USMCA Momentum There, but It May Not Be Enough

The conventional wisdom in Washington is that a House ratification vote for the new NAFTA can be held before Thanksgiving, according to Dan Ujczo, chairman of Dickinson Wright's cross-border law practice. Ujczo, whose firm works with auto manufacturers and who follows the politics of North American trade closely, said when his clients did fly-ins, Republicans, trade associations, and Democrats outside the Progressive Caucus all said that. But Ujczo doesn't think that's true.

It's not that he thinks the working group of nine Democrats is hitting obstacles in getting changes made to the U.S.-Mexico-Canada Agreement. "This isn’t Botox or cosmetic changes going on," he said. "Is there a bargain to be made within USMCA? I think yes. I think they’re coming close to a deal."

However, a House Democratic aide sounded a note of caution on the question of Mexico's budget for labor reforms, the main reason for last weeks' congressional delegation trip to Mexico. Given the scope of the changes needed under Mexican labor reforms, “it’s worrisome Mexico is in an austerity budget," he said.

Both Democratic and Republican lawmakers want a better enforcement mechanism than exists in NAFTA, so it’s likely that the panel blocking problem will be fixed, a Democratic aide said. It may also be possible to manage some enforcement issues in the implementing bill.

Ujczo sees two major stumbling blocks to ratification -- the possibility that impeachment forestalls another piece of legislation traveling with the USMCA to sweeten the vote, and the position of labor, particularly the United Auto Workers. He noted that guarantees of future work for General Motors plants is one of the outstanding items at the negotiating table for the UAW, "that's all about Mexico, at the end of the day."

"You’re going to need 100 to 133 Democratic votes" for House Speaker Nancy Pelosi to want to bring it up for a vote, he said. "You don’t get it without labor."

He said there's no way the bill will be introduced in the House "with the UAW on the picket line." That said, if the UAW and GM reach an agreement that ends the UAW strike, he thinks GM will ask UAW not to oppose USMCA as part of that settlement. He said he doesn't expect the union to come out in favor of it, but if UAW officials tell Democrats to vote their conscience on the pact, that could allow 40 to 50 Democrats to vote yes.

But Ujczo said another way to make the USMCA more palatable to labor is to link it to pension reform. There is a bill that passed the House with all Democrats and 29 Republicans, 264-169, that would offer low-interest loans to multi-employer pension plans that are strained because the unions that cover those workers have shrunk over the decades. The AFL-CIO says it would protect the pension of 1.3 million people.

With the momentum for impeachment, he thinks the president is not willing to bargain like that for the vote.

The negotiations of the working group are very quiet, Ujczo noted, with both PhRMA and Public Citizen, a traditional foe of trade deals, in the dark. He said he thought PhRMA could accept a "ratchet down" proposal on biologics exclusivity, that would guarantee if Congress wanted to shorten the period in the U.S., the USMCA would match whatever length of time Congress chose. He also predicted Democrats could accept that.

A Democratic House aide suggested that the "ratchet down" proposal is no longer the latest offer from the administration to deal with the biologics drug issue, but did not say what had replaced it.

Ujczo said he thinks Democrats could hope that a future Democratic administration could get a more liberal deal, but he argues against that view. "In fact, we as a business community, I wonder why we’re supporting it," he said, because, he said, compliance with the new auto rules of origin is going to be a nightmare.

You wouldn't get the Republican votes to get it through if it moved more to the left and was from a Democratic president, he said he believes. "As of right now, it’s almost impossible for a Republican to vote no," he said -- though he expects a handful of Republicans will be deliberately absent the day of the vote.