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September 23, 2019

Democrats, Trump Administration Continue Meetings To Discuss USMCA Differences

The Office of the U.S. Trade Representative (USTR) and the Democrats’ Working Group appointed by House Speaker Nancy Pelosi (D-Calif.) continued their discussions regarding the United States-Mexico-Canada Agreement (USMCA) last week and, if public reports are to be believed, the two sides made progress.

House Ways and Means Committee Chairman Richard Neal (D-Mass.), who leads the Democrats’ panel, told the press on September 18 that the two sides are “making headway” and will “continue to exchange paper” over the coming weeks.

The USTR already has sent proposals to Democratic lawmakers outlining how the Trump administration would make changes to the USMCA to address Democrats’ concerns on enforcement and labor standards. According to Politico:

  • On enforcement, the Trump administration said it is willing to address issues that made it nearly impossible for governments to pursue state-to-state trade disputes under the rules of the original NAFTA. Politico said this agreement is “a major concession” by the Trump administration, which “had been reluctant to give up the United States’ right to block panels under the deal, particularly in cases involving an attack on U.S. trade remedy laws.”
  • On labor, the Trump administration has indicated it is open to adopting a system of binational inspections that could be used to determine if factories in Mexico are meeting the labor standards of the agreement.

The day before Chairman Neal made his positive remarks, Speaker Pelosi herself said, “Democrats hope to approve a replacement of the North American Free Trade Agreement, but still have concerns about enforcing the deal.”

The USTR and Democrats will continue to meet in the coming week.

Rank and file Democrats, meanwhile, also are trying to make their voice heard regarding the USMCA. As Politico reported, last week 47 percent of the House Democratic caucus, or 110 members, signed a letter led by Rep. Katie Hill (D-Calif.) that was sent to the White House calling for the NAFTA replacement to “meaningfully address climate change.”

Click here to read MSCI’s advice to the Trump administration, sent in 2017, for replacing NAFTA.