The Trump administration included provisions in the new trade deal with Canada and Mexico to win Democratic support, but if the midterm elections hand Democrats the majority in either the House or Senate, the path forward for the revised agreement may be more complicated.
President Donald Trump is expected to sign the agreement in principle on Nov. 30 and send implementing legislation to Congress sometime later. Trump also notified Congress on Tuesday that his administration plans to launch trade negotiations with the European Union, Japan and the United Kingdom in 2019.
Many congressional Democrats have long been skeptical of trade, and the midterms may give them some leverage if they gain control of the House or Senate. The likely new chairmen of the committees that have jurisdiction over trade, Rep. Richard E. Neal of Massachusetts on House Ways and Means and Sen. Ron Wyden of Oregon on Senate Finance, would be the key lawmakers to raise their party’s concerns. While the two lawmakers are the presumed chairmen, their caucuses would make the final decision after the midterm elections.
A Wyden aide said the senator “would certainly expect to be Finance chairman” if the Democrats win the Senate.
Wyden, now ranking member on the Finance Committee, has shown a willingness to needle Trump. He introduced a bill that would require a president at the start of U.S. trade negotiations with a country to disclose personal business or other economic interests in that country. The bill has not moved this Congress, but Wyden as chairman would likely continue to raise questions about trade actions that could benefit the Trump family.
He also has been critical of Trump’s use of national security as a pretext for imposing steel and aluminum tariffs on trading partners and of trade tactics he says lack a strategic plan. While he questions the Trump administration’s approach to trade, Wyden often notes that trade is an important part of his state’s economy.
He has said he wants to delve into the revised pact to determine if it represents a significant improvement on labor and the environment. If approved, the agreement in principle would replace the 1994 North American Free Trade Agreement.
“The crucial test for a new NAFTA, or any new trade agreement, is whether it is enforceable, particularly with respect to promises to protect worker rights and the environment,” Wyden said after the agreement text was released Sept. 30. “Americans are sick of hearing speeches about the benefits of new trade agreements when the agreements in place aren’t even enforced and their opportunities don’t materialize.”
Wyden was elected to Congress in 1996, two years after NAFTA was implemented.
Neal, a Ways and Means Committee member since 1993 and now the panel’s top Democrat, voted against NAFTA and says he will scrutinize the proposed replacement.
“The bar for supporting a new NAFTA will be high,” Neal said in a statement this month. “NAFTA has had many critics over the years and its flaws are well-known.”
He added: “Like me, many of my colleagues did not support the deal originally. And those who did will have serious questions that they need answered before doing so again.” Neal’s office did not respond to a request for his trade priorities if he becomes chairman.
Trump’s Trade Representative Robert Lighthizer may have made inroads with Democrats with his outreach to those in Congress as well as to labor unions and liberal organizations that are part of the party’s base.
Sen. Sherrod Brown of Ohio, a Finance Committee member and staunch labor supporter, said he has spent hours on the phone over the past months with Lighthizer discussing policy. Lighthizer, a former Senate Finance staffer for Republican Sen. Bob Dole, may have an edge over his predecessors in understanding lawmakers and their concerns.
The proposed United States-Mexico-Canada Agreement includes labor provisions in the main text and would greatly limit the use of a mechanism to settle trade disputes, a binding arbitration process corporations use to sue foreign governments over policies or laws that hurt profits.
Labor groups have spent years pushing for those changes. They also welcome language that would require 75 percent of the content of cars and auto parts made in North America to come from the three countries and a requirement that the Mexican government approve by January 2019 changes to its labor laws to give workers more protections.
“There are some good things on paper. Like we say in the labor movement, a collective bargaining agreement is only good when you see the final language and it gets signed,” said Cathy Feingold, director of the AFL-CIO’s International Department. “We are far from saying that this could be an agreement that is where we need it to be.”
Brandon Arnold, executive director of the pro-trade National Taxpayers Union, said despite the labor provisions Trump should expect Democrats to use their leverage as a majority to seek more concessions.
In 2007, House Speaker Nancy Pelosi and Ways and Means Chairman Charles B. Rangel pushed the George W. Bush administration to renegotiate pending trade agreements with Peru and Panama to include a set of labor and environmental principles known as the May 10th Agreement.
It is unclear at this point what course of action Pelosi could take on the NAFTA replacement pact if she became speaker again in 2019, Arnold said. But he does not doubt, he said, that Pelosi would “use her negotiating power to the maximum extent that she possibly can” to press Trump to reopen the agreement or to add specific provisions in the implementing legislation sent to Congress.
“Will she get some concessions? Will she be able to get some deals that are pro-labor, pro-environment?” Arnold asked. “Quite possibly.”
Scott N. Paul, president of Alliance for American Manufacturing, said the Republicans’ need for votes to pass the proposed trade pact will determine how much the president is willing to offer Democrats. It’s a time-honored procedure.
“If I were a Democrat, I would say, you know we can get an infrastructure package, maybe we can find mechanisms that are going to guarantee worker rights the support that we don’t have right now,” Paul said.
But Arnold said there’s a limit to how far Democrats can go if enough of them believe a revamped pact is better than no trade deal.
“Absent approval of this new NAFTA deal, there is very little question the Trump administration will at least attempt to withdraw from the existing NAFTA agreement,” he said.
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