For years, the Democratic Party complained about NAFTA, the free trade deal between the United States, Mexico, and Canada, and called for changes to make it more friendly to American workers.
Well, now they have the opportunity. But it’s come courtesy of such an unexpected source — a Republican president, Donald Trump — that many elected Democrats suddenly seem to have second thoughts, and the Democrat-controlled House of Representatives has yet to schedule a vote on an updated free trade deal.
If Democrats thwart the revised deal, they’ll not only hurt the American economy. They’ll also hurt Mexico — even as many Democrats correctly point out that helping Latin America prosper is the best way to reduce the flow of immigrants and refugees that Trump capitalizes on to stoke fear.
The new trade pact was finalized and signed last year by the three countries. Officially called the United States-Mexico-Canada Agreement, or USMCA, the deal modernized key aspects of NAFTA. It includes stricter and enforceable labor and environmental standards, and some changes for automakers, such as requiring that a higher percentage of an automobile be made in North America to qualify for tariff relief. The agreement also upgrades intellectual property protections and adds a new chapter on the digital economy. It also includes a 16-year sunset clause and will be subject to a review every six years.
Democrats don’t like every part of the agreement, but it’s politics that seems to be the biggest stumbling block. With the 2020 election looming, Demcorats are wary of giving President Trump a policy win.
The longer they wait, the harder it will get. The intensifying politics of the 2020 presidential election will inevitably influence the deal’s fate, and not in a good way. But the politics cuts both ways: If the deal goes down, the millions of Americans who benefit from free trade with Canada and Mexico could well blame Democrats.
The Democrats’ concerns about the revised deal have to do with drug pricing, environmental protection, and the new labor provisions and their enforcement. Those provisions are aimed primarily at Mexico. To comply, Mexico passed major labor reforms a few months ago, such as giving workers the right to representation by independent unions and establishing better mechanisms to enforce basic labor and health standards in workplaces. But House Democrats — and US labor unions — are still skeptical about how those new laws south of the border will work out. They’re demanding stricter rules on enforcement.
But judged against the status quo, the deal is an improvement, and Mexico is already making good on its end. “Mexico made a commitment, and we followed through with it,” said Mexico’s president, Andrés Manuel López Obrador, in late April after Mexican lawmakers passed the labor reforms. “Now it’s up to members of Congress in the US to finish it.”
The economic impact of scuttling the free trade zone would be severe, since the three economies are deeply intertwined, with supply chains that meander across the US-Mexico and US-Canada borders.
“NAFTA and the new USMCA agreement are really about shared production even more than they are about trade,” said Andrew Selee, president of the Migration Policy Institute, a think tank in Washington, D.C., and an expert on US-Mexico relations. “There is no US auto industry, there is only a North American auto industry. These are production processes in which American workers are making goods together with American and Canadian workers.”
Trade with Canada and Mexico supports more than 12 million American jobs, according to 2017 data from Business Roundtable. That includes more than 600,000 jobs in the six New England states, with half of those in Massachusetts alone (302,500, to be exact). Moreover, a report from the US International Trade Commission on the new deal showed that it will have a positive impact on the US economy and employment.
Mexico became the first country to ratify USMCA — or T-MEC, as it is known there — last June. Massachusetts congressman and Ways and Means Committee Chairman Richard Neal is figuring prominently in the talks between Congress and the Trump administration. He’s the lead member of a working group of nine House Democrats tasked by Speaker Nancy Pelosi to negotiate revisions to the agreement. He told Politico last week that all parties are frustrated but that the “conversation is moving along.” And yet Neal also acknowledged that he doesn’t think an agreement will be reached before Congress goes on the August recess.
That’s disappointing. If the revised deal isn’t passed soon, then the issue will become fuel in the fire of next year’s presidential election. If House Democrats care about American workers and companies and the health of our Latin American neighbors as much as they say they do, they should approve the deal.