Trump and Democrats reach deal on Nafta revamp

Nancy Pelosi, the Democratic Speaker of the House of Representatives, has reached a deal with US president Donald Trump to allow ratification of USMCA — the trade pact replacing Nafta whose fate in Congress had been uncertain until this week.

Ms Pelosi’s announcement on Tuesday followed months of wrangling with Robert Lighthizer, the US trade representative, and parallel talks with officials in Canada and Mexico to secure changes to the original text. 

“It’s a victory for America’s workers, it’s one that we take great pride in advancing,” Ms Pelosi said, flanked by Richard Neal, the chairman of the House ways and means committee who led the talks on the Democratic side. She said the outcome was “infinitely better” than the original deal reached by Mr Trump.

Congressional ratification of USMCA has been among the highest legislative priorities for Mr Trump, although its prospects were uncertain until this week. The move towards a green light on Capitol Hill will be touted as a big win for the White House heading into the 2020 presidential campaign, and evidence that Mr Trump’s disruptive approach to trade is delivering results at a time of heightened commercial tensions with China and the EU. 

“America’s great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody — Farmers, Manufacturers, Energy, Unions — tremendous support. Importantly, we will finally end our Country’s worst Trade Deal, Nafta!” Mr Trump wrote in a tweet on Tuesday. 

Mr Lighthizer was due to join Chrystia Freeland, Canada’s deputy prime minister, and Jesus Seade, Mexico’s Nafta negotiator, in the Mexican capital later on Tuesday to sign off on the proposed amendments.

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Democrats successfully pushed for tighter labour standards, strengthened environmental protections and the removal of advantages for pharmaceutical companies in exchange for allowing a vote on USMCA in Congress. Ms Pelosi was able to extract enough concessions from Mr Trump for the deal to be endorsed by the AFL-CIO, the largest trade union federation. The union is highly influential in Democratic politics and has traditionally opposed trade deals. 

“The USMCA is far from perfect . . . but there is no denying that the trade rules in America will now be fairer because of our hard work and perseverance,” said Richard Trumka, the AFL-CIO’s president. “Working people have created a new standard for future trade negotiations,” he said. 

Ms Pelosi had been facing intense pressure to allow USMCA to go forward from moderate Democrats representing swing districts, as they feel increasingly politically vulnerable due to the impeachment proceedings their party has launched against Mr Trump. 

“This agreement would provide certainty for farmers and producers by ending the threat of back and forth retaliatory tariffs that this administration has pursued,” Cindy Axne, an Iowa Democrat, said in a statement. “I am thankful that [Mr Neal and Mr Lighthizer] worked in good faith and negotiated a better deal for all Americans, and did so before the year end.”

The revised pact still needs to be voted on in the House and the Senate before it becomes law. Passage appears guaranteed given its widespread support.

Business groups were largely pleased with the agreement, which mostly replicates the structure of open trade across North America that was enshrined in Nafta. Some of its measures expand commerce in areas such as digital trade, while others restrict it, such as new rules of origin for car manufacturing.

Most importantly, it removes the threat that Mr Trump could withdraw the US from the exiting Nafta trade agreement, which had been hanging over North American business and its integrated supply chains ever since he took office in 2017. 

“A ratified USMCA will deliver increased certainty for manufacturers — especially for the 2 million manufacturing workers whose jobs depend on North American trade,” said Jay Timmons, the chief executive of the National Association of Manufacturers.



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