Balancing Impeachment with Trade
Terry H. Schwadron
Dec. 12, 2019
It is almost incongruous — almost.
Just as the House was leveling impeachment charges against Donald Trump, Speaker Nancy Pelosi and Trump announced they had reached a deal on updating the North American trade pact –a political victory for the president and for Democrats who each want to celebrate a major legislative accomplishment that is not impeachment.
It was a “victory” for being able to walk and chew gum at the same time, the cliched motto for and against Democrats and Congress this year.
Top trade officials from the United States, Mexico and Canada met in Mexico City to make the announcement of a deal to replace NAFTA.
Of course, Trump has been beating this horse since he took office, both deriding NAFTA as flawed for the United States, and in recent months, targeting Democrats for paying attention to impeachment rather than to this trade issue.
Here’s the thing, though.
In doing what government is supposed to do, the parties to the deal may have lost significant Republican support for the very trade bill that they for which they have screamed.
Despite threats of shutdowns or the predictions of financial doom by the White House, now we can be assured that business with our biggest trading partners, Mexico and Canada, will continue uninterrupted. Overall, from a business perspective, the changes in the agreement are relatively small, though important.
The changes are unlikely to bring about the Trump promises about return of factories from Mexico, or keeping U.S. factories, like car makers, from deciding that lower wages in Mexico are more inviting than some call to nationalistic patriotism.
But to get to this point, Democrats and U.S. labor unions have insisted on better conditions for workers in Mexico, no small feat.
Key Republicans already are indicating that they are uncomfortable with some of the changes needed for compromise, needed for both sides to be able to declare victory.
The Hill.com talked with Republican Senate leaders who are worried that the compromise may have shifted too far to the left as part of an effort to get Democrats on board.
Sen. John Cornyn, R-TX, said a deal that has won support from the AFL-CIO “could be problematic,” adding, “I just hope he hasn’t gone too far in Speaker Pelosi’s direction. . . My concern is that what the administration presented has now been moved demonstrably to Democrats, the direction that they wanted.”
Sen. John Thune, R-SD, number two Senate Republican said, “I mean if they got the unions my assumption is that there are going to be a lot of things that were changed from the last time we’ve seen anything on this. So yeah, I think there’s a potential that you could have in their . . . desire to try to satisfy Democrats in the House, labor unions cost you some Republican support depending on what those changes are.”
House Democrats and the president are trying to get a vote on USMCA by the end of the year.
Politico.com and The New York Times note that deal keeps tariff-free trade among the three countries, and adds stricter rules for how autos made in the three countries can qualify for preferential treatment on duties. It also includes modernized digital trade rules and stronger labor and enforceable environmental standards.
The revised pact took a year to complete, resulting in a complex 2,082-page agreement. While much of it simply updates NAFTA for the 21st century, it also contains changes intended to encourage manufacturing in the United States, including by raising how much of a car must be made in North America to qualify for zero tariffs. It requires, for example, that 70% of a car’s metals be produced in North America, and that 40% to 45% of a car’s parts must be made by workings earning an average of $16 an hour.
It also rolls back rules about arbitration among corporations that had allowed companies to bypass American legal systems.
A key change has been to lessen an extension on exclusivity for U.S. pharmarceutical companies on producing prescription drugs. The industry had lobbied the White House to support a 10-year period of exclusive rights. By watering that down, advocates say U.S. consumers can realize savings on prescription drugs produced in Mexico or Canada.
The changes could give Democrats a chance to lock in long-sought policy changes to a trade pact they criticize as prioritizing corporations over workers, laying the groundwork for future trade agreements.
U.S. Trade Representative Robert Lighthizer, White House senior adviser Jared Kushner, Canada’s Deputy Prime Minister Chrystia Freeland joined with Mexican Foreign Minister Marcelo Ebrard to mark conclusion of the deal.