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Trump Aides and Democrats Strike Deal on North American Trade Pact Trump Aides and Democrats Strike Deal on North American Trade Pact
(about 5 hours later)
WASHINGTON — House Democrats said Tuesday they had reached an agreement with the White House to strengthen labor, environmental, pharmaceutical and enforcement provisions in President Trump’s North American trade pact, a significant development that moves the president’s signature trade deal closer to becoming law. WASHINGTON — House Democrats said Tuesday they had reached an agreement with the White House to strengthen labor, environmental, pharmaceutical and enforcement provisions in President Trump’s North American trade pact, a significant development that makes it all but certain that the president’s signature trade deal will become law.
The agreement, announced Tuesday by Speaker Nancy Pelosi, comes at an odd moment as the same group of House Democrats moved closer toward impeaching the president. Ms. Pelosi of California said she would allow the deal to move forward in the House, handing the administration one of its biggest legislative victories less than an hour after she announced the articles of impeachment against Mr. Trump. The agreement, announced Tuesday by Speaker Nancy Pelosi, made for an odd moment, coming as the same group of House Democrats moved closer toward impeaching the president. Ms. Pelosi of California said she would allow a revised United States-Mexico-Canada Agreement to move forward in the House, handing the administration one of its biggest legislative victories less than an hour after she announced the articles of impeachment against Mr. Trump.
The decision to proceed with the United States-Mexico-Canada-Agreement came after Democrats said they secured concessions from the White House to strengthen provisions in a trade pact that governs commerce across North America. Those changes were critical to winning the support of labor unions, including the powerful AFL-CIO. Ms. Pelosi went directly from a news conference on impeachment to another on the trade deal, where she and top Democrats, including Representative Richard E. Neal of Massachusetts, touted concessions they had secured in closed door negotiations with the administration.
The changes to USMCA, which the three countries signed more than a year ago, must now be woven into implementing legislation that the House and Senate will both vote on. The pact will also need to secure the president’s signature and the final approval of the Mexican senate and Canadian leadership. “We’re declaring victory for the American worker,” Ms. Pelosi said. “It is infinitely better than what was initially proposed by the administration.”
At a news conference on Tuesday, Ms. Pelosi, flanked by Democrats including Massachusetts Representative Richard E. Neal, said that they were confident that the legislation would become law, replacing the much-maligned North American Free Trade Agreement and fulfilling a legislative priority for both the administration and the House Democratic caucus. The timing of the handshake agreement offers Mr. Trump a crucial victory to tout on the campaign trail during his re-election bid and House Democrats tangible proof that they are able to legislate while preparing to vote on charges of abuse of power and obstruction of Congress against the president.
“It is infinitely better than what was initially proposed by the administration,” Ms. Pelosi said. “It’s a victory for America’s workers.” Ms. Pelosi repeatedly rebuffed Republican suggestions that Democrats had timed the announcement to try and minimize any negative fallout from the impeachment proceedings.
“This is a transformative agreement,” Mr. Neal said. “Not any one of us is important enough to hold up a trade agreement that is important for American workers,” she said.
Mr. Trump, who has spent weeks blaming Ms. Pelosi for obstructing completion of a trade deal that he says will help workers, touted the progress on Twitter earlier on Tuesday morning. “Looking like very good Democrat support for USMCA. That would be great for our Country!” The administration agreed with Canada and Mexico on revisions to the North American Free Trade Agreement one year ago, but the deal requires the approval of Congress, including the Democratic-controlled House. Ms. Pelosi and her colleagues have used that vote as leverage to secure long-sought policy changes to a long-maligned trade deal.
Mr. Lighthizer, Jared Kushner, the president’s son-in-law and a senior adviser, and Chrystia Freeland, who negotiated the deal on behalf of Canada and is now deputy prime minister, are expected to announce advancements to the pact with Mexican officials in Mexico City later Tuesday. “Make no mistake,” Representative Earl Blumenauer, Democrat of Oregon, said Tuesday. “This is a Democrat’s agreement that we fought for, and it’s going to be the template going forward for writing new trade agreements.”
Among the biggest wins was an agreement to remove intellectual property protections for the pharmaceutical industry, which Democrats warned could undermine efforts to make health care more affordable. Democrats also convinced the White House to strengthen the deal’s enforcement provisions, and obtained commitments to ensure Mexico is adhering to labor reforms.
The timing of the handshake agreement offers Mr. Trump a crucial victory to tout on the campaign trail during his re-election bid and House Democrats tangible proof that they are able to legislate while preparing to vote on charges of abuse of power and obstruction of Congress against the president. While it is unclear when legislation will be ready for the House floor, it could come as lawmakers are readying for a vote on impeachment articles. Those changes were critical to winning the support of labor unions, including the influential AFL-CIO, which endorsed the revised pact just moments before Ms. Pelosi’s announcement.
“We’re going to begin to share text and review parts of the agreement before there’s an expedited period of bringing it to the floor” Mr. Neal said. “There’s no reason for unnecessary delays.” In fact, the revised deal addressed so many of the Democrats’ concerns that some Republicans appeared skeptical of the final agreement and suggested that Mr. Trump’s top trade adviser, Robert E. Lighthizer, had given away too much.
Given the ongoing impeachment inquiry and Democratic opposition to both Mr. Trump and NAFTA, the House majority is offering a remarkable trade win to the administration. Senator John Cornyn, Republican of Texas, voiced concern that Mr. Lighthizer had potentially spent more time talking with House Democrats than Republicans on the final product. And Senator Patrick J. Toomey, Republican of Pennsylvania and one of the most ardent critics of the deal, railed against both the original deal and the new changes, including removal of the pharmaceutical provision.
But the closed door negotiations between a select group of Democrats and Mr. Lighthizer gave them an opportunity to secure multiple policy changes related to prescription drug pricing, the environment, labor protections and dispute settlement. “It’s clearly moved way to the left,” Mr. Toomey told reporters. “It seemed to be just a one-way direction in the direction of Democrats.”
That included removing a provision that Democrats criticized as a boon to the pharmaceutical industry. Democrats had objected to provisions governing intellectual property protections for new pharmaceutical products, in particular an advanced class of drugs called biologics, which were given 10 years of protection from cheaper alternatives. Congressional Democrats said those measures could undermine efforts to make American health care more affordable and the revised deal strips out that 10 year protection. Mr. Trump, who spent weeks blaming Ms. Pelosi for standing in the way of a trade deal that he said would help workers, touted the progress on Twitter on Tuesday morning. “Looking like very good Democrat support for USMCA. That would be great for our Country!”
Democrats have also been eager to lock in provisions that they see as improvements on the original NAFTA, and provide more certainty to the businesses in their districts that depend on the pact. In a statement, Mr. Lighthizer called the announcement a victory for Mr. Trump.
The administration and Republicans in both chambers have hammered Ms. Pelosi and her caucus for weeks over the delay in allowing the pact’s legislation to go for a vote on the House floor. Even within Ms. Pelosi’s majority, several moderate members and a number of the freshmen responsible for flipping seats and delivering her the majority had begun pressuring leadership for a vote on the pact before the end of the year. “After working with Republicans, Democrats, and many other stakeholders for the past two years we have created a deal that will benefit American workers, farmers, and ranchers for years to come,” he said.
The changes must now be woven into implementing legislation that the House and Senate will both vote on. The pact will also need to secure the president’s signature and the final approval of the Mexican and Canadian legislatures.
Mr. Neal said he remained hopeful that the House could vote on the agreement before the end of the year. Senator Mitch McConnell of Kentucky, the majority leader, said that the Senate would not bring the deal for a vote before Dec. 20, when lawmakers are scheduled to leave for a holiday break.
“That’ll have to come up, in all likelihood, after a trial is finished in the Senate,” he said, referring to the impeachment proceedings.
Mr. Lighthizer on Tuesday briefed groups of House and Senate Republicans by phone on the changes. While some expressed concern, most Republicans appeared to maintain their support for the new trade pact, even with the new changes negotiated by Democrats.
Senator Rob Portman, Republican of Ohio, declared “relief” in an interview, and noted that such a compromise in a divided government “is a rare feat around here, and we should celebrate it.”
And as Mr. Neal left the news conference, Representative Steve Scalise of Louisiana, the Republican whip, shook his hand. A spokeswoman said Mr. Scalise had promised Mr. Lighthizer strong Republican support for the deal.
“There’s a Republican leader saying it was good,” Mr. Neal said as he entered an elevator. “That wasn’t staged.”
The agreement came as a huge relief to industries that have grown up around NAFTA and rely on tariff-free trade across Canada, Mexico and the United States. The lack of movement in Congress, combined with Mr. Trump’s threats to walk away from the original NAFTA pact, had created crippling uncertainty among businesses.
“This is finally good news on the trade front after a long, hard year,” said Rufus H. Yerxa, the president of the National Foreign Trade Council, which represents major exporters. “We believe this agreement will further strengthen the North American region, bringing about the commercial stability and certainty that our companies need to remain competitive in the global economy.”
The administration and Republicans in both chambers have hammered Ms. Pelosi and her caucus to take action. Even within Ms. Pelosi’s majority, several moderate members and a number of the freshmen who flipped Republican-held seats in 2018 had begun pressuring leadership for a vote on the pact before the end of the year.
The deal announced Tuesday offered Ms. Pelosi and her core allies justification for the delay by establishing what she said would be a legacy agreement that sets the standard for future trade deals.The deal announced Tuesday offered Ms. Pelosi and her core allies justification for the delay by establishing what she said would be a legacy agreement that sets the standard for future trade deals.
The rewrite provides a much-needed update to the trading rules for North America. The original NAFTA, which was negotiated by President George H.W. Bush and signed by President Clinton, went into force on January 1994, before the commercialization of the internet. In addition to updating rules for digital commerce, Mr. Trump’s U.S.M.C.A. raised the threshold for the proportion of a car’s value that must be made in North America in order to qualify for the pact’s zero tariffs. It also rolls back a special system of arbitration for corporations long opposed by Democrats.
Besides updating rules for digital commerce, Mr. Trump’s USMCA has made other changes generally sought by Democrats, like raising the threshold for the proportion of a car’s value that must be made in North America in order to qualify for the pact’s zero tariffs. It also contains provisions designed to strengthen Mexican labor unions and roll back a special system of arbitration for corporations long opposed by Democrats. One of the most significant revisions will roll back protections for new pharmaceutical products, in particular an advanced class of drugs called biologics, which were initially given 10 years of patent protection from cheaper alternatives. It also removed language that would ensure patent protections when drug companies find new uses for their existing products, a process known as “evergreening.”
With passage into law in the United States, the deal will clear its biggest and one of its last remaining hurdles in a tumultuous two-year negotiation. Those changes are a big departure from past trade agreements, which sought to lock in stronger protections for intellectual property, long seen as a competitive advantage for the American economy.
Since beginning the negotiations in August 2017, Mr. Trump peppered the talks with accusations that Canada and Mexico were ripping off the United States, as well as frequent threats to withdraw from the pact altogether. He and his advisers pressed for concessions that were opposed by both foreign officials and the business community, including a sunset provision that could have caused the pact to automatically expire. Protections for pharmaceutical companies became a stumbling block in negotiations over the Trans-Pacific Partnership, a 12-country trade deal negotiated by President Barack Obama. Drug protections helped sink the T.P.P. and Mr. Trump pulled the United States out of the pact during his first week in office.
The Trump administration ultimately watered down some of its more controversial demands and secured the approval of Canada and Mexico late last year. Mexico’s legislature has already ratified the agreement, and in Canada the trade pact is expected to pass into law without controversy. Mr. Blumenauer said the pharmaceutical revisions would “change the landscape” on trade agreements. “If we go back and review the other trade agreements we’ve had, they are replete with pharmaceutical protections,” he said. “This is a very significant shift.”
Elisabeth Malkin contributed reporting from Mexico City. The drug industry was not pleased.
“The announcement made today puts politics over patients,” Stephen J. Ubl, president and chief executive of the Pharmaceutical Research and Manufacturers of America, said in a statement. “The only winners today are foreign governments who want to steal American intellectual property and free ride on America’s global leadership in biopharmaceutical research and development.”
The revisions also beefed up labor protections, especially in Mexico. While Mexican negotiators succeeded in rebuffing Democrats’ demand for American inspections of Mexican factories, they agreed to additional funding and oversight to ensure that Mexico proceeds with strengthening its labor laws and unions. The United States will also be allowed to block goods from specific Mexican factories if companies are found in violation of labor rules.
Democrats also said they had succeeded in bolstering enforcement of the trade pact by stripping out a provision — added by Mr. Lighthizer — which had curbed the ability of countries to bring disputes against one another.
In a loss for Ms. Pelosi, the pact will still contain certain legal protections that may shield online platforms like Facebook and Twitter from some lawsuits over content posted by their users.
Ms. Pelosi acknowledged the inclusion of those provisions was a “disappointment,” adding, “I mean, I lost."
Catie Edmondson and David McCabe contributed reporting from Washington. Elisabeth Malkin contributed reporting from Mexico City.