WASHINGTON _ After months of negotiations and a last-minute hitch involving Mexico, the White House and House Democrats reached a deal Tuesday that clears the way for passage of a revised North American free trade pact.
House Speaker Nancy Pelosi announced the deal, saying it made the trade agreement that the administration negotiated last year with Mexico and Canada "infinitely better." She particularly cited new enforcement provisions that include monitoring of Mexico's labor practices and penalties for noncompliance.
Pelosi, D-Calif., was flanked by fellow lawmakers, who noted that the two parties had come to agreement in a climate of extreme partisan rancor. Just an hour earlier, Pelosi and other Democrats had unveiled articles of impeachment against President Donald Trump.
"Every once in a while you get to participate in a it-will-never-happen moment," said Democratic Rep. Richard E. Neal of Massachusetts, chairman of the Ways and Means Committee, which oversees trade policy in the House.
Trump, in a morning tweet, hailed the prospect of completing one of his signature campaign promises:
"America's great USMCA Trade Bill is looking good," he said, referring to the United States-Mexico-Canada Agreement, the new name for the renegotiated North American Free Trade Agreement, or NAFTA.
Trump reached a deal last year with Mexico and Canada on USMCA, but Pelosi and other Democratic leaders refused to schedule a House vote until their demands were met, especially for stronger labor enforcement rules, which was the last major obstacle in advancing the long-stalled accord.
Under Democratic pressure, the administration also dropped a provision that would have given drug companies 10 years of data exclusivity for certain drugs. Dropping the exclusivity could allow consumers to have quicker access to generic drugs.
Despite grumbling from some Democrats that the deal did not go far enough, the House is expected to vote on USMCA next week. The Senate could complete approval before the end of the year.
Robert Lighthizer, Trump's chief trade official who led the negotiations with Canada and Mexico as well as with Congress, said USMCA will serve as the template for future agreements.
"After working with Republicans, Democrats, and many other stakeholders for the past two years, we have created a deal that will benefit American workers, farmers, and ranchers for years to come," he said in a statement from Mexico, where he traveled Tuesday apparently to nail down final details and celebrate the occasion with Mexican officials. "This will be the model for American trade deals going forward."
For Pelosi and other Democrats, who wanted to shape key elements of the trade agreement, ratifying the pact would provide a rare legislative accomplishment in a sharply divided Congress, allowing them to make a case to voters that they can legislate even during the impeachment process.
Trump and Republican lawmakers have repeatedly criticized Pelosi and her colleagues in recent weeks for not passing the revised NAFTA. Congressional Democrats argued that the revisions lacked sufficient enforcement terms to protect unions and workers' rights in Mexico.
Many Democrats and labor groups blame NAFTA for a flight of production and jobs to Mexico, where wages are much lower and workers have had few organizing rights. Pelosi insisted she would not move the new trade deal forward without additional language on labor enforcement, as well as changes on market monopoly for certain drugs and stronger environmental protections.
While some Democrats were loath to do Trump any political favors, Pelosi faced pressure from moderates, including freshman lawmakers in her party, who have worried they could pay a price if Congress did not pass a trade pact with America's two largest trading partners.
Trump hopes passage of the USMCA could help him with constituencies in the Midwest, where his trade war with China has hurt farmers and manufacturers.
As a candidate three years ago, Trump promised to overhaul trade policy. But he has had little to show for multiple tariffs and other extraordinary tactics he has used as he has aggressively sought concessions from trading partners.
Except for a small update to the U.S. trade pact with South Korea and a recent limited deal with Japan, he has been unable to win any deals.
In his campaign and since taking office, Trump has frequently denounced NAFTA as a disaster for U.S. industry and workers. And last fall, after more than a year of negotiations, Trump and the leaders of Canada and Mexico signed off on a revised trilateral pact.
The USMCA, while not a major overhaul of NAFTA, includes notable changes to rules governing production of automobiles and parts and resolving disputes between governments and private investors.
It also contains new or updated provisions on digital trade, financial services and other areas of commerce that were not major factors when NAFTA was ratified a quarter-century ago.
Tariffs in North America already were almost entirely removed by NAFTA, so the updated accord isn't likely to have much impact on the pace of exports of U.S. farm goods to Mexico and Canada. At the same time, farmers have been unsettled by the trade war with China, and completing the North American trade agreement, they said, would reduce some of the worries about the future.
"It just causes uncertainty with the threat of companies wanting to look for other sources," said Michelle Jones, who with her family farms wheat and barley in central Montana, and has been closely following the trade discussions from 2,000 miles away. Mexico is the largest export market for U.S. barley and also a big buyer of wheat.
Even though Trump and the heads of Canada and Mexico formally signed the proposed USMCA more than a year ago, it was only in the last few months that Lighthizer began negotiating with a working group of House Democrats. He went back and forth in an effort to reach a compromise on changes that Pelosi and her colleagues demanded, even as partisan rancor intensified in Washington over impeachment proceedings.
More recently Lighthizer stepped up the talks with Mexico. And throughout last week he and Mexico's undersecretary for North America, Jesus Seade, were ensconced in meetings in Washington.
To ensure compliance, some House Democrats and labor groups had pressed to allow U.S. inspectors at Mexican plants and for the ability to block goods at the border for noncompliance with rules on collective bargaining and other workers' rights.
U.S. and Mexican officials also wrangled over what kinds of steel would be allowed to meet the USMCA's new requirement that 70% of the metal for car production be sourced in North America.
Mexican authorities and business owners have balked at the idea of U.S. inspectors in Mexican plants, calling it an infringement on their national sovereignty _ always a sensitive issue in relations with their bigger American neighbor.
Last spring Mexico passed new labor law reforms under its populist leftist president, Andres Manuel Lopez Obrador, in large part to align with the revised trade accord.
The new labor enforcement terms, as released by Democrats on Tuesday, said there would be an "inter-agency committee" to monitor Mexico's implementation of labor reform, with "labor attaches" based in Mexico to provide "on-the-ground information about Mexico's labor practices."
Failure to comply with benchmarks would lead to "enforcement action," although it wasn't clear whether that would include stopping goods at the border, which labor advocates sought and Mexico resisted.
On Monday, the AFL-CIO and its president, Richard Trumka, gave a crucial vote of support for the deal. Pelosi credited Trumka for having a significant role in pushing for stronger labor enforcement. While not all House Democrats were on board with the agreement, the labor federation's backing is enough to all but assure passage in the House.
The GOP's majority in the Senate means likely approval there, as well, although Daniel Ujczo, a trade lawyer at the firm Dickinson Wright, said the final steps could still take some time.
Few have seen the actual text, he said, and "that process is all going to happen while the impeachment is going on throughout December."
Mexico and Canada also will need to vote on the agreement.
The Mexican Senate was briefed on the deal over the weekend. And on Monday, Lopez Obrador, expressing optimism that an agreement was at hand, urged U.S. legislators to act swiftly before next year's election season comes into full swing.
"Very respectfully, I say we don't want this very important issue for the economies of three nations to be connected, to mix with, political-electoral matters," he told reporters.
The comments seemed to reflect a fear in Mexico that the stalled trade-deal debate could extend into next year's U.S. electoral season, giving some candidates an opportunity to use the accord for the kind of Mexico-bashing that candidate Trump employed during his presidential campaign.
What's more, many in Mexico do not want to see the proposed USMCA fall through and risk the possibility of Trump withdrawing from NAFTA, which he has threatened in the past. The Mexican economy has been sluggish, and Lopez Obrador and others clearly recognize the importance of U.S. trade, which accounts for almost 80% of Mexico's exports.
Lopez Obrador has already proved himself willing to make painful concessions to the Trump administration, notably in the arena of migration: Mexico agreed earlier this year to crack down on U.S.-bound Central Americans after Trump threatened steep tariffs on Mexican imports.
Manuel Molano, an analyst at the Mexican Institute for Competitiveness think tank in Mexico City, said Mexican businesses would prefer doing trade under the original NAFTA, especially as the USMCA is likely to slow Mexico's once-rapidly-growing auto industry.
Still, that's better than no agreement at all, he said. "Business leaders here will end up agreeing that USMCA is more important than any significant worries about (Mexican) salaries."
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