Some Lawmakers Optimistic, Some Skeptical of Bilateral Deal With Mexico

Senators and House members from both parties reacted to the outline of a bilateral deal between Mexico and the U.S. with a variety of views, ranging from celebration to skepticism. The deal aims to steer more auto manufacturing to the U.S. -- and maybe to Canada, if that country comes on board (see 1808270032).

House Ways and Means Committee Chairman Kevin Brady, R-Texas, called the agreement very encouraging. His counterpart in the Senate, the Utah Republican Orrin Hatch, emphasized that Canada must be part of NAFTA to benefit consumers and producers, but still praised the development. But other Republicans were less salutary. Nebraska's Sen. Ben Sasse, an ardent free trader, said, "There is reason to worry that this might be a step backward from NAFTA for American families -- especially on fundamental issues of presumed expiration of the deal, and empowering government bureaucrats rather than markets to determine the components in cars and other goods.”

Sen. Roy Blunt, R-Mo., said he wants to see more details, "but it appears to me to be a significant step in the right direction." Blunt, who was speaking to International Trade Today in a brief interview at the Capitol, declined to say whether he thinks a bilateral deal can be approved under fast-track, since the negotiating priorities envision a trilateral pact. "I think all that's pretty hypothetical," he said. "We need to see the final agreement and then we need to see at happens with Canada, but in the middle of the country where I live, a U.S.-Mexico agreement is a whole lot better than no agreement at all."

Senate Majority Leader Mitch McConnell of Kentucky also declined to answer whether Trade Promotion Authority would bar a two-country pact. He said they'd have to see what happens with Canada before making a "judgment on the way forward."

U.S. Trade Representative Robert Lighthizer has made a lot of effort to appeal to trade-skeptical Democrats over the last year, and has been particularly interested in changing the pact in ways he believes will benefit U.S. manufacturing workers, such as by requiring more auto content made at $16 an hour or more, and improving labor rights in Mexico. Ohio's Democratic Sen. Sherrod Brown, who made a point in his press release of noting he voted against the original NAFTA, called the Mexico handshake deal an important step forward.

Rep. Tim Ryan (D), who represents an area near Youngstown, Ohio, said during an Aug. 28 NPR interview that NAFTA led to massive manufacturing job losses. The rewrite "is not going to be a silver bullet; but I welcome this, and I’m hopeful it can move us in the right direction," he said, adding that Rust Belt Democrats like him "may find some agreement" with the Trump administration's trade decisions. However, he also suggested that a bilateral deal is not congruent with fast track, and moreover, he said, it's wrong how Trump has treated Canada during this negotiation. "For him to turn Justin Trudeau into our enemy … it’s ridiculous. Hopefully, we can find a way to bring Canada into this."

House Ways and Means ranking member Bill Pascrell, D-N.J., was more definitive that Congress won't vote on a deal without Canada. "I view this as a progress report with negotiation still continuing between our three nations," he said.

Sen. Michael Bennet, D-Colo., responded to an International Trade Today question, saying, "the people I represent who are in the crosshairs of these tariffs, they are very cautious about this, as they should be, and I am as well. Look, I would like nothing more than for NAFTA to be renegotiated in a way that benefits American farmers, American workers and American ranchers. I am 100 percent for that, and if Donald Trump can achieve that with Mexico and Canada, I will congratulate him."

Former House Ways and Means Committee chairman Sandy Levin, a Michigan Democrat and a no vote on the original NAFTA, sent a press release from Mexico, where he was meeting with workers who had been fired after they went on strike at a tire factory. They had a union, but in Mexico, many union contracts are not ratified by a majority vote, and U.S. unions view Mexican unions as captive to employers. Levin said these workers earn less than $2 an hour. "If a rewrite of NAFTA fails to forcefully and directly address this issue, the result will just be more downward pressure on American workers’ wages and outsourcing of U.S. jobs to very low-wage Mexico," he said. Although the USTR release says that the countries will agree to adopt and enforce laws consistent with the International Labor Organization, the Central America Free Trade Agreement (CAFTA) also recommended countries meet those standards, but that was viewed as unenforceable. The Obama administration tried to push Guatemala to improve labor rights for three years before pressing a labor enforcement case in 2014 -- it was lost in 2017 (see 1706270087).

Lighthizer said, "The United States and Mexico have agreed to a Labor chapter that brings labor obligations into the core of the agreement, makes them fully enforceable, and represents the strongest provisions of any trade agreement." Levin noted Congress has not seen text yet, "but reports to date leave major questions about the specific rights of workers to overturn the thousands of unfair ‘protection’ contracts now in place in Mexico, as well as the mechanisms to effectively enforce these rights."