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Trump, Mexico, Canada trade deal, NAFTA update: USMCA in trouble?

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g7 summit trump trudeau
U.S.
President Donald Trump meets with Canada’s Prime Minister Justin
Trudeau in a bilateral meeting at the G7 Summit in in Charlevoix,
Quebec, Canada, June 8, 2018.


Leah
Millis/Reuters



  • The highlight of President Donald Trump’s trade policy has
    been the new trade deal with Mexico and Canada — the USMCA.
  • The deal must still be approved by Congress.
  • Democrats are generally more skeptical of free trade deals.
  • They now control the House following the midterms and could
    vote to reject the deal without some important changes.
  • Additionally, some conservative GOP members have raised
    concerns about provisions in the USMCA that strengthen workplace
    protections for LGBT workers.

The biggest success of President Donald Trump’s prolonged trade
battles has come in the form of a revised trade deal with Canada
and Mexico. 

But recent statements from key members of Congress have
potentially thrown the future of that deal in question.

Creeping doubt from leading Democrats and a group of conservative
House members have created fresh concern that the the US-Mexico-Canada
Agreement (USMCA)
, which
was agreed to by the three member
countries on September 30,
will be able to pass Congress without some significant changes.

Th USMCA, which is primarily an update of the existing North
American Free Trade Agreement (NAFTA),
would make adjustments
to rules on cars, dairy, and other
goods flowing between the US, Canada, and Mexico.

But some of the smaller details in the agreement could also cause
it to hit some snags.

Democratic pushback

The USMCA always faced the headwind that it was moving forward at
a heightened period of political uncertainty, such as the
presidential changeover in Mexico and the midterm elections in
the US.

Before it comes into effect, each country’s legislature must pass
the USMCA:

  • In the US, Trump renegotiated NAFTA under what is known as
    Trade Promotion Authority, or TPA.

  • Under TPA, only a majority of lawmakers
    need to vote for
    the USMCA to pass.
  • But required waiting periods with TPA mean a vote will likely
    not come until the next Congress is seated in January.
  • So Democrats will have a chance to leave their mark on
    Trump’s agreement, since the president will need to win over at
    least a handful to pass the deal.

Democrats in general are more skeptical of free trade agreements
than their GOP counterparts. The original NAFTA was passed with
mostly Republican votes despite being agreed to under President
Bill Clinton. Former President Barack Obama, meanwhile, needed
extensive GOP support to negotiate the Trans-Pacific Partnership.

Despite not being able to make large changes to the text — that
would require Trump to reopen negotiations with Mexico and Canada
— legislation can help determine the level of enforcement of
certain parts of the USMCA.

Rep. Bill Pascrell, who could lead the critical House Ways and
Means Committee next year,
told Bloomberg
that the USMCA can’t pass as is. He said there
needs “to be not only changes in the legislation but more
enforcement” in the deal to get enough Democrats on board.


Other Democrats
have also expressed misgivings. Rep. Nancy
Pelosi, considered the frontrunner to be the next House speaker,
has called for strengthening the pro-labor and environmental

aspects of the deal
 by making them legally enforceable,
instead of just guidelines.

Most important of all are the enforcement provisions in
terms of labor and the environment,” Pelosi
told The New York Times.
“Enforcement, enforcement,
enforcement.”

Read more: A top Republican senator just made
it clear that Trump’s new trade deal with Mexico and Canada could
still fall apart

But amid the early wobbles, most analysts expect the deal to
eventually get done. If Democrats don’t agree to the deal, Trump
could threaten to pull the US out of NAFTA entirely — which would
be an economic disaster — and Democrats don’t have an alternate
track to take.

“We believe that will happen early next year as we don’t believe
Democrats will derail the USMCA without a viable alternative just
to deprive Trump of a ‘win,'” Nancy Vanden Houten, senior
economist at Oxford Economics, wrote in a post-midterm note to
clients.

Conservative pushback

Given Democrats’ hesitation, Trump needs near-unanimous support
from his own party to ensure the USMCA’s passage.

On that front, a small clause in the deal could actually cause a
revolt among the GOP.

Forty conservative House members sent a letter to Trump on Friday
expressing displeasure with
a provision in the USMCA
that requires member countries to
beef up workplace protections for LGBT people.

The House members argue that the deal could force the US to make
significant changes to labor laws to make sexual orientation and
gender identity a protected class — or risk getting kicked out of
the economically critical deal.

“A trade agreement is no place for the adoption of social
policy,” the letter said. “It is especially inappropriate and
insulting to our sovereignty to needlessly submit to social
policies which the United States Congress had so far explicitly
refused to accept.”

Read more: The US, Canada, and Mexico’s new
trade pact looks a lot like NAFTA. Here are the key differences
between them.

Losing 40 GOP members in the House would require more than 50
Democrats to flip and support the deal for it to pass, which is
highly unlikely. 

But making any such changes would be difficult. The deal text is
set to be signed at the G20 summit on November 30, and Canadian
Prime Minister Justin Trudeau is unlikely to accept any side
deals to allow the US to ease up the protections.

But without those changes, conservatives say the deal could be in
trouble.

This is language that is going to cause a lot of people to
reconsider their support of the trade agreement, and to the point
that it may endanger the passage of the trade agreement unless
something is done,” GOP Rep. Doug Lamborn
told Politico on Friday
.

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