As president he is replacing it with the United States-Mexico-Canada Agreement (USMCA), which is remarkably similar to NAFTA, with two significant exceptions: It is the first U.S. trade agreement designed to decrease trade, and it is larded with Democratic policy objectives.
As Sen. Patrick J. Toomey (R-Pa.) notes, under NAFTA there were zero tariffs on 100 percent of manufactured goods and 97.5 percent of agricultural products that crossed the three nations’ borders. U.S. exports to Mexico increased 500 percent. The USMCA’s constructive modernizations of NAFTA — the enormous digital economy did not exist in 1994 — are, Toomey says, “mostly taken from the Trans-Pacific Partnership,” which was negotiated by the Obama administration, and for that reason was anathema to Trump. His scrapping of the TPP was a gift to China.
The USMCA ends free trade in automobiles and auto parts with Mexico: By imposing impossible minimum-wage requirements on Mexican factories, the USMCA guarantees that cars and parts will be subject to tariffs — taxes paid by U.S. consumers. The USMCA also compels Mexico to change its labor laws to promote unionization. And the provision that the USMCA expires in 16 years is, Toomey says, “designed to have a chilling effect on investment.” He notes that members of Congress who have opposed every trade agreement before this one support it, as does the AFL-CIO, which generally opposes free trade agreements.
The USMCA’s substance is regrettable. The process that produced it was even more so because it was lawless.
Agreements that fully comply with the Trade Promotion Authority (TPA) cannot be amended and can be passed by a simple majority. But the USMCA did not comply: The implementing legislation was not submitted to Congress 30 days before a committee or floor vote on it, a requirement necessary if Congress is to perform its constitutional duty to establish trade policy. Also, the TPA requires that the implementing legislation contain only provisions “strictly necessary or appropriate” for implementation. Otherwise, the TPA’s expedited process could be used to sneak extraneous matters into law without adequate scrutiny, or possible opposition through amendment, or a 60-vote threshold. But for the first time ever, implementing legislation contained appropriations, $843 million, including $50 million for salaries and expenses for the Office of the U.S. Trade Representative, which was designated an “emergency.”
The Senate and its once-formidable Finance Committee are, Toomey believes, being “marginalized” and made “irrelevant” as the executive wields authority delegated to it by Congress — but without Congress insisting on compliance with the terms of the delegation. The question, Toomey says, is: “Are we willing to enforce our own law that governs the proceedings of this body?”
Sen. Bill Cassidy (R-La.) felt similarly in December when Congress “passed a $1.4 trillion spending extravaganza, complete with half a trillion dollars in tax cuts and a bevy of favors for special interests — all without debate and without committee consideration, based on decisions made by the bill’s sponsors over a weekend.” The $300 billion “Cadillac tax,” a restraint on lavish employer-provided health plans, was repealed. This demonstrated that Congress cannot repeal Obamacare but will not pay for it. Amendments were not allowed, debate was limited to 90 minutes, and the Senate voted on the bill less than three days after it was unveiled. “Senate leadership clearly didn’t want it to be understood or discussed,” Cassidy said.
In the 116th Congress, now in its second year, there have been, Toomey notes, votes on just 20 amendments — one was a “sense of the Senate” legal nullity, four were “noncontroversial or largely devoid of substance,” six “were killed using a procedural maneuver,” and none of the other nine “came close to passage.” The Finance Committee has held one substantive markup in 13 months.
The president’s institutional vandalism is partially explained, although not excused, by the breadth and depth of his ignorance concerning the manners and mores of a republic. The Senate’s self-degradation is even more depressing.