Economy

The Big Trade Holdup

Democrats keep moving the goal posts for passage of the USMCA trade deal.

Michael Swartz · Dec. 6, 2019

Back in 2018, negotiators from the United States, Canada, and Mexico agreed on a new trade framework to replace the long-derided NAFTA agreement ratified under President Bill Clinton in 1993. Its next step was ratification by the legislative bodies of the respective nations, which has already occurred in Mexico, while Canada will likely pass it quickly once its Parliament reconvenes this month after elections that saw Justin Trudeau’s Liberal Party remain in power.

However, the biggest stumbling block to ratification seems to be Nancy Pelosi and her congressional Democrats, who are holding out for adoption of several new wrinkles involving Big Labor, Big Pharma, and Big Tech. Big Labor is demanding tighter restrictions on automotive content, House Democrats are fretting that the 10-year market exclusivity period for new drugs is too lengthy, and members of both parties believe the agreement’s legal immunity protections for Internet providers (that are based on existing U.S. law) are too broad.

One proposal Mexican businesses strenuously object to, though, is a union-backed proposal allowing the dispatch of inspectors to Mexican factories for enforcement. Mexico has already changed its labor laws to suit the new pact as initially agreed to, so changes would have to be approved by its legislature.

The Wall Street Journal explains the implications of Democrat demands: “In other words, if the United Auto Workers howl that an auto maker is moving jobs to Mexico, the U.S. could insist on scouring the company’s Mexican factories. Manufacturers would operate under a political sword of Damocles in Mexico and might reduce investment to avoid potential disruption to their operations. Touchdown, unions.”

Mexico believes the Democrat agenda is generally an improvement to the original, but then the Mexicans were happy enough with the original that they already ratified it. And the Mexican government would like the process to move more quickly, too: In a letter to Pelosi dated Nov. 26, Mexican President Andres Manuel Lopez Obrador urged quick passage, pleading, “Let us move forward with the USMCA promptly, to ensure that the electoral process in your country, with the debates and passions typical of all democracies, doesn’t prevent or delay the conclusion of such an important event. I am convinced that history will judge us favorably for approving this needed platform of friendship, cooperation and prosperity between our societies and nations.”

Mexico is well aware that both an impeachment trial and an American presidential election are looming in 2020, and this caused The Wall Street Journal to ask, “Is the Speaker trying to make Mexico pay for a new trade wall simply to prevent a Trump policy success?”

The issue with our process, as explained by the national Chamber of Commerce, is the number of cooks in the kitchen. “Congress does not vote on the agreement itself but on an implementing bill, which includes all the changes to U.S. law required to bring the U.S. into compliance with the agreement.” The Chamber adds, “The U.S. government can implement some provisions — those that do not require changes to U.S. law — by issuing a Statement of Administrative Action.” As is true with most of these agreements, though, there will be some need to rewrite our laws to suit — hence the controversy.

But some Democrats also want action on USMCA, specifically the freshmen legislators who were elected from states won by Donald Trump and who seek to counter the argument that all they worked on was impeachment. But since Nancy Pelosi seems cowed by the “orange man bad” mob of her base, we’re likely to see a lot more impeachment than we are to see movement on important things like USMCA.

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