Politics

The window to pass Trump's USMCA trade deal is getting smaller as 2020 approaches

Key Points
  • Supporters of the USMCA trade deal, President Donald Trump's replacement for NAFTA, are increasing their pressure on Congress to pass it as time potentially draws shorter. 
  • House Speaker Nancy Pelosi says Democrats are getting closer to supporting the agreement as they try to resolve concerns about enforcing labor and environmental standards. 
  • Failing to approve the deal before the end of the year could make the task a lot tougher for Congress, as the 2020 election will heat up early next year. 
President Donald Trump delivers remarks on supporting the passage of the U.S.-Mexico-Canada (USMCA) trade deal during a visit to Derco Aerospace Inc., a Lockheed Martin subsidiary, in Milwaukee, Wisconsin, July 12, 2019.
Carlos Barria | Reuters

As President Donald Trump's North American trade deal crawls toward approval, supporters are increasing their pressure on Congress to ratify it.

Business interest groups led by the National Association of Manufacturers plan to blitz lawmakers Wednesday with messages backing the White House's replacement for the North American Free Trade Agreement. The effort follows Vice President Mike Pence's recent nationwide tour touting the United States-Mexico-Canada Agreement and a push for its approval from top congressional Republicans.

House Speaker Nancy Pelosi has said Democrats have inched closer to supporting the deal. They have worked to iron out lingering concerns in weeks of talks with the Office of the U.S. Trade Representative. While the Trump administration hopes the House can deliver it a key economic and political win before the end of the year, Democrats have not committed to vote timing as they look to improve enforcement tools for labor and environmental standards.

A uncertain fate awaits the deal as 2020 looms — and elections threaten to devour much of Washington's attention. While Pelosi has said the now public impeachment inquiry into Trump will not affect USMCA approval, the House has at least one other distraction in trying to keep the government funded past a Nov. 21 deadline.

The deal could start to move forward within weeks because "it's going to be very difficult in 2020, as with any election, to pass major legislation as primaries start to heat up," said Jason Marczak, director of the Atlantic Council's Adrienne Arsht Latin America Center. He added that Democrats want to show they can legislate despite the impeachment investigation.

When the White House reaches a deal with House Democrats on the substance of the agreement, it must send the final legislation to Capitol Hill, officially beginning a countdown clock that allows up to 90 days to hold a vote. Before that happens, the committees with trade jurisdiction would hold an informal session to "mark up" or edit, the legislation. As of this writing, Pelosi has not signaled her party's support of the deal to the White House, and the markup session has not been held.

"House Democrats are hard at work in negotiations with USTR to address the critical concerns with the USMCA draft," Henry Connelly, a spokesperson for Pelosi, tells CNBC. "Substance will determine the timing."

A senior GOP aide suggested that the deal could see momentum during the three weeks Congress is in session between Thanksgiving and Christmas. But Washington's typical end-of-year frenzy will be even more so this year, with government funding expiring, a presidential election year looming and an impeachment inquiry building.

A senior administration official suggested that Pelosi may be waiting to take up USMCA closer to a vote on articles of impeachment. In that scenario, this official said, Democratic lawmakers representing districts that voted for Trump would be incentivized to vote in favor of impeachment in order to pass USMCA.

"That's the cynic's view," this official tells CNBC.

Business groups hope to end confusion about access to Canada and Mexico, the top two U.S. export markets in 2018. The U.S. sent about $300 billion and $265 billion in goods to Canada and Mexico, respectively, last year.

In a statement Wednesday, Linda Dempsey, vice president of international economic affairs policy at the National Association of Manufacturers, said, "American workers benefit from a strong, modernized trade relationship with Canada and Mexico."

At the same time, top U.S. labor unions have urged Congress to oppose the deal as it stands now. They have voiced concerns that it will not go far enough to stop companies from shipping jobs to Mexico.

For instance, the AFL-CIO's executive council said in a September statement that without changes, "the new NAFTA would do little to stop the continued outsourcing of jobs in a wide range of industries."

Mexico has already ratified the trade agreement. Canada has not yet approved it.

Earlier this month, a delegation led by House Ways and Means Committee Chairman Rep. Richard Neal, D-Mass., met with Canadian Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland in Ottawa. In a statement after the trip, Neal said he "particularly stressed the importance of meaningful enforcement mechanisms that ensure the protection of workers in all three nations and of our shared environment."

NAFTA remains in place pending ratification of USMCA. While Trump has threatened to withdraw from the existing deal to put more pressure on lawmakers to approve his replacement, he never followed through on it.

In a Nov. 6 press release, the committee also said Democrats have "made substantial progress" in talks with U.S. Trade Representative Robert Lighthizer and his staff. They "now seek to resolve the remaining critical questions, which include those regarding worker protections and labor-specific enforcement mechanisms," according to the Ways and Means Committee.

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Trump: USMCA should pass with bipartisan support

Mexico has also worked to assuage Democratic concerns about the deal. Last month, Neal received a letter from Mexican President Andres Manuel Lopez Obrador committing to Mexican labor reforms in part designed to boost wages in Mexico and deter American companies from moving jobs south.

Spokespeople for Pelosi, Neal and the USTR did not immediately respond to requests to comment on how far they think progress toward ratification has come. Even so, at least one key House Republican has said the deal could pass before 2020.

"I'm convinced we can get this done and to the president's desk this year," Ways and Means Committee ranking member Rep. Kevin Brady, R-Texas, told reporters on Oct. 31.

Once Democrats and the Trump administration agree on the structure of a deal, the White House can submit the legislation that would ratify it. The House Ways and Means Committee would have up to 45 days to report it to the full House. The chamber would then get up to 15 days to pass it.

The Ways and Means panel would not have to take the full 45 days to advance the deal, meaning it could still pass the chamber this year.

The Senate Finance Committee would then get 15 days to send it to the full chamber. The Senate would have another 15 days to approve it.

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