Trump announces USMCA deal to replace NAFTA
The U.S.-Mexico-Canada trade agreement could mean more jobs around the Dallas Fort Worth International Airport and at ports around the country. But it might hurt the produce industries in Florida and Georgia.
Or the pact might spur foreign competition that could depress American wages.
The uncertainty about the impact of the agreement, if it is ratified, is making it a rough summer for the Trump administration and supporters who want Congress to approve the United States-Mexico-Canada Agreement (USMCA).
The main struggle over the trade agreement is in the Democratic-run House of Representatives. Skeptics there are led by liberals and ardent supporters of organized labor, as Democratic leaders scramble to win what House Speaker Nancy Pelosi calls “surgical” fixes to the proposed agreement.
When the House returns on Tuesday after an Independence Day recess, it plans to stay in session until July 26, then leave again until September 9. The agreement needs to be ratified by the legislatures in Mexico — whose Senate approved the deal last month — as well as in the United States and Canada.
U.S. House leaders won’t give a precise timetable, but they also know they’re up against a political clock. Once campaigning intensifies for next year’s elections, recent history shows it gets tougher to convince wavering lawmakers to accept a trade agreement as positions harden.
“I think there’s no interest on the part of our leadership, certainly not me, to have this bleed into 2020,” said Rep. Earl Blumenauer, an Oregon Democrat who chairs the House trade subcommittee.
The fate of the agreement rests with three different groups of House members: The leaders, the skeptics and the politically vulnerable.
House Speaker Nancy Pelosi, D-Calif.
“I frankly thought this would be the easiest trade agreement that we could pass,” the California Democrat told reporters recently.
Instead, she’s facing a Democratic caucus split between liberals and more centrist members. Pelosi has created groups of members to find consensus and work with the Trump administration. They’re looking at the environment, enforcement, labor and pharmaceuticals.
Any changes to the administration’s proposal at this point, she said, “would be surgical.”
The “overarching issue,” Pelosi said, is enforcement, and giving assurances to wavering members will be a challenge.
“You can have every kind of agreement in the world, but if you don’t have effective enforcement you’re just having a conversation,” she said.
Rep. Earl Blumenauer, D-Ore.
He offered measured optimism that differences can be resolved.
He tries to reassure colleagues who are wary of whether Mexico can enforce the agreement that the country’s officials are well-intentioned. And he is trying to assure Mexican officials that the United States is equally well-intentioned, after President Donald Trump threatened high tariffs and crackdowns on immigration.
“Part of it is we’re demonstrating respect for them,” Blumenauer said of his outreach to Mexico, “respect we’re not certain has been evident in certain administration actions towards the Mexican government. I think we can play a constructive role.”
An example: The 1993 North American Free Trade Agreement, which this pact would succeed, did little to curb border bodies of water pollution, Blumenauer said. “We didn’t have any tools to clean it up, and that’s a problem for people on both sides of the border. We’d like to find out what the tools are to be able to make a difference,” he said.
Rep. Vern Buchanan, R-Fla.
The Bradenton-area congressman is the trade subcommittee’s top Republican and an enthusiastic supporter of the agreement.
He recognizes it’s not perfect. Buchanan led a group of Democrats and Republicans who signed a letter to U.S. Trade Representative Robert Lighthizer urging him to make sure “clear rules are in place” to protect U.S. seasonal and perishable produce from unfair trade practices.
Buchanan, though, also sees huge benefits for his district, notably its port.
“There’s opportunities with Mexico, obviously,” he told McClatchy. “There’s business being done and there’s more that can be done in terms of our port and port related opportunities. There’s a lot of room for expansion.”
Rep. Henry Cuellar, D-Texas
“It means trade, trade, trade, job, job, job,” the Texas Democrat, a member of the House leadership, said of the benefits the trade deal would bring to his border-straddling district.
Laredo is the largest commercial land port of entry in the United States, Cuellar said.
“We get more international trains than any other place,” Cuellar said. “We get more buses than any other place. Why are buses important? Because Mexico sends over 19 million tourists over here where they spend almost $20 billion a year in Dallas, Fort Worth, Laredo, San Antonio. You name the place.”
Trade through the Laredo port adds an estimated 363,000 jobs to the Texas economy and accounted for 32 percent of all international trade in the state in 2015, a report from the Texas comptroller’s office shows.
Cuellar said he shared some of the same concerns with many of his Democratic colleagues but pointed to Mexico’s altering of labor laws and recent ratification of the agreement as good omens.
Rep. Ro Khanna, D-Calif.
“This is a terrible, terrible agreement. It’s basically a handout to pharmaceuticals,” the California Democrat said at a rally outside the Capitol last week.
He was surrounded by like-minded Democrats and a long list of representatives from progressive, labor, retiree and environmental groups.
Their chief concern involves biologics, drugs produced from living cells that tend to be more costly — and have enormous potential to treat illnesses that are currently difficult to cure.
The trade agreement would give biologic manufacturers 10 years of protection from competition. Khanna and others argue that will keep prices artificially high, since generic alternatives would be prohibited during that period. Liberals want a shorter exclusivity period.
Drug companies counter that developing biologics is expensive and they need to both protect and recoup their investment.
Khanna saw things differently. The current trade plan, he said, “would deprive people of lifesaving drugs. It is nothing more than a handout to pharmaceuticals. It makes no political sense.”
Rep. Pramila Jayapal, D-Wash.
The Washington state Democrat co-chairs the Congressional Progressive Caucus, a group of about 90 House liberals who have long been wary of the USMCA.
The caucus website features its “Fair Trade Agenda” that calls for “robust and binding labor and environmental standards across all partner countries” and “an end to corporate handouts that promote monopoly power.”
Ask Jayapal her views on the USMCA, and she offers the same points the agenda makes. “Labor enforcement, biologics, environmental provisions … we have to fix those and that will require reopening the agreement,” she said. “We really want to get to a yes but I really don’t know if we’re going to get there.”
Rep. Austin Scott, R-Ga.
The Georgia Republican is concerned that the trade agreement could be devastating to many of the produce farmers in his Macon-based district.
“It’s the fruit and vegetable guys that USMCA hurts,” Scott said.
Scott and other Georgia and Florida members of Congress worry that cheaper, heavily subsidized Mexican produce is outcompeting U.S. fruits and vegetables at the grocery store, putting many southern farmers out of business.
Thirty-six of the Georgia and Florida lawmakers signed a letter to Lighthizer asking him to add provisions to the USMCA to make it easier for farmers to request the federal government put tariffs on specific international products that are devastating their business.
Scott said he would back the trade agreement if provisions are made to protect his state’s fruit and vegetable farmers.
Rep. Kenny Marchant, R-Texas
The veteran Texas Republican won reelection with 50.6 percent of the 2018 vote, and views the trade agreement as a big boost for his Dallas-Fort Worth area constituents.
Part of his district surrounds Dallas Fort Worth International Airport. “So we don’t particularly make anything but we sell it, store it, distribute it, transport it, the whole thing,” Marchant said.
“So anytime you have expanded trade or expanded treaties, etc., my district’s going to have more warehouses, more distribution centers, they’re gonna use the airport more,” he said.
He realizes enforcement remains an issue. “A lot of our entrepreneurs are reluctant to go down there and start a big business without the assurance they have an effective court system so they can litigate any differences they have,” he said.
Rep. Sharice Davids, D-Kan.
Canada and Mexico are Kansas’ two biggest trading partners, a fact that the Democratic freshman is keenly aware of as she contemplates a vote on the USMCA.
Davids’ suburban Kansas City district isn’t as agriculture-heavy as the rest of the state, but the trade fight has had ripples throughout the region’s economy.
Davids’ GOP colleagues from Kansas have been pressing her on the issue — as have agriculture trade groups from the state.
“We’re putting all the pressure we can on those folks through the ag community,” said Rep. Roger Marshall, a Republican who represents western Kansas. “She’s in a swing district. A lot of her constituents will depend on USMCA.”
Davids’ spokeswoman called a trade deal crucial for Kansas, a state that relies heavily on agriculture and aviation exports. But Davids “also thinks the agreement should have strong environmental and labor protections, and is advocating for those as well as strong enforcement measures for when benchmarks aren’t met,” her spokeswoman said.
Passing a trade deal will have high stakes for Davids as she defends her seat in 2020 in a district where Republicans outnumber Democrats. Davids campaigned as a moderate and has sought to establish a reputation as a pragmatist since defeating a GOP incumbent last year.
If a trade deal fails to pass this year, it will likely be used as a hammer against Davids on the campaign trail next year as Republicans seek to recapture the seat.
Rep. Joe Cunningham, D-S.C.
The South Carolina Democrat was the first in his party to win the Charleston-area seat since 1981. He represents a district that Trump won by about 13 percentage points in 2016.
Cunningham understands no agreement will be perfect, but many businesses want “some type of finality” and an ability to forecast the immediate future.
“I want to get something across the finish line and I feel like every time we’re coming close to finalizing a deal the president puts out a tweet and provides a tariff against Mexico and completely upends it,” Cunningham said. “I’m concerned about tying the knot on this thing.”
He’s inclined to support USMCA. “I want to bring something to the floor because our businesses deserve it,” Cunningham said.
Rep. Colin Allred, D-Texas
The freshman Dallas Democrat unseated 11-term Republican Pete Sessions in a high-spending election last year. Allred, whose seat is being targeted by the Republican Party, is optimistic about the USMCA, seeing it as a benefit for his constituents.
“North Texas businesses small and large rely on trade with Mexico and Canada for their robust supply chains,” Allred said.
He cited as an example Lennox Industries, an HVAC systems manufacturer headquartered in Richardson, which Allred said, “relies on components made in Mexico that are then assembled here in the United States.”
Allred, the House Democrats’ freshman class co-president, was targeted early by lobbyist groups wanting to hasten passage of the USMCA. He and other more moderate freshman Democrats are seen as crucial votes, as the party’s more liberal wing threatens to upend the agreement.
Bryan Lowry and Emma Dumain of McClatchy’s Washington Bureau contributed.