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Trump’s border threats complicate trade pact talks

Replacement for NAFTA already faces assortment of challenges on Capitol Hill

Speaker Nancy Pelosi, D-Calif., is suggesting the USMCA may need enforcement changes. (Tom Williams/CQ Roll Call)
Speaker Nancy Pelosi, D-Calif., is suggesting the USMCA may need enforcement changes. (Tom Williams/CQ Roll Call)

The Trump administration’s sales pitch for a new trade deal with America’s northern and southern neighbors has a long way to go, and the president’s threat to close the U.S. border with Mexico does not appear to be helping matters.

President Donald Trump is scheduled to visit the U.S.-Mexico border on Friday amid renewed concern he may seek to shut down the flow of traffic between the two countries, a move that would by definition make free trade impossible.

The president was still considering closing ports of entry at the southern border because “Democrats are leaving us absolutely no choice at this point,” White House Press Secretary Sarah Huckabee Sanders said Tuesday, although it was not clear how closing legal ports of entry would stem illegal entry to the country, which the administration has made its premier issue.

Senate Majority Leader Mitch McConnell spoke out against the idea of a border shutdown Tuesday.

“We certainly have a crisis at the border, I think the president’s right about that. Closing down the border would have a potentially catastrophic economic impact on our country, and I would hope we would not be doing that sort of thing,” the Kentucky Republican said.

Meanwhile, as lawmakers grappled with Trump’s threats, Trade Representative Robert Lighthizer continued touting the revised U.S.-Mexico-Canada deal on Capitol Hill.

Lighthizer spent more than an hour fielding questions from Democratic freshmen in a closed-door session about the deal’s labor provisions, the length of time for patent exclusivity for biologic drugs, and the environment.

“It was spirited, a candid discussion. Obviously, he’s selling the administration’s perspective,” said Rep. Jason Crow of Colorado.

But Rep. Susan Wild called it a contentious session.

“My concern about it has to do with prescription drug prices and the promise that all of us made to voters about working to bring down prescription drug prices,” the Pennsylvania Democrat said.

Wild said the proposed agreement’s 10 years of exclusivity that gives drug companies a monopoly on pricing is unacceptable. The decade of exclusivity is longer than Mexico and Canada currently enforce, but shorter than the 12 years in the United States. House Democrats have said that if the trade agreement took effect, lawmakers could not reduce the monopoly period to less than 10 years.

Wild said Lighthizer “was steadfast and that was nonnegotiable. He was unwavering on that issue.”

Chamber of Commerce weighs in

Across from the White House itself on Tuesday, the U.S. Chamber of Commerce was arguing that closing ports of entry at the U.S.-Mexico border would be “destructive” for the American economy, according to Neil Bradley, executive vice president of the chamber and a former top aide to onetime House Majority Leader Eric Cantor.

He also said the president’s threat to close the border ports, if implemented, would “undermine economic growth and prosperity” and “provide little benefit in terms of security.”

“We have been in contact with the White House and we have expressed our concern with closing the border and the economic consequences,” he said. “We also expressed that we want to work with them and Congress on a responsible plan on border security and immigration reform.”

Citing Commerce Department data for 2018, chamber officials said over $340 billion in goods moved into the United States over the southern border. Of that total, $46 billion in things like “boilers, machinery and electrical equipment” are at risk of putting a dent in U.S. economic growth.

Aside from the obvious foreign policy implications, the risk of such a move underscores the difficulty for Congress in even taking up the proposed U.S.-Mexico-Canada trade agreement. Trump has separately threatened to potentially void the existing trade pact.

“I am very concerned about all of the impulsive and ill-advised actions that this president of the United States takes on a regular basis. This would be one of them,” House Majority Leader Steny H. Hoyer of Maryland said Tuesday in response to a question about withdrawing from NAFTA.

Hoyer was speaking with reporters after Speaker Nancy Pelosi, at a Politico Playbook event, said Mexico would need to change its own labor laws for the House to entertain the USMCA.

“One of the things that the Mexican government has to do before we could even consider it is to pass legislation about workers’ rights in Mexico,” Pelosi said. “We have to see that they pass the legislation, that they have the factors in place that will make sure that it is implemented and they demonstrate some commitment, sincerity.”

It then became clear the Democrat from California was also arguing that the trade deal itself may need to be reopened in order to ensure compliance from Canada and Mexico with provisions that are of interest to Democrats.

“We’re saying that enforcement has to be in the treaty, not in the implementing legislation,” Pelosi said. “Implementing legislation only bears on how we act, it doesn’t have to bear on all three countries act[ing].”

Hoyer expanded on that point.

“The speaker I think is speaking for the overwhelming majority, if not all the caucus, in saying that the economic issues must be addressed. Mexico made some promises in NAFTA it didn’t keep. What the speaker is saying [is], ‘We trust you; verify it.’ And the verification is a vote by the parliament in Mexico, adopting that which they say in the agreement that they’ll adopt.”

Mexico’s interest in moving forward could of course be affected by any Trump administration moves to restrict commerce with the United States over immigration.

Canada was represented on Capitol Hill Tuesday as well, with Ambassador David MacNaughton meeting with members of the New Democrat Coalition, a more moderate group of House members that is more supportive of free trade.

And Canada apparently made clear that the country would not favor reopening the terms of the pact.

“The speaker is the gate-keeper. There’s a point of leverage here. There are concerns that have been raised among New Democrat ranks … on enforce-ability, labor provisions, biologics and exclusivity. These issues have to be addressed in order to move forward,” said Wisconsin Democratic Rep. Ron Kind. “Things can get dicey pretty quickly if you start to open up and renegotiate. Suddenly, it becomes a free-for-all.”

Tariffs and barriers

But Kind said the New Democrats are also of the view that tariffs imposed on Canadian products by Trump need to be resolved before the trade pact faces votes on Capitol Hill, and they are also taking a wait-and-see approach toward whether the Mexican government will move forward with passage of implementing legislation.

“All eyes really are on Mexico and what they are capable of doing this month,” Kind said.

Two key Republicans, Senate Finance Chairman Charles E. Grassley of Iowa and Sen. John Cornyn of Texas, said separately Tuesday that Trump may need to direct his administration to lift Section 232 tariffs on steel and aluminum in order to advance the resolution.

“I don’t know why it’s taking him so long to realize he has a victory in hand,” Grassley said of the president.

Also Tuesday morning, Cornyn told an audience at the Wilson Center that easing the tariff burden on American allies may in fact be necessary to get the Senate to really consider the trade deal that would replace NAFTA.

“It may even be impossible to get the votes on the new Mexico-Canada [agreement],” the Texas Republican said. “We have not even be able to get the votes in the Senate for the bill as long as the 232 tariffs are still outstanding.”

“I think in Mexico and Canada, probably the same thing. They probably can’t pass it either,” said Cornyn, who used to be the top vote-counter for Senate Republicans.

Ellyn Ferguson, Lindsey McPherson and John T. Bennett contributed to this report.Correction 5:58 p.m | An earlier version of this story misspelled MacNaughton’s name.