A Treasury Department spokesman had no comment on Neal’s proposal. But it comes amid intensified negotiations aimed at securing congressional approval of the updated trade deal. There have been multiple meetings in recent weeks between Neal’s working group of House Democrats and Trump administration officials led by U.S. Trade Representative Robert E. Lighthizer.
“We have really narrowed our differences considerably,” Neal said after meeting with Lighthizer in the Capitol this week.
“After long experience with this, I know how you can wrap things up all of a sudden,” Neal added.
The support of organized labor will be crucial to bringing many Democrats on board. Richard Trumka, head of the AFL-CIO, the nation’s largest labor federation, said in an interview Thursday that negotiations were “moving in the right direction” but that important differences remained on issues including enforcement of fair labor standards. Trumka also said that the addition of the Butch Lewis Act, which he supports, would not be enough on its own to win AFL-CIO backing for a trade deal that does not meet the union’s standards.
“You can’t take a bad bill and try to hide it with another bill and expect people to think it’s good,” Trumka said.
The negotiations are proceeding in a Capitol consumed by the impeachment inquiry of Trump, which has contributed to growing GOP frustration with House Democrats over their failure to wrap up talks. Some in the Trump administration and the business community have pushed for a House vote by Thanksgiving, a timeline that looks implausible, although some hold out hope for a handshake agreement by then. The growing fear among some supporters of the deal is that with impeachment looming, the trade pact will be delayed until 2020 and then derailed entirely by election-year politics.
Senate Majority Leader Mitch McConnell (R-Ky.) alleged on the Senate floor Thursday that House Speaker Nancy Pelosi (D-Calif.) has put the trade deal “on ice in order to move the Democrats’ impeachment obsession to the front burner.” A Pelosi spokesman, Henry Connelly, responded that “McConnell would prefer to rush through a USMCA draft that locks in high drug prices and lacks the enforcement needed to actually protect American workers and farmers, but that’s not good enough for Democrats.” USMCA is the acronym for the United States-Mexico-Canada Agreement, the name of the new trade deal.
At the same time, some of the political dynamics around the deal have begun to shift in unpredictable ways. Rewriting NAFTA was one of Trump’s major campaign promises, so by striking a deal, Democrats would be delivering a major win to the president heading into 2020. Many Democrats say it’s worth it if they can negotiate changes to Trump’s agreement. They have alleged that NAFTA led to lower wages and sent jobs overseas. The Democratic presidential field includes free-trade skeptics, but with impeachment underway, Democrats are motivated to show they can still achieve legislative accomplishments. Pelosi has spoken repeatedly of wanting to “get to yes” on the deal, though without committing to a timetable.
Trump himself tweeted this week: “Can’t believe that Nervous Nancy Pelosi isn’t moving faster on USMCA. Her people want it, they don’t know why she isn’t putting it up for a bipartisan vote. Taking too long!”
The initial USMCA deal was signed almost a year ago by Trump and the leaders of Canada and Mexico, but it needs to be ratified by the legislatures in all three countries.
The Trump administration says the new deal will rebalance North American trade to favor American manufacturing workers by requiring 75 percent of automobile content be produced in North America, with up to 45 percent being made by workers earning an hourly wage of at least $16.
Four issues have been at the center of the bargaining: labor standards, environmental provisions, the data exclusivity period for a new class of drugs known as biologics and the deal’s enforcement mechanisms.
The USMCA would grant pharmaceutical companies 10 years of protection from generic alternatives to any of their high-priced biologics, which are made from living organisms. That would mean no change in U.S. law, but it would require Canada and Mexico to provide drugmakers with more years of monopoly protection than they currently do.
Democrats have blasted the provision as a giveaway to the pharmaceutical industry. In response to their concerns, Lighthizer has proposed tying USMCA’s biologics protection to U.S. law. If Congress shortened the exclusivity period from its current 12 years to something less than the 10 years provided in the trade deal, the text would automatically “ratchet” down to reflect the change.
Mexico, meanwhile, has scrambled over the past few months to respond to Democrats’ requests for more robust labor reform and enforcement mechanisms. Mexican officials said that when Neal visited Mexico this month, he presented a list of concerns that some Democratic lawmakers still had about the country’s recently revised labor rules. Mexico raised its minimum wage and increased its budget for labor rule compliance.
Mexico’s president, Andrés Manuel López Obrador, responded with a letter on Oct. 17 aiming to quell Neal’s concerns.
“I assure you that this government intends to continue increasing wages by at least two percentage points above the inflation rate each year,” López Obrador wrote.
Mexico’s deputy foreign minister for North America, Jesus Seade, said the Labor Ministry’s budget will increase by about 23 percent to ensure that the labor reform is properly implemented.
But the Democrats have continued to convey concerns to Mexico about how the labor reform will be enforced. One Democratic proposal was to send inspectors to Mexico to investigate labor standards. That idea was rejected by Mexican officials as an infringement on their sovereignty. Seade is working with Lighthizer to create a different enforcement mechanism, Mexican officials said.
López Obrador for years railed against NAFTA and free-market policies but has come to embrace the new trade agreement, becoming an important cheerleader for the deal. He also encouraged Mexico’s Congress to ratify the deal, which it did in June.