Senate passes USMCA bill, giving Trump a win on trade
The Senate voted 89-10 to clear the bill for Trump’s signature
The Senate approved implementing legislation Thursday for a renegotiated version of the North American Free Trade Agreement, giving President Donald Trump a victory as the Senate moved to swearing in its members as jurors in Trump’s impeachment trial.
The Senate voted 89-10 to clear the bill for Trump’s signature, with several dissenting Democrats citing the absence of climate change provisions as a lost opportunity to address the issue on an international scale since Trump withdrew the U.S. from the Paris climate agreement. U.S. Trade Representative Robert Lighthizer, who negotiated the deal, watched the vote from the public gallery.
The vote on the United States-Mexico-Canada Agreement occurred after the Senate voted to waive budget restrictions. Sen. Patrick J. Toomey, R-Pa., argued on the floor, as he did in the Budget Committee, that the bill included appropriations that violate budget rules.
Toomey voted against the bill along with Democrats Charles E. Schumer, the minority leader, and Kirsten Gillibrand of New York, Kamala Harris of California; Sheldon Whitehouse and Jack Reed of Rhode Island; Brian Schatz of Hawaii; Cory Booker of New Jersey; Edward J. Markey of Massachusetts; and independent Bernie Sanders of Vermont.
The Democrat-controlled House approved the bill on Dec. 19 with a bipartisan vote of 385-41. Speaker Nancy Pelosi, D-Calif., said House Democrats had negotiated several changes to the USMCA to make it acceptable.
Key changes for Democrats included enforcement of labor provisions they believe will make it more difficult and expensive for U.S. manufacturers, particularly auto makers, to shift production to Mexico. The changes won the endorsement of the AFL-CIO, but other unions such as the International Association of Machinists and Aerospace Workers oppose it.
The pact also would give technology companies provisions to address e-commerce, which did not exist when NAFTA was negotiated. A chapter based on Section 230 of a 1996 telecommunications law (PL 104-104) gives companies like Facebook, Google and Twitter immunity from liability for user content posted on their platforms.
Trump is expected to tout the vote in his reelection campaign as a promise kept. In 2016, he vowed either to revamp the 1994 trade agreement or to withdraw the U.S. from the pact. As president, Trump caused anxiety among businesses large and small and his base of farm support with threats to pull out of NAFTA if Canada and Mexico did not make concessions.
Business groups say congressional approval of the USMCA implementing bill makes it less likely Trump will try to upend a trade agreement negotiated and renamed by his administration.
The bill now goes to Trump for signing, but the Canadian Parliament still must ratify the USMCA before the agreement can take effect. Mexico has already approved the new pact.
The implementing legislation provides the framework and mechanisms the Trump administration will use to enforce labor rights and environmental standards with a focus on Mexico. For example, an interagency task force on labor will be established 90 days after the bill takes effect.
The USMCA will replace NAFTA, an agreement credited with building the three nations into a $1.2 trillion-a-year trading bloc and blamed for contributing to the loss of thousands of U.S. manufacturing jobs to low-wage Mexico.
Trump campaigned against NAFTA as the “worst trade deal ever made.”
In committee reviews, floor comments and statements, several senators cited the absence of environmental provisions addressing climate change as one reason for voting against the implementing bill.
It seemed unlikely the administration would have pursued climate change, not only because of Trump’s skepticism of the science behind it, but also because a trade-negotiating objective Congress approved in 2015 says trade agreements are not to establish obligations for the U.S. regarding greenhouse gas emissions. The language is part of a customs enforcement law that added several negotiating guidelines to the Trade Promotion Authority statute, which sets the ground rules for trade deals sent to Congress for approval.
Democratic presidential candidates Amy Klobuchar of Minnesota, Elizabeth Warren of Massachusetts and Michael Bennet of Colorado voted for the pact. Sanders, another candidate, said in a written statement that it should be rewritten because it does not guarantee that companies will stop shifting jobs to Mexico.
The Congressional Budget Office estimates that the USMCA will increase U.S. government revenue by $2.97 billion from fiscal 2020 to 2029 due to higher expected duty revenue on car and truck parts that do not meet stricter rules.
Some vehicles and parts would no longer qualify for duty-free treatment because they don’t meet new requirements that 75 percent of content in cars and auto parts come from North America and that 40 percent of car content and 45 percent of truck content be made by workers earning $16 an hour.
The CBO also estimates that the agreement would reduce the federal deficit by $3 billion over a 10-year period. The agency estimates that appropriations not subject to emergency status would total $833 million in outlays from fiscal 2020 to 2029.
Under the USMCA, U.S. dairy, poultry and egg products would gain greater access to Canadian markets, and Canada will adopt a new quality-grading system for U.S. wheat.
Canada also will end pricing schemes the U.S. dairy industry says keep Canadian skim milk powder prices at artificially lower levels, giving domestic producers an edge in sales to Canadian cheese-makers over U.S. high-protein ultrafiltered milk.
The International Trade Commission, an independent agency, said the trade agreement, “if fully implemented and enforced,” over several years would increase real GDP by $68.2 billion, or 0.35 percent, and would add 176,000 jobs to the U.S. economy.
House Democrats’ negotiations with the Trump administration in 2019 resulted in the removal of provisions that would have given pharmaceutical companies a 10-year pricing monopoly on biologic drugs in Mexico and Canada. The U.S. has 12-year pricing exclusivity for biologics, and Democrats worried that keeping the provisions in the USMCA would prevent future Congresses from reducing the U.S. timeframe to less than 10 years.