House Set to Pass USMCA This Week, Faces Uncertain Future in the Senate

The U.S. House of Representatives is set to pass the United States-Mexico-Canada Agreement this week, more than a year after the framework for the trade agreement was finalized by the three nations and following a series of alterations by the Democratic-controlled House leadership.

Last week, House Speaker Nancy Pelosi (D-Calif.) announced that the agreement, designed to be a “replacement” for the now-scuttled North American Free Trade Agreement, would come to a vote before Congress leaves for the holidays. The revised agreement, which came after months of negotiations between House leaders and the Trump Administration, has now earned signoff from major union leaders including the UAW, longtime protectionist senators like Sherrod Brown (D-Ohio) and Ron Wyden (D-Ore.), and the president himself. On Tuesday, the House Ways and Means Committee approved the USMCA via voice vote, meaning it will likely pass the full chamber on Thursday.

However, the modifications to the agreement have created a strange situation where the Trump Administration is now getting pushback from members of the Senate, which the Republicans control. Senate Majority Leader Mitch McConnell (Ky.) said the Senate will not vote on the USMCA until after a potential impeachment trial concludes, delaying final ratification by at least several weeks.

A business-led advocacy group formed to back the agreement, named the Pass USMCA Coalition, also announced last week that it will no longer issue statements of support in favor of the treaty. Mexican president Andrés Manuel López Obrador and deputy foreign minister Jesus Suade expressed frustration at the changes they say were made without their input, though reports earlier this week suggested that U.S. Trade Representative Robert Lighthizer has largely assuaged the concerns of the Mexican government.

Among the new concessions House leadership was able to extract is a requirement that 75 percent of vehicles sold in North America be produced on the continent in factories paying workers at least $16 an hour. The USMCA, as currently written, also raises requirements on the percentage of North American-made steel and parts that must be used for an OEM to receive duty-free tax status, makes it easier for Mexican factories to unionize, removes certain intellectual property protections for drug companies, and requires certain multi-national organizations to agree to certain arbitration guidelines that weren’t in the original agreement.

That said, most political observers expect the USMCA to be passed as currently written in the Senate at some point. Vice President Pence has made dozens of trips across North America over the past year rallying public support for the agreement, and President Trump has made it clear that passage would give him a major policy result to campaign on in 2020, even with the changes from the House.

Auto industry leaders have also expressed support for the House’s agreement, saying that the certainty around trade would help their business, considering how much advanced planning goes into manufacturing and supply-chain management. But most observers also agree that the new deal will put new price pressures on OEMs, by raising labor costs for Mexican-made cars and also making it more difficult for manufacturers to move currently-existing jobs south.


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