Leaders Sign New NAFTA; Ratification Push to Come Next Year

Trump said at the signing of the agreement that "this will help stop auto jobs from going overseas and it will bring back auto jobs that have already left." But in sharp contrast to that prediction, General Motors announced this week it will be closing four plants in the U.S. and one in Canada. Trudeau noted the announcement at the signing ceremony, remarking that it is "all the more reason why we need to keep working to remove the tariffs on steel and aluminum between our countries."

"While Trump likes to claim victory and make a ceremonial show, today’s signing is merely the next step in an incomplete and ongoing process," said Rep. Bill Pascrell, D-N.J., the top Democrat on the House Ways and Means Subcommittee on Trade. His statement added, "There is still a ways to go to gain support in the new Congress for this agreement."

Incoming Ways and Means Chairman Richard Neal, D-Mass., represents a part of Massachusetts that lost much of its manufacturing base. "I will continue to scrutinize the details of this deal to determine whether it will deliver on creating the American jobs that this Administration has promised, particularly in the towns and communities across our country that have borne the heaviest losses over the past two and a half decades," he said in a statement. "The agreement must do more than make some improvements on the margins. My assessment will focus on the content of the commitments that have been put on paper and whether those commitments, especially on worker rights and environmental protections, are enforceable... ."

Enforceability of working condition standards and environmental protections are the two most-mentioned issues by Democrats on Capitol Hill. Minority Leader Nancy Pelosi, who will be speaker when the House has the opportunity to vote on NAFTA 2.0, said there is not enough in the text on enforcement for those areas. She said Mexico has not yet passed a law to improve wages and working conditions there. So, given that, she said there's not enough substance to "yet say yes or no."

Pascrell pointed to a union election that was halted because of violence the day before the signing. "The original NAFTA did not improve the labor conditions in Mexico; those flaws persist to this day," his statement said. Rep. Rosa DeLauro, D-Conn., a leader of the trade skeptics in the House, issued a statement that pointed to the GM closings and said NAFTA 2.0 "would not help end the outsourcing incentives that have hollowed out communities across the country. In its current form, this deal is far from being one that helps working people across North America."

But with the new majority come a number of Democrats who are well aware of NAFTA's benefits for their districts, and who emphasize those, not just the questions they have about the environmental and labor standards in the rewrite.

Rep. Ron Kind, D-Wis., is pro-trade and possible competition for Pascrell to lead the trade subcommittee. He issued a statement that suggested he can't draw a conclusion on the new NAFTA unless metal tariffs are lifted on Canada and Mexico, and that said he has serious questions about enforceability. He said U.S. Trade Representative Robert Lighthizer should meet with Democrats "who are dedicated to finding common ground in our trade agreements."

Rep.-elect Chris Pappas, Democrat of New Hampshire, said in a brief interview with International Trade Today: "We are a state that has 160,000 jobs tied to international trade," adding that Canada is the main trading partner. He said Trump's haphazard policies on tariffs are not helping people and businesses in the state. At a press conference on the Hill, Rep.-elect Dean Phillips of Minnesota said two priorities Democrats all should agree on is that "middle-income folks have more money to spend and businesses in our country have access to foreign markets." Rep.-elect Mike Levin, Democrat of California, said at the same press conference that cross-border trade is extremely important to his district, which is just north of San Diego. "The president has taken our relationships to the brink unnecessarily," he said, adding that he will be looking for strong environmental protections in the NAFTA rewrite.

Few districts are as economically dependent on NAFTA as the one that's sending Veronica Escobar to Congress in January. Escobar said in an interview that right before NAFTA passed in the 1990s, residents of El Paso, Texas, "were all pretty shaken up and concerned, because we knew we were going to be hit really hard, and we were. Almost the day after, all the garment manufacturing industry went. We spiraled into double-digit unemployment." But El Paso reinvented itself, and now a quarter of its jobs are linked to logistics, she said. "I don't believe [NAFTA] was a disaster." She said there was some good that came from Trump reopening the agreement, because it does need improvements. But, she said, "I don't want it to be rhetoric only, or a tool for him to say he checked off the NAFTA redo off of his list."

Lighthizer is counting on winning both Democratic and Republican votes to get ratification. House Ways and Means Chairman Kevin Brady, R-Texas, issued a statement that said, "There is no doubt that President Trump has delivered on his promise to obtain many provisions that will increase our ability to sell more American goods and services. But as I’ve said throughout the negotiations, for USMCA to gain widespread support, it must increase certainty as to the durability of the agreement, be fully enforceable to hold our trading partners accountable across all sectors, and increase -- not diminish -- our ability to sell into these markets."

The Senate is not expected to be as tough a hill to climb for the administration, as the deal only needs majority support, not 60 votes, under fast track. The ranking member on the Senate Finance Committee and the top Democrat in the Senate both suggested enforcement is not strong enough yet, but Sen. Chuck Schumer, D-N.Y., implied that implementing legislation could help.