Deal on USMCA trade pact reached by Trump, Democrats

After lengthy negotiations, the Trump Administration and House Democrats have reached a deal that clears the way for passage of the revamped U.S.-Mexico-Canada Agreement (USMCA) trade pact.

In announcing the deal on Dec. 10, House Speaker Nancy Pelosi said that recent changes to the proposed trade agreement that the Trump Administration negotiated last year with Canada and Mexico have made it “infinitely better.” Pelosi specifically cited new enforcement provisions that include monitoring of Mexico’s labour practices and penalties for noncompliance.

“There is no question…that this trade agreement is much better than NAFTA,” Pelosi said.

In a tweet, President Trump himself described the revamped trade pact as being “great” for the U.S.

Although Trump reached a deal with Mexico and Canada on USMCA last year, Democratic leaders refused to schedule a House vote until their demands for stronger labour enforcement rules were met.

From the perspective of the U.S., the USMCA pact contains provisions designed to steer manufacturing back to that nation. For example, it requires that 40 per cent to 45 per cent of cars eventually be made in countries that pay autoworkers at least US$16 an hour – i.e., in the U.S. and Canada, not in Mexico. It also contains new or updated provisions on digital trade, financial services, and other areas of commerce that were not important factors when NAFTA was ratified 25 years ago.

In a statement released just hours before Pelosi’s announcement, the Washington, D.C.-based Plastics Industry Association urged passage of the trade pact. “[We are] encouraged to see support growing for the U.S.-Mexico-Canada Agreement,” Tony Radoszewski, the association’s president and CEO said. “We expect this trade deal will have a positive impact on American consumers and businesses and are glad to see the path toward ratification coming into focus. We look forward to reviewing the agreement’s final text and working with Congress to move the USMCA forward.”

As for what comes next, the House is expected to vote on USMCA next week, and the Senate could complete approval before the end of the year. Canada and Mexico also will need to vote on the agreement.