Top Stories
Top Stories
Politics

House Democrats will decide the fate of Trump's North American trade deal as Congress returns

Key Points
  • As Congress returns to Washington this week, President Donald Trump's administration is pushing for swift approval of the United States-Mexico-Canada Agreement. 
  • By approving the deal, Trump hopes to follow through on one of his key promises ahead of the 2020 election. 
  • Democrats still have concerns about labor and environmental standards in the deal, and House Speaker Nancy Pelosi is not committing to firm vote timing as House Democrats negotiate with the administration. 
Speaker of the House Nancy Pelosi, D-Calif., holds her weekly news conference in the Capitol on Thursday, July 11, 2019.
Bill Clark | CQ-Roll Call Group | Getty Images

House Democrats will control the fate of one of President Donald Trump's top priorities as they return to Washington this week.

The president has pushed for swift approval of his replacement for the North American Free Trade Agreement, a top economic and political priority ahead of the 2020 election. Democrats have shown little urgency in moving to ratify the new United States-Mexico-Canada Agreement as signed by the three countries last year.

The White House has contended House Speaker Nancy Pelosi could put the deal to a vote at any time and it would pass the Democratic-held House. But the speaker and top Democratic negotiators still have concerns about whether it goes far enough to protect American workers and the environment. They also worry that a piece of the agreement could raise drug prices for U.S. consumers.

Democrats expect the pace of their talks with the Office of the U.S. Trade Representative to pick up after they return to Washington. Some members — many of them freshmen who helped Democrats flip the House by winning swing districts — have pushed for a vote on the deal before the end of the year. Even so, Pelosi has not yet committed to firm timing on a vote.

"The substance will determine the timing," Pelosi spokesman Henry Connelly said when asked if a vote could happen in 2019.

The next few months could prove pivotal for Trump's trade agenda, one of the planks that helped to propel him to the White House. He has taken more heat as his trade war with China, the world's second-largest economy, escalates, and fears about slowing global growth spread. Farmers and other businesses damaged by the trade conflict want to see the USMCA approved to end the uncertainty about their access to key Canadian and Mexican markets.

Much hinges on American trading relationships with its neighbors, which expanded after NAFTA went into effect in 1994. The U.S. sent about $300 billion in goods to Canada last year, more than any other country. It exported about $265 billion in products to Mexico, its second-largest market.

Democrats and Republican Trump alike have lamented that NAFTA helped to sap American manufacturing jobs in favor of cheaper Mexican labor. During remarks pushing for USMCA's passage last month, the president called NAFTA "one of the world's worst trade deals ever" and a "disaster for the country."

The U.S., Canada and Mexico made a few key changes to NAFTA last year. USMCA puts stricter rules on the country of origin for auto parts and requires almost half of those products to be made by workers earning $16 an hour or more. It also expands American access to the Canadian dairy market and aims to modernize copyright and digital trade rules.

Of the three countries, only Mexico's legislature has ratified the deal.

Sticking points on enforcement

America's southern neighbor passed a labor reform law in April in part to appease House Democrats' concerns about the USMCA. But Pelosi still has worries about how to enforce the rules, which give workers better bargaining rights and aim to deter American companies from moving jobs to Mexico.

VIDEO8:2508:25
Rep. Kevin McCarthy on China trade, Hong Kong, the USMCA and more

On a conference call with the House Democratic caucus last week, Pelosi stressed the party's lingering concerns about labor rules, drug costs and environmental protections, according to an aide on the call. She also detailed a phone call with Canadian Prime Minister Justin Trudeau, during which she said Democrats were particularly worried about enforcing the agreement and Mexico's labor standards.

House Ways and Means Committee Chairman Rep. Richard Neal, a Massachusetts Democrat leading a group working on the deal, also outlined the House's latest interactions with the USTR. He said the working group has sent specific proposals to the USTR.

Neal also told his fellow Democrats that the ball is now in U.S. Trade Representative Robert Lighthizer's court, the aide said. The congressman said he expects the pace of negotiations to pick up this month after Congress returns.

The Trump administration appears set to press the issue more in the coming months. As lawmakers return to Washington, the USMCA is at "the top of our agenda," Treasury Secretary Steven Mnuchin told Fox Business Network on Monday.

"Ambassador Lighthizer is working very closely with the House," he said. "I've spoken to the speaker about this several times and we look forward to working with her this month, hopefully to get to the point where they are comfortable in bringing this to the floor. Because I think if they do bring it the floor it has the votes to pass."

The USTR did not immediately comment on what the Trump administration thinks a realistic timeline is for USMCA approval. Democrats currently hold a 235-197 edge in the House.

USMCA and the 2020 election

Pelosi has also had to deal with some agitating from within her own caucus. In July, 14 House Democrats wrote a letter to the speaker urging her to hold a vote on the USMCA by the end of the year.

A dozen of those lawmakers just took office in January. Most of them won battleground GOP-held seats in January and may face competitive elections again next year.

As Congress returns, some of those lawmakers continue to push for party leaders to advance the USMCA. Rep. Colin Allred, who flipped a Texas district in the Dallas suburbs last year, said, "trade with Mexico and Canada is critical to helping businesses both big and small succeed."

"I believe Congressional leadership should move forward in a productive way to address any outstanding concerns and I continue to be optimistic that an agreement that benefits North Texas and our three nations can advance," he said in a statement to CNBC.

Rep. Sharice Davids, who won election in northeast Kansas in 2018, said, "a multilateral agreement is crucial" because her district relies on trade with Mexico and Canada. In a statement to CNBC, she said she will "keep pushing" for stronger environmental and labor protections "and for a bipartisan vote by the end of this year so we can support our trade and agricultural communities, as well as our workers and the environment."

Many organized labor groups — part of a key electoral constituency for Democrats — have not warmed to the USMCA. Organizations such as union federation AFL-CIO have pushed for changes before Congress ratifies the deal to better protect American workers.

In a letter sent Monday to the 14 lawmakers who pushed Pelosi for a vote, International Association of Machinists and Aerospace Workers President Robert Martinez Jr. said the deal does not currently go far enough to stop outsourcing to Mexico. The head of the roughly 600,000-worker union wrote that the USMCA "does not come close to reflecting the much-needed changes that we have submitted to USTR."

"Until the changes are fixed in the newly negotiated agreement, NAFTA 2.0 should not be brought to the floor for a vote," he wrote. "We strongly oppose your insistence that a vote take place this year and urge you to reconsider our requests for a NAFTA that can be acceptable to us and all of the working families you represent."

Correction: House lawmakers face reelection next year. An earlier version misstated the timing.

Subscribe to CNBC on YouTube.