The White House announced Tuesday that a new free trade deal between the United States, Mexico and Canada may be put on hold until the fall as negotiations with Speaker of the House Nancy Pelosi and House Democrats continue over several sticking points.
White House economic adviser Larry Kudlow told national news outlets that a congressional vote on the new United States-Mexico-Canada Agreement (USMCA) may have to wait despite President Donald Trump’s wish to push it forward.
But it’s not a dead deal, Kudlow assured.
Speaker Pelosi must give it the “green light” before the deal will officially be presented in the halls of Congress, he said.
“I remain optimistic that she will provide a vote. It will happen sometime this summer, hopefully. It could stretch on to the autumn, but I think it will be sooner than that. It’s up to her, not me,” Kudlow said.
NAFTA still in place, for now
The announcement surfaced as rumors swirled that President Trump was going to force Congress’ hand and send the implementing legislation to the Senate Tuesday. Under existing Trade Promotion Authority rules, that would have required a vote within 90 days.
While Trump has threatened in the past to withdraw from the existing North American Free Trade Agreement to force congressional action on a new deal, it remains in place for now.
No time for more delays
There is still hope the U.S. Congress will ratify the pact sooner than later. Mexico was the first country to ratify the deal almost unanimously last month. Canada is also expected to approve the deal with little fuss.
The U.S. should follow suit, said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. Mexico is the state’s top trading partner. Canada is No. 3. Trade with the two amounts to more than $20 billion annually.
“Arizona cannot afford to wait,” Hamer said in a column he co-authored with San Diego Regional Chamber of Commerce Vice President of International Business Affairs Paola Avila. “Every major chamber of commerce and business group across North America supports USMCA. The time is now for Congress to act and to take advantage of all that USMCA has to offer.”
No major surgery required
Top officials and lawmakers in the U.S. have stated that there are issues that need to be addressed, but a complete renegotiation is not necessary.
The agreement needs some “surgical” tweaking, Speaker Pelosi told the Capitol press corps June 27.
“We do not want to pass this agreement just slightly different from NAFTA with a little sugar on top and say, ‘See, we did something different.’ If it isn’t going to be enforceable, it will just be NAFTA with sugar on top,” she stated.
Sticking points continue to center around three key issues. Democrats are seeking changes that would:
- Strengthen enforcement measures to assure that new labor reforms adopted by Mexico will take place
- Strengthen enforcement of new environmental protection to protect waterways and other natural areas near manufacturing sites
- Rework provisions that threaten to push up the price of prescription medicines in the U.S.
Twelve million jobs and counting
More than seven months have passed since the leaders of the three countries signed USMCA that would replace NAFTA-which was enacted in 1994.
At stake? Tariff-free trade between the three countries generates more than $1.2 trillion in revenues, according to the U.S. Department of Commerce.
NAFTA supports more than 12 million American jobs, according to a study by the Business Roundtable, a group of chief executive officers of major U.S. corporations that support USMCA passage.
Losing free trade with two of its largest trading partners and allies, would cost nearly 2 million jobs and reduce U.S. exports by almost $20 billion, the study shows.
Hundreds of industry groups have been pounding Congress with calls and letters, calling for ratification. Organizations like the National Cattlemen’s Beef Association (NCBA) have launched full media campaigns, featuring personal stories from members who benefit from free trade.
“The USMCA keeps the highly successful framework for U.S. beef trade in place and preserves access to two of our largest export markets,” NCBA President Jennifer Houston said in a prepared statement. “Cattle producers need certainty with Canada and Mexico so that we can continue to build on 25 years of duty-free, unrestricted trade in North America.”
USMCA maintains science-based trade standards while rejecting failed policies of the past, like mandatory country-of-origin labeling, she said.
USMCA brings trade into digital age
A report by the independent International Trade Commission shows that the USMCA will create more than 176,000 additional jobs, raise the annual U.S. GDP by $68.2 billion and increase U.S. exports by $33.3 billion.
A sampling of the new provisions in the USMCA:
- Protections for innovations and intellectual property in pharmaceuticals, agriculture and technology
- Benefits U.S. manufacturing with requirements for 75 percent of automotive content to be made in North America
- Drives wages higher by requiring that 40 to 45 percent of auto content be made by workers earning at least $16 per hour
- Enables U.S. chemical manufacturers to create a model for chemical regulations
- Strengthens worker rights in Mexico, including the right to organize and vote
To see what jobs are supported by U.S. exports and imports in all 50 states, visit: Benefits of trade with Canada and Mexico. For a snapshot on the Arizona impact, visit: The USMCA and Its Impact on Arizona.