Experts, Politicians Evaluate USMCA as Template for Future Trade Deals
House Democrats and the Office of the U.S. Trade Representative say that the new NAFTA can serve as a template for future trade deals, but experts question how that might come to pass, and a key Republican wants at least one Republican priority restored in future deals.
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Council on Foreign Relations Senior Fellow Edward Alden, in a recent blog post, noted that the Democrats' -- and the AFL-CIO's -- endorsement of the U.S.-Mexico-Canada Agreement is a huge shift from the last 25 years. He noted that the Central America Free Trade Agreement only passed by two votes, and with only 15 Democrats on board, and that the AFL-CIO hadn't endorsed a major deal since the Kennedy round of the General Agreement on Tariffs and Trade in the 1960s.
In a phone call with reporters Dec. 11, he said “the reason it's been so hard to get a consensus for a long time” is that Republicans were not willing to beef up labor and environmental obligations, and they were staunch defenders of things multinational corporations like, such as requiring trading partners to expand intellectual property protections and investor-state dispute settlement, which many on the left argued put corporate desires over the people in the countries where the companies were pressing ISDS cases.
Alden said “Trump doesn't look at it as, 'What's good for our multinationals?'” And because of that, he said, his administration was willing to move closer to Democrats' trade priorities.
But, he said, the way this rewrite of NAFTA happened, in which Mexico agreed to wage-labor content designed to keep work in Canada and the U.S., and Mexico agreed to a special expedited labor enforcement regime, wouldn't necessarily happen in India. “I think that's a model that's hard to replicate,” he said, because other countries we'd negotiate with aren't as dependent on our market. “I think what we may discover about this is the domestic consensus on trade in the United States is incompatible with trade negotiations.” But, he said, Vietnam could be a test case. He said Vietnam accepted a lot through the Trans-Pacific Partnership on labor rights, including snapback tariffs.
Shannon O'Neil, another CFR senior fellow on the call, said that the digital trade chapter and the IP chapters that were lifted from the TPP are more likely to be a template, since they were already agreed to by a number of countries.
House Ways and Means Committee ranking member Kevin Brady, R-Texas, said Republicans in the Senate should not focus on the ways the USMCA diverges from Republican priorities. “I, for one, had hoped we could rebuild a bipartisan model for trade, and that means giving up some things,” he said at a press conference Dec. 11.
But when asked by International Trade Today if Alden was right, that it would be hard to replicate, he replied, “So let me be clear, when I say a new model for trade, not every provision. I think there needs to be much stronger investor-state dispute processes, depending on the country we're dealing with. But I think overall, finding consensus on the new economy we have, as well as labor and the environment, I think the framework for that has been reached here. I think it's helpful, I think it's a new starting point for future agreements.”