Senate Finance Committee Chairman Charles E. Grassley said Monday Congress won’t be able to ratify President Trump’s rewrite of the North American trade deal this year unless House Democrats agree to act on it this week.
He said a long-awaited compromise between Democrats, who are holding out for greater environmental and labor protections in the accord, and the administration on the U.S.-Mexico-Canada Agreement is “close,” but the window to act is almost closed.
“The end of this year’s legislative session is rapidly approaching,” Mr. Grassley, Iowa Republican, said. “If a deal cannot be reached by the end of this week, I do not see how USMCA can be ratified in 2019.”
Mr. Trump pledged to voters in 2016 that he would renegotiate trade deals that both parties view as skewed against American workers.
The GOP says the updated NAFTA accord, or “USMCA,” fulfills that promise but that “do-nothing Democrats” are too consumed by hatred of him to approve it.
The deal has emerged as Mr. Trump’s main counter-programming to a House impeachment inquiry alleging he sought political favors from Ukraine in exchange for military aid.
Vice President Mike Pence is shuttling across the heartland to build public support for the trade deal, and Mr. Trump’s main political action committee, America First, put the agreement at the top of its to-do list.
Mr. Grassley said the window for getting something done in 2019 is “extremely tight.”
“Now is the time for Democrats to finally act,” he said.
House Speaker Nancy Pelosi and her lieutenants say their Democratic troops are inching closer to yes. They want to see stiffer language to enforce labor standards, so American workers aren’t undercut by cheaper labor in Mexico.
“If there is no functioning enforcement mechanism, then the agreement doesn’t mean anything and countries could take actions that violate the trade deal with impunity. This would affect anything you can think of that the agreement touches, like workers and the environment,” said Erin Hatch, spokeswoman for House Ways and Means Committee Chairman Richard Neal, Massachusetts Democrat.
She said both sides are working toward a resolution, even as Mr. Trump urges his Democratic rival to just put the deal on the floor.
Analysts say both sides have their reasons for acting the way they are. The deal bolsters Mr. Trump’s 2020 platform — and his argument that he has achieved things his predecessors ignored — while Democrats may interpret the president’s eagerness as an opportunity to shape the trade deal more to their liking.
The collapse of what many consider NAFTA 2.0 could mean a jolt to the U.S. economy and stock market, just as Mr. Trump gears up his 2020 re-election campaign.
“Democrats are bargaining hard to get as many concessions as possible from Republicans. Trump needs for this agreement to be approved so they feel they are in a strong position and can ask for a lot,” said Darrell West, director of governance studies for the Brookings Institution. “Assuming they work things out, it would be a nice win for Trump and something he would emphasize during his reelection campaign.”
As written, the deal would give U.S. dairy farmers greater protections from Canadian rivals on price, ensure that American wheat is graded under the same standards as Canada’s and bar places like China from dumping metals or other products into the U.S. — duty-free — via one of the U.S.’s neighbors.
Supporters say it will spur domestic production by requiring a greater percentage of car-manufacturing materials to be produced in North America, while boosting minimum wages for auto laborers.
Digital-trade provisions will erase tariffs on things like e-books that consumers in each of the three nations buy off Amazon, a subject not even considered in the original NAFTA approved in 1994.
Private analysts say the new deal is far short of the complete overhaul Mr. Trump promised on the campaign trail, with the vast majority of goods between the three countries continuing to enjoy tariff-free treatment. Still, most say the new accord provides a useful updating for a market and an economy very different from 1994.
“Much of the original framework [of NAFTA] has been maintained, but there have been some big positives,” said Gabriella Beaumont-Smith, a macroeconomics policy analyst at the conservative Heritage Foundation.
Importers and exporters will be able to breeze through paperwork online, due to the USMCA’s customs reforms, she said.
But the pro-market think tank isn’t thrilled with other features, such as minimum wage requirements that could dent employment and the “rules of origin” applied to steel and aluminum, which could raise prices on cars.
Focus on the House
As it stands, Mexico has ratified the USMCA and Canada has taken legislative steps toward approval, so all eyes are on the Democratic-controlled House. Mr. Trump says any further delay risk alienating the country’s North American partners.
“Canada and Mexico, they’ve been waiting for many months,” Mr. Trump told Florida supporters last week. “They’re going to say, ‘You know what? Let’s forget about it.’”
He’s floated various theories for the delay. He’s called Mrs. Pelosi “incompetent” and blamed AFL-CIO union leader Richard Trumka, saying he’s played Mrs. Pelosi “like a fiddle” in a bid to make him look bad.
Mr. Trumka immediately retorted on Twitter: “The notion that anybody could play [Mrs. Pelosi] like a fiddle is laughable. She wants the same thing we do: an enforceable agreement that actually works for workers.”
Some Democrats privately say they find it difficult to hand Mr. Trump a major victory on trade he will certainly highlight on the campaign trail next year. Others say that approving USMCA will reinforce Mrs. Pelosi’s argument that the House can still legislate even as it considers the Trump impeachment case.
GOP lawmakers, meanwhile, are blaming the Democrats’ impeachment drive for the pact’s coming down to the wire. They say it’s sapped all the oxygen in Congress, despite the speaker’s assurances they are closer to the finish line.
“Saying that she now believes there is not enough time in the year to bring the agreement to a vote is quite the statement, especially after how, under her leadership, the House of Representatives spent nearly 30 legislative days on their quest to undo the 2016 presidential election,” Rep. Vicky Hartzler, Missouri Republican, said.