WASHINGTON, DC—At nine o’clock Tuesday morning, U.S. House Speaker Nancy Pelosi stood at a microphone in Washington to formally unveil articles of impeachment against President Donald Trump.
An hour later, she stood at another microphone to announce her Democratic caucus had reached an agreement with Trump on his key policy priority — ratifying the United States-Mexico-Canada Agreement (USMCA) that replaces NAFTA.
It may seem an odd combination of announcements — condemning and co-operating in the same breath — but they signalled that what have been the two of most dominant issues in the United States in 2019 will likely move out of the House of Representatives before the end of the year — and likely both will be resolved in the Senate by early in the new year.
Just a few hours later in the early afternoon, at still another microphone in Mexico City during a signing ceremony with Mexican and American officials, Canadian Deputy Prime Minister Chrystia Freeland heralded what she called a “progressive” agreement to replace NAFTA.
A deal had originally been reached between the three countries in November 2018, but Pelosi’s Democratic majority has refused to bring it to a vote , insisting on changes to key labour, environmental, and pharmaceutical patent provisions. In recent weeks, talks had been ramping up, especially between Trump’s trade representative and Mexican officials, to see if an agreement to satisfy the congressional concerns could be met in time to be completed before the U.S. primary election cycle kicks off in February 2020.
Negotiations with Mexico stretched into late last week, pushing the edge of a schedule that would allow congress to deal with the matter before breaking for the year on December 20.
But on Monday, both the Mexican government and U.S. labour representative Richard Trumka of the AFL-CIO signalled a deal had been reached that they were happy with, paving the way for Pelosi’s announcement and the signing ceremony on Tuesday.
The text of the revised agreement, which will now need to be ratified not just by the American congress, but by the Mexican and Canadian governments as well, was not immediately available Tuesday afternoon, as an aide in Freeland’s office said it was taking time to make last-minute translations into Spanish and French.
But some of the core changes were outlined at the two press conferences in Washington and Mexico City.
Patent protections that were to be lengthened on biologic pharmaceuticals, having the effect in both Canada and Mexico of increasing drug prices by making it take longer for generic versions of drugs to come to market, appear to have been removed in a concession by Trump’s administration that had been widely reported recently.
On the key sticking point about enforcing labour standards contained in the new deal in Mexico, it appears the parties have arrived at a strengthened dispute-resolution panel rather than a regime of inspections of Mexican factories for which American labour representatives and Democrats had been asking.
Tighter regulations requiring steel to be sourced from North America that had emerged as a stumbling block will be phased in over a period of years. There will also be stronger environmental verification mechanisms in the new deal.
“Looking like very good Democrat support for USMCA. That would be great for our Country!” President Donald Trump Tweeted Tuesday morning, declaring victory on one of the issues he has championed throughout his term of office. “It will be the best and most important trade deal ever made by the USA,” he said in another Tweet, “Good for everybody.”
If it seems odd that a Democratic party in Congress that is trying to impeach Trump could also see it as good for them, it may be important to note that in her press conference Pelosi was careful to stress that with the amendments, the deal was in her view “infinitely better” than the one Trump agreed to a year ago.
Trade lawyer Daniel Ujczo of Dickinson Wright said last week, before the deal was announced, that he’d been telling people who talked about the prospect of Pelosi giving Trump a win that the changes she was asking for were things she and her caucus and supporters want. “This will not be Trump’s deal. If she gets what she wants out of this, you know, out of these negotiations, it’s a Democrat deal.”
The timing of this alongside the impeachment announcement was clearly dependent in part on the timing of the Mexican government signing off on the changes. But it also gives the Democrats a way to ward off accusations that Trump and his supporters have been making that they are so distracted by impeachment that they are neglecting an important U.S. policy priority.
Scotty Greenwood, the CEO of the Canadian American Business Alliance, told me recently that she had long thought impeachment made it more likely, rather than less, that Democrats would pass the trade deal. “Several months ago, everybody’s like, ‘Oh, it’s toxic, now they’ll really do nothing, they all hate each other.’ And it’s like: No, Pelosi is really smart and really pragmatic. And impeachment is the thing that makes it most likely that she gets to vote (on USMCA), because she’s got to be able to show she can do something, you know, legislate while you litigate.”
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From the Canadian government perspective, whatever litigation proceeds in the U.S., the break in the U.S. trade logjam will be greeted with relief. Freeland called the “fraught” negotiations an “existential challenge” to Canada and said on Tuesday in Mexico that the new deal is good for working people in Canada.
The newest changes largely work to Canada’s benefit at the expense of Mexico (in the case of labour enforcement) and the U.S. (in the case of drug patents). Perhaps more importantly, the very existence of the deal could, as Ujczo says he expects, give Canada’s economy a “shot in the arm.” It removes uncertainty about what Trump might do in its absence and what a Democratic successor theoretically might do instead.