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U.S., Canadian officials converge on Mexico City to seal final changes to trade deal

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12/09/2019 | 09:48pm EST
FILE PHOTO: A man stands between trucks waiting in a long queue at border customs control to cross into the U.S, caused by the redeployment of border officers to deal with a surge in migrants, at the Otay border crossing in Tijuana

Senior U.S. and Canadian officials were set to fly to Mexico City on Tuesday to work on the final changes to a languishing North American trade pact that could clear the way for a vote in the U.S. Congress before the end of the year.

U.S. House Speaker Nancy Pelosi said on Monday night she expected the final language of the U.S.-Mexico Canada Agreement (USMCA) to be set by Tuesday, which would bring Democrats to a "moment of truth" on whether to proceed to passage.

"We're close. We're not quite finished yet, we're within range," Pelosi told a forum of chief executives on Monday evening, adding that she was working on the language of separate legislation on how the deal would be implemented.

The Trump administration and Democrats in the U.S. House of Representatives are closing in on a deal following several intense days of negotiations with Mexico over potential changes to clauses concerning labor enforcement, steel and aluminum, biologic drugs and internet services.

U.S. Trade Representative Robert Lighthizer and White House senior adviser Jared Kushner are due to fly to Mexico City on Tuesday for meetings to try to pin down final details, an administration official told Reuters late Monday afternoon.

They will be joined by Canadian Deputy Prime Minister Chrystia Freeland, a spokesman for Freeland said.As House speaker, Pelosi will decide whether and when to bring the trade legislation to the floor for a vote.

The USMCA, which would replace the 26-year-old North American Free Trade Agreement (NAFTA), encompasses $1.2 trillion in annual trade across the continent. Its backers say it is responsible for 12 million U.S. jobs and a third of all U.S. agricultural exports.

It needs to be approved by lawmakers in all three countries. U.S. Democrats have been reluctant to vote to give a political victory to Republican President Donald Trump.

And time is running out. U.S. lawmakers from both parties say that waiting until next year could make it more difficult to ratify because the presidential election campaign - and perhaps impeachment proceedings against Trump - will be in full swing.

House Ways and Means Committee Chairman Richard Neal told reporters he was "delighted" that a deal was close at hand, and was convinced it would offer better protection for workers. "I voted against the original NAFTA," he said. "By any objective standard, this is substantially improved."

Democrats said they were waiting to see the changes they had proposed in writing before signing off.

"I want to see it. The written word is always important," said Representative Rosa DeLauro, a Connecticut Democrat and member of the working group that has negotiated with the Trump administration.

Since negotiations to replace NAFTA first started in August 2017, deals have been imminent numerous times, only to be delayed by last-minute hitches.

Leaders of the United States, Canada, and Mexico signed the initial USMCA agreement more than a year ago, but since then, Democrats controlling the House have pressed for changes to strengthen the enforcement of new labor standard.

They also have pressed for removal of a provision that grants big internet services providers liability protections for third party content, and are seeking to relax data protections for biologic drugs that they fear will mean higher drug prices.

Lighthizer last week also added a new demand - that the trade deal strengthen the automotive rules origin to include steel and aluminum that is "melted and poured" in North America.

The prior requirement that 70% of the steel and aluminum in North American cars come from the region did not specify a production method, opening the door to the used of semi-finished metals from China and elsewhere.

Trump, who blamed NAFTA for the loss of millions of American factory jobs during his 2016 re-election campaign and vowed to quit or renegotiate it, said on Monday that "a lot of strides have been made over the last 24 hours" on USMCA.

"I'm hearing very good things. I'm hearing from unions and others that it's looking good," Trump told reporters at the White House.

Trump spoke earlier with AFL-CIO president Richard Trumka about the negotiations, a person familiar with the call said.

Trumka, one of the most powerful U.S. labor leaders, has been a major party to the negotiations, pushing for stronger labor enforcement provisions that ensure Mexican workers are allowed to unionize.


Details of the proposed changes have not been disclosed. Mexican officials rejected U.S. demands to allow U.S. factory inspectors to supervise labor enforcement, but have said that Mexico would allow panels of experts and a third party to review labor standards.

Mexican President Andres Manuel Lopez Obrador said on Monday that Mexican senators had endorsed changes to USMCA that had been accepted by Mexico. He urged Pelosi to move forward with a vote on the trade deal.

U.S. Senate Finance Committee Chairman Charles Grassley spoke with Lighthizer about the pact on Monday and is hoping for a deal announcement soon, said Grassley's spokesman, Michael Zona.

Congress had been scheduled to leave Washington by the end of this week, but consideration of spending and defense bills is likely to keep lawmakers working for a few more days beyond that.

U.S.-China trade talks are also set to come to a head this week. New U.S. tariffs on some $156 billion worth of Chinese consumer goods are due to take effect on Sunday unless an interim deal is reached before then.

(Additional reporting by Richard Cowan, David Shepardson, Steve Holland, Ginger Gibson, Jeff Mason and Andrea Shalalin Washington; Sharay Angulo and Julia Love in Mexico City and David Ljunggren in Ottawa; Writing by David Lawder; Editing by Rosalba O'Brien and Sonya Hepinstall)

By David Lawder and Andrea Shalal

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