An alliance of trade groups and business groups -- including PhRMA, the National Chicken Council and the International Association of Drilling Contractors -- is funding the Pass USMCA Coalition, which will lobby for ratification of the new NAFTA, called the U.S.-Mexico-Canada Agreement. Rick Dearborn, former deputy chief of staff for President Donald Trump, is executive director of the group, and former Obama administration Commerce secretary Gary Locke is honorary chairman.
USMCA
The U.S.-Mexico-Canada agreement is a free trade agreement between the three countries, also known as CUSMA in Canada and T-MEC in Mexico. Replacing the North American Free Trade Agreement (NAFTA) in 2020, the agreement contains a unique sunset provision where, after six years (in 2026), any of the three parties may decide not to continue the agreement in its current form and begin a period of up to 10 years where USMCA provisions may be renegotiated.
The approach to a future bill that would give Congress the ability to intervene on Section 232 tariffs will depend on what version can get the broadest bipartisan support, Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told reporters Feb. 13. He said he doesn't have his mind made up on what has to be in the bill to constrain Section 232 actions. He said his staff is "moving very quickly" to put together a bill that "shows the appropriate respect to [Sen. Pat] Toomey and to [Sen. Rob] Portman," Republican committee members who have each authored bills that would constrain the president on the tariffs (see 1901310029 and 1902120033)
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that neither Mexican nor Canadian politicians will ratify the new NAFTA as long as those two countries are subject to U.S. Section 232 steel and aluminum tariffs. Grassley, who was speaking to reporters on a conference call Feb. 12, has said in the past that Canadian and Mexican retaliatory tariffs reacting to those tariffs have to be lifted in order to get the new NAFTA through Congress (see 1901090041).
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Rep. Rick Larsen, D-Wash., said he is skeptical that a formal agreement on trade will be reached in the U.S.-China talks, citing what he called the Trump administration’s lack of “patience,” and that while some features of the renegotiated NAFTA remain in contention, he senses that more in Congress are comfortable with the language.
In his State of the Union address, President Donald Trump briefly talked about the China deal his administration is negotiating -- he said he's looking for "real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs." But he spent more time talking up the U.S.-Mexico-Canada Agreement, his replacement for NAFTA, which he called a catastrophe. "I have met the men and women of Michigan, Ohio, Pennsylvania, Indiana, New Hampshire, and many other states whose dreams were shattered by the signing of NAFTA," he said. By contrast, he said USMCA will deliver for workers. "I hope you can pass the USMCA into law so that we can bring back our manufacturing jobs in even greater numbers, expand American agriculture, protect intellectual property, and ensure that more cars are proudly stamped with our four beautiful words: 'Made in the USA,'" he said, to applause. He said he's making it a priority to reverse "decades of calamitous trade policies."
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Sen. Pat Toomey, R-Pa., said the Trump administration will have great difficulty getting the House of Representatives to approve its rewrite of NAFTA. "I'm not aware of a single elected Democratic member of Congress who has endorsed this. I'm aware of many who have panned it. So it's not clear to me what the path forward is. There's a lot of resistance from Democrats. There's a lot of protectionist provisions that were meant to satisfy the protectionist urges of some of my Democratic colleagues, [but] they don't seem to have been sufficient yet," he said Jan. 31 at a reporters roundtable in his office. Toomey suggested that the text is not so protectionist that he's a certain no vote. "With certain changes to the implementing legislation, I could agree to this revised NAFTA. That would require moving in the direction of free traders."
The New Democrat Coalition, a caucus of generally pro-free-trade Democrats in the House of Representatives, has not coalesced around the NAFTA replacement, according to J.D. Grom, executive director of the group, speaking Jan. 29 on a panel at the Washington International Trade Association annual conference. "Members are still working through where we're at on the agreement," he said, but they are clear that they will be unhappy if President Donald Trump tries to withdraw the U.S. from NAFTA to force a yes vote on its replacement. "We don't want to be in a hostage situation," he said.
In order for importers to be able to create certificates of origin under the U.S.-Mexico-Canada Agreement, U.S. law will have to change. That's one of dozens of changes to statutes that will need to happen to accommodate the changes between NAFTA and USMCA. The U.S. trade representative shared the six-page outline of the needed changes with Congress late on Jan. 29, fulfilling one of the steps under fast-track consideration of the trade pact. The document suggests that USTR is still seeking a lowering of U.S. de minimis levels specifically for Canada and Mexico (see 1810190043), since those countries did not raise their de minimis levels as much as the U.S. negotiators wished.