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As Trump pushes USMCA, Dems ‘going to the mat’ on enforcement

The Trump administration is ramping up pressure on Democratic lawmakers in the House to get behind the revised North American Free Trade Agreement, known as USMCA.

Supporters hope lawmakers in all three countries will swiftly approve the deal, now that President Trump has lifted his metal tariffs on Canada and Mexico.

Trump now insists he won’t work with Democratic lawmakers on legislative issues, until they end their investigations into him.

“One thing they can do is approve the USMCA so that we have our farmers taken care of — and by the way, not only the farmers. It’s every industry,” Trump said.

When the administration passes the deal to Congress, the House will consider it first. It’s up to Speaker Pelosi to decide when that happens.

“The Senate’s ready to approve it — the Republican Senate. But the Democrat House is not. Pelosi does not understand the bill. She doesn’t understand it. Even though unions are in favor of it. Farmers, manufacturers, everybody, just about, is in favor of it,” said Trump on Thursday. “It’s a replacement for — as I said— the worst trade deal ever made.”

Democratic lawmakers have issues with environmental, labor and pharmaceutical provisions in the agreement. One of the biggest concerns House Democrats have is enforcement.

Opponents argue NAFTA led companies to outsource American jobs to Mexico to take advantage of cheap labor. The USMCA includes increased labor standards, but critics argue there is no enforcement mechanism to make sure Mexico abides by its commitments.

“Lessons from enforcement failures in NAFTA – especially with respect to labor and environment provisions – must guide our Committee’s work,” said Rep. Earl Blumenauer, chairman of the House Ways and Means trade subcommittee at an enforcement hearing this week.

“I come from Michigan, specifically from my hometown of Flint, which has an incredible history in manufacturing and the birthplace of General Motors,” Rep. Dan Kildee (D-MI) said at the hearing. “It was the place in 1937 when the first UAW contract was written after 44 days of the Sit-Down Strike. We helped build the middle class, and very sadly have felt the brunt of bad trade deals for a long time.”

‘We’d like to get a yes’

Pelosi and other top Democrats have been speaking with U.S. Trade Representative Robert Lighthizer in an attempt to address the concerns.

House Majority Leader Steny Hoyer told reporters there are ongoing discussions with Lighthizer, to eventually outline specific fixes Democratic lawmakers would like to see.

“Organized labor said it would like to get to yes, we say we’d like to get to a yes; I think both are truthful on that,” said Hoyer. “But we’re not there yet.”

It’s not just Democratic lawmakers in the House who worry about enforcement.

Sen. Ron Wyden (D-OR) wrote a letter to Lighthizer saying, “all of the obligations [in the USMCA] become meaningless if the United States cannot effectively and swiftly enforce them.”

“What I’m trying to convey is that the ballgame here is not complicated. You want to get anything resembling bipartisan support, you have to have real enforcement with real teeth,” said Wyden in an interview with Yahoo Finance.

Sen. Ron Wyden, D-Ore., left, gestures while asking questions as Sen. Chuck Grassley, R-Iowa, right, chairman of the Senate Finance Committee, looks on during a hearing with drug company CEOs on drug prices, Tuesday, Feb. 26, 2019 on Capitol Hill in Washington. Also on the committee is Sen. Debbie Stabenow, D-Mich. (AP Photo/Pablo Martinez Monsivais)

‘We’re going to fight for this’

Wyden and Sen. Sherrod Brown (D-OH) have proposed a plan they say will ensure Mexico holds up its end of the deal.

“I had another long session with the administration this week,” Wyden told Yahoo Finance. “I’ve told them that this is the bottom line. I’m the ranking Democrat on the Finance committee. I can tell you many, many Democrats share my view in the Senate and the House. And we’re going to go to the mat – we’re going to fight for this.”

Their proposal requires Mexico to increase the enforcement personnel and creates joint compliance initiatives to promote labor rights and acceptable working conditions. The plan allows U.S. and Mexican governments to inspect facilities suspected of violating labor standards. If facilities are found to be in violation, they would not get tariff-free treatment.

The senators’ plan would not require re-opening the trade agreement with Canada and Mexico.

An aide to Sen. Brown told Yahoo Finance the plan could be inserted into the actual text of the USMCA or it could be in the form of a side agreement with Mexico. However, it cannot just be in the implementing bill, which is the legislation Congress passes to enact a trade deal. The aide said the Brown-Wyden plan will require cooperation and agreement from Mexico.

“I don't trust the Trump administration and I don't trust the negotiators and I don't trust the companies that have played this outsourcing game to do it in implementing legislation,” Brown told Yahoo Finance. “We've got to lift labor standards in all three countries – and if we don't do that, NAFTA will continue to mean bleeding jobs."

Senate Finance Committee Chairman Chuck Grassley (R-IA) told reporters this week the Brown-Wyden proposal would “naturally come up” if and when the committee considers the trade agreement.

“Enforcement is a big thing for Democrats, but Republicans also expect it to be followed by all three countries. So I don’t know where there [are] differences... – only in how do you accomplish the goal?,” said Grassley.

When asked if re-opening the trade deal with Canada and Mexico would kill the chances of ratifying the USCMA his year, Grassley said it would.

“Yes. Because Canada and Mexico won’t come back to the table,” Grassley said.

Congress is not in session next week, but the USMCA will still be in focus.

Vice President Mike Pence is scheduled to meet with Canadian Prime Minister Justin Trudeau next week, to rally support for the deal. Canada’s House of Commons, which needs to approve the deal, adjourns in June before elections in October.

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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