Pelosi, Trump Near Handshake Deal on USMCA

House Speaker Nancy Pelosi and President Donald Trump ( MGN )

(Bloomberg) -- The Trump administration and House Democrats are on the verge of announcing a handshake deal on the U.S.-Mexico-Canada free trade agreement, according to people familiar with the negotiations, paving the way for approval of the deal as early as this month while Democrats gear up for an impeachment vote.

Speaker Nancy Pelosi is reviewing changes to the agreement that U.S. Trade Representative Robert Lighthizer and his Mexican counterpart Jesus Seade have put on paper over the past week.

The two trade officials exchanged proposals on labor inspection rules and tougher steel provisions and finalized a compromise package late Friday that they submitted to Pelosi for approval, the people said. The demand from the U.S. regarding steel and aluminum, which people briefed on the talks said was from the United Steelworkers union, threatened to stall the negotiations last week.

Lighthizer and Seade are scheduled to meet in Washington again on Monday and could announce a deal.

“Now is the time to vote on it,” Mexican President Andres Manuel Lopez Obrador said Monday. “I am optimistic we can reach a deal.”

Passing the trade deal is President Donald Trump’s top legislative priority and would give him a political win as he faces an impeachment inquiry and heads into a re-election campaign next year. At the same time, it allows Democrats to show they are capable of legislating even as they are investigating the Trump administration.

Pelosi last month cautioned that even with a deal, there might not be enough time to vote on the agreement this year, reminding her members that “in a world of instant gratification,” legislating takes time.

There are still a number of procedural hurdles before the agreement can come to the floor for a vote, including committee hearings and review of the implementing bill in the House Ways and Means and Senate Finance committees. Those steps could be waived to save time, though, and people familiar with the talks said lawmakers are likely to skip some of them.

Political Pressure

Democrats from rural, swing districts are especially eager to get a deal done. Farmers have faced devastating economic losses this year because of the trade war with China, although the president has blamed some of that on the delay in getting the USMCA approved.

The U.S. International Trade Commission, an independent government panel, in an April analysis said USMCA would boost the U.S. economy by 0.35% and lead to 176,000 new jobs in the sixth year after implementation, a small addition to 132 million people employed full time in the U.S.

Leaders of Canada, Mexico and the U.S. signed the agreement more than a year ago and the White House and Democrats have spent months locked in tense negotiations over four key areas: environment, labor commitments, drug-patent protections and enforcement mechanisms. In recent weeks, the discussions have focused on the deal’s labor enforcement.

One of the main sticking points was a Democratic proposal to enforce labor rights by allowing products from factories accused of violations to be inspected and blocked at the U.S. border. California Representative Jimmy Gomez, a member of House Democratic negotiating team, said last week that Pelosi and Lighthizer have offered Mexico a compromise on labor enforcement that “respects Mexico’s sovereignty.”

Republicans and the business community increased pressure on Pelosi as they grew concerned that time was running out for a vote in 2019 and that it would be difficult to hold a vote in an election year. Pelosi said she wouldn’t rule out a vote in 2020, although she said her preference would be to get it done sooner rather than later.

The president has become increasingly frustrated that his deal has stalled and expressed pessimism about the chances Congress would ever take it up for a vote.

“Hard to believe, but if Nancy Pelosi had put our great Trade Deal with Mexico and Canada, USMCA, up for a vote long ago, our economy would be even better,” Trump said in a tweet on Saturday. “If she doesn’t move quickly, it will collapse!”

Labor Role

Key to reaching a deal has been neutralizing any opposition from the largest U.S. union confederation, the AFL-CIO.

Trump and his advisers tout USMCA as the best agreement ever negotiated for unions and Democrats, particularly the deal’s labor provisions and stricter auto-content rules that they say would boost U.S. manufacturing.

AFL-CIO President Richard Trumka urged Democrats in a November meeting not to rush into an agreement without strong enforcement procedures and said they should hold out for more concessions.

The labor leader told The Washington Post on Monday that there was a deal and that he’s planning to discuss it with his executive committee later in the afternoon.

 

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