US, Canadian officials set to seal trade deal in Mexico

WASHINGTON (Reuters) – Senior US and Canadian officials were set to fly to Mexico City on Tuesday to work on the final changes to a North American trade pact that could clear the way for a vote in the US Congress before year’s end .

US House Speaker Nancy Pelosi said on Monday night she expected the final language of the US-Mexico Canada Agreement (USMCA) to be set by Tuesday, which would bring Democrats to a “moment of truth” on whether to proceed.

“We’re close. We’re not quite finished yet, we’re within range,” Pelosi told a forum of chief executives on Monday evening, adding that she was working on the language of separate legislation on how the deal would be implemented.

The Trump administration and Democrats in the US House of Representatives are closing in on a deal following several intense days of negotiations with Mexico over potential changes to clauses concerning labor enforcement, steel and aluminum, biologic drugs and internet services.

US Trade Representative Robert Lighthizer and White House senior adviser Jared Kushner are due to fly to Mexico City on Tuesday for meetings to try to pin down final details, an administration official told Reuters late Monday afternoon.

They will be joined by Canadian Deputy Prime Minister Chrystia Freeland, a spokesman for Freeland said.

As House speaker, Pelosi will decide whether and when to bring the trade legislation to the floor for a vote.

The USMCA, which would replace the 26-year-old North American Free Trade Agreement (NAFTA), encompasses $1.2 trillion in annual trade across the continent. Its backers say it is responsible for 12 million US jobs and a third of all US agricultural exports.

It needs to be approved by lawmakers in all three countries. US Democrats have been reluctant to vote to give a political victory to President Donald Trump.

And time is running out. US lawmakers from both parties say that waiting until next year could make it more difficult to ratify because the presidential election campaign – and perhaps impeachment proceedings against Trump – will be in full swing.

House Ways and Means Committee Chairman Richard Neal told reporters he was “delighted” that a deal was close at hand, and was convinced it would offer better protection for workers. “I voted against the original NAFTA,” he said. “By any objective standard, this is substantially improved.”

Democrats said they were waiting to see the changes they had proposed in writing before signing off.

“I want to see it. The written word is always important,” said Representative Rosa DeLauro, a Connecticut Democrat and member of the working group that has negotiated with the Trump administration.

Since negotiations to replace NAFTA first started in August 2017, deals have been imminent numerous times, only to be delayed by last-minute hitches.

Leaders of the United States, Canada, and Mexico signed the initial USMCA agreement more than a year ago, but since then, Democrats controlling the House have pressed for changes to strengthen the enforcement of new labor standard.

They also have pressed for removal of a provision that grants big internet services providers liability protections for third party content, and are seeking to relax data protections for biologic drugs that they fear will mean higher drug prices.

Lighthizer last week also added a new demand – that the trade deal strengthen the automotive rules origin to include steel and aluminum that is “melted and poured” in North America.

The prior requirement that 70% of the steel and aluminum in North American cars come from the region did not specify a production method, opening the door to the used of semi-finished metals from China and elsewhere.

Trump, who blamed NAFTA for the loss of millions of American factory jobs during his 2016 reelection campaign and vowed to quit or renegotiate it, said on Monday that “a lot of strides have been made over the last 24 hours” on USMCA.

“I’m hearing very good things. I’m hearing from unions and others that it’s looking good,” Trump told reporters at the White House.

Trump spoke earlier with AFLCIO president Richard Trumka about the negotiations, a person familiar with the call said.

Trumka, one of the most powerful US labor leaders, has been a major party to the negotiations, pushing for stronger labor enforcement provisions that ensure Mexican workers are allowed to unionize.

Congress had been scheduled to leave Washington by the end of this week, but consideration of spending and defense bills is likely to keep lawmakers working for a few more days beyond that.

US-China trade talks are also set to come to a head this week as new US tariffs are due to take effect on Sunday.