Trump to now focus on trade deals after USMCA passage

The Trump administration is now focusing on winning trade deals with China and deepening talks with the United Kingdom and European Union after securing easy passage Thursday of the North American trade pact.

In a 385-41 vote, lawmakers approved the replacement deal for NAFTA, which is widely seen as a crucial win for President Donald Trump going into his 2020 reelection campaign. House passage of the deal, which now goes to the Senate, came less than 24 hours after the lower chamber voted to impeach the president.

Approval of the U.S.-Mexico-Canada Agreement, or USMCA, frees up U.S. Trade Representative Robert Lighthizer to pursue other trade priorities. Lighthizer said Tuesday in a Fox Business interview that he expects to place increased attention on trade talks with the United Kingdom and the European Union.

Republicans, including House Minority Leader Kevin McCarthy, acknowledged that wrapping up USMCA will help strengthen the U.S.’ position in negotiations with China.

“Our hand would only have been stronger if today happened months ago,” McCarthy said. “Another goal that President Trump continues to make progress on is our negotiations with China. Today will make him stronger and hopefully help his hand."

Lighthizer will continue to lead negotiations with China after securing a preliminary trade deal with Beijing that was announced last week. But no date has been set yet for U.S. and Chinese officials to pick talks back up for a “phase two” deal.

Lawmakers on both sides of the aisle have long credited Lighthizer, who was in the House gallery to watch the vote, with helping bring the Trump administration and House Democrats together on a compromise deal. He’s also been viewed by Democrats as one of their favorite Trump administration officials for the countless hours he has spent on Capitol Hill hearing out Democrats across the political spectrum in order to land a rare bipartisan win for the president.

"I’m happy for the House. I’m happy for the country. I’m happy for the president," Lighthizer told POLITICO as he exited after the vote.

While Thursday's passage is indisputably a big win for Trump, House Speaker Nancy Pelosi has repeatedly made clear that passing USMCA goes beyond partisan politics, particularly given Democrats’ long history of criticizing the old pact’s harm toward American workers. Still, it allowed Democrats to go home for recess with proof they could pass legislation that benefits American workers while recommending Trump's removal.

“I was asked: Aren’t you giving the president a victory to boast about? That would be collateral benefit if we could come together to support America’s working families,” Pelosi said on the House floor. “And if the president wants to take credit? So be it.”

The USMCA still must be passed by the Senate, which will likely not happen until late January. Senate Majority Leader Mitch McConnell has already said it will not be considered until after the Senate impeachment trial, which will take place after the holiday recess. The deal, however, is expected to pass with strong bipartisan support in the upper chamber.

Pelosi took a jab at McConnell for not moving to pass it this year, saying she will send the bill, H.R. 5430, right over and “he can take it up anytime.”

“If Senate Republicans care about workers, they will no doubt join us in sending the bill to the president’s desk,” she said.

But Republicans repeatedly took their floor time to blame Pelosi and Democrats for holding up the deal for more than a year since it was originally signed by Trump.

"American workers have a major victory in USMCA, and I’m proud to support it — it’s just a shame Speaker Pelosi held it up for so long," Rep. Kevin Brady (R-Texas), ranking member of the Ways and Means Committee, said on the floor.

"And due to Democrats’ misguided obsession with impeachment, they neglected moving forward on this pro-worker and pro-growth trade agreement for far too long," he added.

The pact was able to garner such strong bipartisan support after months of negotiations between U.S. Trade Representative Robert Lighthizer and a group of nine Democrats tapped by Pelosi to make changes to the original version of the USMCA that Trump signed last year. Democrats had been concerned over the pact’s enforcement, labor, environmental and drug pricing provisions.

But both sides landed on a compromise that won support from both parties, business groups and major unions. AFL-CIO, the nation's largest labor federation, was vocal in pushing for passage of the USMCA, marking the first time the influential group has endorsed a trade deal in nearly two decades.

The deal is not expected to significantly increase trade in the region, given that the original NAFTA already eliminated most tariffs between the U.S., Mexico and Canada.

The USMCA, which Trump has called “the best and most important trade deal ever made by the USA,” would raise U.S. GDP by $68.2 billion, or 0.35 percent, by the sixth year after it enters into force, according to the independent U.S. International Trade Commission.

The USMCA would also create 176,000 U.S. jobs, increasing employment by 0.12 percent by the sixth year, the ITC found.

But lawmakers and economists alike have emphasized that the new deal offers some much-needed certainty for companies and workers in all three countries. Many Democrats caution, however, that the USMCA will not solve all the problems in their districts when it comes to trade, given how much Trump’s trade war with China has impacted them.

“Getting this done, although it doesn’t change a heck of a lot for a lot of row crop farmers [given the China situation] … it certainly creates certainty in the market,” Rep. Cindy Axne (D-Iowa) told POLITICO.

Most of the big changes to come from USMCA will not be felt for a few years, as the U.S., Mexico and Canada now have to work on implementing the provisions in the USMCA.

One of the biggest changes from NAFTA to USMCA is tighter rules on how North American autos and auto parts qualify for reduced tariffs. Those changes, which aim to increase car production within the region, will require that companies make significant and costly changes to how they make their cars.

But some aspects of the deal, particularly on digital trade, will be felt immediately. The deal includes rules requiring data to flow freely across borders, which tech groups expect will reduce costs and complications for global companies.

Many Democrats ultimately got on board after their top demands were met, including provisions that will allow the U.S. to file complaints against Mexican factories suspected of violating workers’ union rights. It would allow the U.S. to be part of a multinational team that verifies whether factories are complying and can penalize them if they do not.

Democrats also succeeded in getting the Trump administration to drop a provision establishing a 10-year protection period for biologic drugs, which opponents say would have allowed drug companies to keep prices high. That change left some Republicans and business groups disappointed, but not enough to withdraw support for the deal.

"This begins a new era of modern trade agreements that emphasize not just how much your GDP is going to grow, but how it actually helps with labor rights and environmental protections," Rep. Jimmy Gomez (D-Calif.), who helped negotiate the Democrats' compromise, told POLITICO.

Gomez said he's hopeful the USMCA will "realign the politics" of trade to make way for Democrats to "lean in on trade" and actively pursue deals in the future that are good for workers and the environment. Democrats have historically been against free trade agreements, saying they don't go far enough to protect workers.

Megan Cassella contributed to this report.