA.”

Lighthizer’s office declined to comment.

NAFTA was meant to expand trade among the United States, Canada and Mexico by removing tariffs and other barriers on products as they were shipped between countries. The pact did open up trade, but it also proved disruptive in terms of creating new manufacturing supply chains and relocating businesses and jobs. Many Democrats have agreed with Trump that the deal displaced U.S. workers by moving higher-wage American jobs to lower-wage parts of Mexico.

Trump has assailed NAFTA as “the worst trade deal ever” and threatened while campaigning for president in 2016 that he would withdraw from it entirely upon taking office. Instead, his administration has been in bargaining with House Democrats to replace it with the new U.S.-Mexico-Canada Agreement, which Trump calls USMCA. Negotiations have proceeded even amid the Democrats’ public hearings in their impeachment inquiry into the president.

In a statement Monday, Pelosi said that House Democrats and the Trump administration were “within range of a substantially improved agreement for America’s workers.”

It remains uncertain whether organized labor would endorse the renegotiated deal. AFL-CIO President Richard Trumka has been closely involved in talks and has pushed House Democrats to hold out for more changes. His endorsement would be likely to sway dozens of House Democrats to support the new deal.

If the new agreement is approved by Congress, it would mark a major political victory for the president. Over the past two years, he has used import tariffs and the threats of quitting the continental trade zone to force Canada and Mexico into a negotiation that neither country really wanted.

The USMCA would be the most significant accomplishment thus far for the president’s “America First” overhaul of U.S. trade policy. The deal is expected to have a modest positive impact on U.S. output and jobs, according to the nonpartisan U.S. International Trade Commission.

But the deal could upend North American automotive supply chains by requiring that 40 percent of each vehicle be produced by workers earning $16 per hour, a mandate that would draw jobs away from lower-wage Mexican workers.

Taking account of the Internet economy that has development since NAFTA was inked in 1994, the new agreement also provides for the free flow of data among banks, airlines, online retailers and entertainment companies in the three countries.

In recent days, amid House Democrats’ escalating impeachment drive, the president’s frustration with the multiyear renegotiation has flared. He said Pelosi preferred trying to oust him from office to giving him a win on USMCA.

“She’s incapable of moving it,” he said earlier this week before a meeting with the prime minister of Bulgaria.

Dozens of moderate Democrats have pushed the speaker to bring to the floor legislation to implement the deal, arguing they need to show voters they can get something done amid the impeachment furor.

Among the final issues to be resolved between Lighthizer and Pelosi was Democratic lawmakers’ push for measures that would cement Mexico’s expanded collective-bargaining rights and other labor protections, an area where Seade insisted Mexico has shown serious commitment.

Mary Beth Sheridan in Mexico City contributed to this report.

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