The U.S., Canada and Mexico are expected to sign the revised trade agreement on Tuesday.
(Updated 11:30 a.m. EST, 12/10/2019)
Topline: Even as presidential impeachment talks are ongoing, congressional Democrats and the Trump administration have finalized a revised North American trade deal with Canada and Mexico to replace NAFTA, after more than a year of negotiations.
- Voting to ratify the new United States-Mexico-Canada Agreement (USMCA), the so-called NAFTA 2.0, is planned to start in the Democratic-held House of Representatives next week, top Democrats confirmed on Tuesday.
- Canada, Mexico and the U.S. have all agreed upon the amended trade deal, which will be signed on Tuesday, Mexican president Andres Manuel Lopez confirmed to Reuters.
- While the Trump administration reached an agreement with Canada and Mexico for a revised trade deal in 2018, Democrats had spent months pressing for better labor and environmental protections, as well as advocating against a pharmaceutical provision that they argue hurts consumers.
- House Speaker Nancy Pelosi and other Democrats worked with labor unions, such as the AFL-CIO, who had urged for tougher labor rules to protect American workers before supporting the deal, according to the Washington Post. AFL-CIO President Richard Trumka later confirmed the union’s support for the new agreement on Tuesday.
- In a news conference announcing the deal on Tuesday morning, Pelosi highlighted the new agreement was “infinitely better” than what was originally proposed by the administration, calling it a “victory for America’s workers.”
- The USMCA’s approval will also likely boost Trump’s reelection bid in 2020 and constitute his biggest trade win to date, according to the New York Times, since it follows up on his 2016 campaign promise to rip up NAFTA.
Crucial quotes: “It makes sense for both sides to get some kind of a deal done,” says Wilmington Trust chief economist Luke Tilley. “The downside risk for markets is if the deal completely falls apart, in which case NAFTA would stay in place.”
“Both sides of the aisle are hopeful that this deal will get done even as the president is going through impeachment proceedings,” says Edward Moya, senior market analyst at Oanda. “It will remove a key market uncertainty.”
What to watch for: The Trump administration and top Republicans have repeatedly urged House Democrats to vote on the new USMCA deal before the end of the year, in part to avoid pressures from the impeachment process and upcoming 2020 election. With the House moving closer to voting on articles of impeachment, both Republicans and Democrats are hoping to pass the deal before the year’s end, according to the Washington Post. Canada and Mexico will both need to approve the revised agreement within their respective legislatures as well.
