Key Democrat demands changes to new North America trade deal
U.S. President Donald Trump’s new trade deal with Canada and Mexico needs changes to secure support from Democrats, according to a senior House Democrat in line to play a leading role on trade policy in the new Congress.
There needs “to be not only changes in the legislation but more enforcement” if the Trump administration wants votes from Democrats, said New Jersey Rep. Bill Pascrell, who is positioned to chair the Ways and Means Trade subcommittee, on Wednesday.
Democrats’ concerns wouldn’t require a major rewrite of the deal and likely could be addressed by putting strong “enforcement mechanisms,” especially over labour and environmental rules, in the U.S. law that brings the deal into force, said Pascrell.
All three nations are preparing to sign the agreement during the Group of 20 leaders’ summit in Argentina taking place from Nov. 30Dec. 1. The trade pact will require approval from the new U.S. Congress that convenes next year, and lawmakers in Mexico and Canada.
The Canadian dollar reversed an earlier advance of as much as 0.2 per cent and traded little changed on the day as of 11:12 a.m. in New York. The Mexican peso briefly erased most of its 0.9-per-cent gain on the news, before recovering ground to be up 0.7 per cent.
Pascrell’s comments underscore the new clout Democrats will yield, after the party seized control of the House of Representatives in last week’s midterm election. While the lawmaker didn’t outline specific changes his party is seeking to the deal, Democrats have been consistent in pushing for tougher labour provisions.
The new NAFTA includes a requirement that Mexico change its laws to bolster independent unions but Democrats and labour activists say the deal doesn’t contain adequate mechanisms to enforce the rules. Some labour activists argue that these concerns could be addressed in U.S. legislation — as proposed by Pascrell — rather than a wholesale reopening of negotiations with Mexico.
The U.S., Canada and Mexico at the end of September reached a preliminary deal to update the North American Free Trade Agreement, which Trump had derided as a “disaster” that cost the U.S. jobs. Negotiators from the three countries worked around the clock to clinch an agreement so outgoing Mexican President Enrique Pena Nieto could sign it before his successor Andres Manuel Lopez Obrador takes office Dec. 1.
The new deal would be called the U.S.-Mexico Canada Agreement, or USMCA. Business leaders welcomed the pact, which staved off the risk that Trump would withdraw from NAFTA. Still, Trump could give six months’ notice of U.S. withdrawal from NAFTA, which put pressure on Democrats to vote for the deal or let the trading bloc collapse.
The revised accord includes tighter regional content rules for cars built on the continent, as well as a provision that requires at least 40 per cent of car production to come from factories where the average wage is US$16 per hour. The U.S. also won greater access to Canada’s dairy market, and added a chapter that commits the nations to avoid gaming their currencies.
But the deal’s approval in Congress isn’t a foregone conclusion. Trump is pursuing approval under so-called fast-track authority, which allows him to seek a simple yes-or-no vote in exchange for clearing procedural hoops. Lawmakers can propose changes to the agreement along the way.