News reports say House Democrats and the White House are close to agreeing on changes to a trade deal that the United States, Canada and Mexico signed last year but have not ratified.
The United States-Mexico-Canada-Agreement, known as the USMCA, would replace the existing North American Free Trade Agreement, or NAFTA, which President Donald Trump has derided as the “worst trade deal” ever signed by the U.S. He made renegotiating NAFTA a campaign promise during the 2016 presidential race.
NAFTA took effect in the 1990s during U.S. President Bill Clinton’s administration.
The Mexican Senate accepted changes to the USMCA after intense negotiations with the United States. Mexican President Andres Manuel Lopez Obrador is urging House Speaker Nancy Pelosi to move forward on the deal.
“It’s time, it’s the moment,” Lopez Obrador said at a press conference.
Reports say Pelosi is studying the terms of the agreement. The changes to the deal are aimed at winning the support of House Democrats. Those close to the discussions say a ratification vote could take place in the House of Representatives on Dec. 18.
Both the House and the Senate must sign off on the deal.
Some congressional Republicans have criticized Pelosi, saying she is holding up the deal, which they say is having an impact on Trump’s negotiations with China.
“We would get a better agreement with China if we had USMCA done,” House Minority Leader Kevin McCarthy said in his weekly press conference last Thursday. China and the U.S. have placed billions of dollars worth of tariffs on each other’s goods in the trade war.
NAFTA’s critics say it encouraged factories and jobs to relocate to Mexico. NAFTA eliminated most tariffs among the three nations, making it one of the largest free trade agreements in the world.
Ratification needed
The revised agreement must be ratified by legislators in the three countries for it to go into force. House Democrats called on Mexico to adhere to higher labor standards.
Mexican senators have approved the USMCA. If it cannot be ratified by all three countries, they will remain in NAFTA unless they break away from it.
Lopez Obrador expressed concern for implementing the trade deal sooner rather than later. He said time was running short to avoid the matter becoming an issue in the U.S. presidential race.
The Trump administration also made lowering the trade deficit with Mexico part of a renegotiation strategy.
Separately, the United States had a last-minute request to the agreement over the weekend, relating to how steel is identified. The U.S. has proposed that 70% of steel for automobile production come from the North American region. Cars produced in Mexico also use components made in Brazil, Japan and Germany.
If Congress is not able to pass Trump’s renegotiated trade deal, he said that he would take the United States out of NAFTA.