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President, Democrats reach tentative deal on North American trade pact

On the USMCA then, the White House has reached a tentative agreement with House Democrats and labour leaders over a rewrite of the North American trade deal that has been a top priority for Trump.

“I’m hearing very good things, including from unions and others that it’s looking good. I hope they put it up to a vote, and if they put it up to a vote, it’s going to pass,” the president said on Monday. “I’m hearing a lot of strides have been made over the last 24 hours, with unions and others.”

Trump’s son-in-law Jared Kusher said earlier today that all sides were “making pretty good progress” at a Wall Street Journal event in DC and Mexico’s president Andres Manuel Lopez Obrador has since confirmed that the US and Canada are ready to sign. Details still need to be finalised and the US trade representative will need to submit the implementing legislation to Congress. No vote has yet been scheduled.

The new, long-sought trade agreement with Mexico and Canada would give both Trump and his primary adversary, Speaker Pelosi, a major accomplishment despite the current turmoil in Washington over impeachment.

The new trade pact would replace the 25-year-old North American Free Trade Agreement (NAFTA), which eliminated most tariffs and other trade barriers involving the United States, Mexico and Canada. Critics, including Trump, labour unions and many Democratic lawmakers, branded NAFTA a job killer for America because it encouraged factories to move south of the border, capitalise on low-wage Mexican workers and ship products back to the US duty free.

Weeks of back-and-forth, closely monitored by Democratic labour allies such as the American Federation of Labor and Congress of Industrial Organisations (AFL-CIO), have brought the two sides together. Pelosi is a longtime free trade advocate and supported the original NAFTA in 1994. Trump has accused Pelosi of being incapable of passing the agreement because she is too wrapped up in impeachment.

Democrats from swing districts have agitated for finishing the accord, in part to demonstrate some accomplishments for their majority. By ratifying the agreement, Congress could lift uncertainty over the future of US commerce with its No. 2 (Canada) and No. 3 (Mexico) trading partners last year and perhaps give the American economy a modest boost. US farmers are especially eager to make sure their exports to Canada and Mexico continue uninterrupted.

Canadian PM Justin Trudeau spoke on the phone with Trump on Monday about the progress being made – overcoming their recent Nato spat. Trudeau’s office said they will stay in touch “through the final stages of the negotiations.”

US trade representative Robert Lighthizer last year negotiated the replacement agreement with Canada and Mexico. But the new USMCA accord required congressional approval and input from top Democrats like Pelosi and Ways and Means Committee chairman Richard Neal of Massachusetts, who have been engaged in lengthy, detailed negotiations over enforcement provisions and other technical details.

Republicans leaders and lawmakers have agitated for months for the accord but Pelosi has painstakingly worked to bring labour on board. Democrats see the pact as significantly better than NAFTA and the endorsement by AFL-CIO president Richard Trumka (just granted) could be the key to winning significant Democratic support.

The pact contains provisions designed to nudge manufacturing back to the United States. For example, it requires that 40 per cent to 45 per cent of cars eventually be made in countries that pay autoworkers at least $16 (£12) an hour – that is, in the United States and Canada and not in Mexico.

The trade pact picked up some momentum after Mexico in April passed a labour-law overhaul required by USMCA. The reforms are meant to make it easier for Mexican workers to form independent unions and bargain for better pay and working conditions, narrowing the gap with the United States. Mexico ratified USMCA in June and has budgeted more money later this year to provide the resources needed for enforcing the agreement.

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