Freeland, U.S. and Mexican officials to meet to pin down trade deal

Washington/Mexico City | Reuters — The Trump administration, Mexico and U.S. Democrats on Monday closed in on a deal for labour-related changes to a languishing North American trade pact that may soon allow it to proceed to a vote, as the window for passage this year quickly narrows.

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

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Congressional aides and industry sources said that a proposed deal has been sent to U.S. House of Representatives Speaker Nancy Pelosi, who will make the final decision on whether and when to bring the U.S.-Mexico-Canada Agreement (CUSMA) to a vote.

“We’re studying the proposal,” a senior Democratic aide told Reuters, adding that there was not yet an agreement to announce.

The Mexican government has also invited Canada’s deputy prime minister, Chrystia Freeland, to Mexico City, a Mexican official said.

Canadian Prime Minister Justin Trudeau’s office on Monday said Freeland would also be in Mexico City on Tuesday to “participate in meetings with the United States and Mexico on NAFTA.”

CUSMA, which would replace the 26-year-old North American Free Trade Agreement (NAFTA), encompasses US$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. In the United States, Democrats have so far been reluctant to stage a vote that would give a political victory to Republican President Donald Trump.

And time is running out for a vote before year end. Lawmakers from both parties said 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.

Many on Capitol Hill were reluctant to declare that a deal had been struck. 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 U.S., Canada, and Mexico signed the initial CUSMA agreement more than a year ago, but since then, Democrats controlling the House have pressed for changes to strengthen the enforcement of new labour standards and relax data protections for biologic drugs that they fear will mean higher drug prices.

Pelosi is scheduled to meet on Monday evening with senior House Democrats who have been working on changes to the pact, a Democratic House aide said.

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 per cent 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 U.S. factory jobs during his 2016 re-election campaign and vowed to quit or renegotiate it, said Monday that “a lot of strides have been made over the last 24 hours” on CUSMA.

“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 CUSMA negotiations, a person familiar with the call said.

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

Trumka earlier told the Washington Post that there was a deal on CUSMA that he was reviewing with his executive committee.

“We have pushed them hard and have done quite well,” Trumka was cited as saying by the Post.

Neither Trumka nor an AFL-CIO spokeswoman responded to queries about the pact or the phone call with Trump.

Mexican senators endorse changes

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

Mexican President Andres Manuel Lopez Obrador on Monday said that Mexican senators had endorsed changes to CUSMA 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 USTR’s 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.

“We have to bring this to an end,” Johns Hopkins University professor Jonathan Sands, who directs the university’s Center for Canadian Studies, said of CUSMA approval. “Every part of the trade debate is up in the air right now, with the trade war on China and trade tensions with Europe ramping up.”

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

Reporting for Reuters by David Lawder and Sharay Angulo; additional reporting by Richard Cowan, David Shepardson, Steve Holland, Jeff Mason and Andrea Shalal; writing by David Lawder. Includes files from Glacier FarmMedia Network staff.

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