With Democrats in charge, trade deal not a done deal

WASHINGTON—Yes, the leaders of Canada, the U.S. and Mexico have a deal on a new trade agreement.

No, that does not mean the negotiations are definitely over.

The legislatures of all three countries must approve the new United States-Mexico-Canada Agreement for it to take effect. And the Democrats, who have won back control of the House of Representatives, one half of the U.S. Congress, have signalled this week that they are not ready to vote for the deal as it stands.

“There are certainly some improvements in the USMCA over the previous NAFTA, but the jury is still out as to whether this deal meets my standard for a better deal for American workers,” Rep. Bill Pascrell, the top Democrat on a House subcommittee on trade, told a hearing on the USMCA on Thursday.

Trump’s team said it was designing a deal that would win the support of the U.S. labour movement, a key ally of Democrats and traditionally an opponent of trade agreements. But the AFL-CIO labour coalition said Thursday that it was reserving judgment.

“While there are positive changes in it,” such as improved terms on labour and manufacturing rules, “it is not obvious that the improvements are sufficient to make a meaningful difference to jobs and wages or to Mexico’s protection union regime,” AFL-CIO trade policy specialist Celeste Drake testified.

She added: “Other rules in the agreement undermine the interests of working families.”

The complaints from the left have been largely centred on what it sees as the weakness of provisions meant to compel Mexico to raise its wages and improve its labour standards. Critics see Mexico’s labour regime as one of the key reasons companies have shifted manufacturing jobs away from the U.S.

The Trump administration took steps to address Mexican labour, but unions and some Democrats say not enough has been done to guarantee the enforcement of provisions meant to compel changes.

The left has also quibbled with certain provisions. Unions say, for example, that a new rule requiring a certain percentage of a car to be made by workers earning at least $16 (U.S.) per hour needs to be indexed to inflation.

Rep. Nancy Pelosi may be returned to her previous post as House Speaker when Democrats take control in January. Under Pelosi, House Democrats took more than four years to approve trade agreements made by another Republican president, George W. Bush — and only after Democrat Barack Obama was elected president and made changes to those texts.

“Right now, it is a work in progress,” Pelosi told the New York Times.

Changes could be made through either the main text of the agreement or through “side letters,” like those added to the original NAFTA by Democrat Bill Clinton when he was president. NAFTA will remain in effect as the debate plays out.