White House, Democrats in Talks to End Holdup on USMCA Approval

Jenny Leonard and Erik Wasson
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White House, Democrats in Talks to End Holdup on USMCA Approval

(Bloomberg) -- The White House and congressional Democrats have opened talks to resolve outstanding details that have thus far held up the new North American trade deal, according to people briefed on discussions between House Speaker Nancy Pelosi and trade chief Robert Lighthizer.

Pelosi told Lighthizer that she will designate members of her caucus to be working group representatives to deal with labor, enforcement, environment and pharmaceutical provisions of the deal, two people briefed on the discussions said. The groups will likely consist of Democrats from the Ways and Means Committee, the congressional Progressive Caucus and the Congressional Black Caucus to ensure they can build consensus within the party, one of the people said.

The Trump administration had hoped to build momentum last week by lifting steel and aluminum tariffs, clearing a major hurdle for lawmakers to approve the U.S.-Mexico-Canada Agreement. White House officials thought removing these duties would be enough to kick-start work on the deal in Congress this week, but after several recent meetings with Pelosi, Lighthizer and his team decided they would need more time to get Democrats on board, the people said.

While Pelosi previously said she wants to work with the administration to make the deal better for Democrats, this is the first time she has directed members of her party to sit down across the table from the U.S. Trade Representative and his team. Business groups and analysts eager for a deal interpreted the move as a positive sign that the speaker will seriously engage in fixing the issues that her members have flagged as insufficient.

Lifting Tariffs

Steny Hoyer, the second ranking Democrat in the House who tends to speak for the more moderate members of his party, said they are still working on labor, enforcement and pharmaceutical provisions.

“The administration wants to get to yes, we would like to get to yes,” Hoyer told reporters Tuesday.

Trump last week announced that he reached a deal with Mexico and Canada to lift steel and aluminum tariffs he imposed on the countries last year. Congressional Republicans publicly opposed the duties and called on Trump to remove them if he wants a legislative victory on his North American trade deal. Major trade associations were split on fully endorsing the USMCA until the tariffs were lifted.

Removing the duties means Republicans and the business community now are united in their push for fast approval of the agreement. But Pelosi and her caucus have made clear they don’t want the administration to rush a vote before the substance of the deal is satisfactory.

A labor enforcement proposal written by Sens. Sherrod Brown and Ron Wyden that could address some Democratic concerns has been shared with House staff. It got a serious look in both the House and the Senate, though many technical details still need to be figured out, two of the people said.

‘Put Politics Aside’

Senator Chuck Grassley of Iowa, who chairs the Finance Committee with jurisdiction over trade, said Monday after a meeting with Lighthizer that he’s offering his help to get Democrats to a place where they can support the deal.

“I want to sit down and talk to them,” he said of his Democratic colleagues. “Any way I can help I will.”

He added that Democrats should be satisfied that Mexico passed its labor reform legislation earlier this month. And he said that Canada’s plan to pass the new Nafta by June 25 will give momentum to the U.S. process. “The support of a socialist prime minister in Canada ought to help convince some Senate Democrats,” he said.

House Republicans also criticized what they described as foot-dragging from their Democratic colleagues. Minority Leader Kevin McCarthy said lifting steel and aluminum tariffs, along with Mexico’s labor reform, should be enough for Democrats to accept the deal.

“It’s time to put politics aside and actually put America first,” McCarthy said Tuesday.

As the next procedural step, the White House has to submit a draft statement of administrative action that lays out the changes to U.S. law and starts a 30-day clock before legislation can be sent to the Congress that lawmakers will put to a vote. Grassley said the trade committee staff for both Democrats and Republicans have been briefed on the draft statement, which he considered a sign that the administration could send it sooner rather than later.

Deputy USTR C.J. Mahoney and the White House office of legislative affairs for the past six weeks have been holding weekly inter-agency meetings on USMCA, one person said. In the past two weeks, the White House geared up to submit the draft to Congress, but decided in the past week to take a slower approach.

Lighthizer had lunch with Senate Republicans Tuesday and afterward South Dakota senator John Thune, a member of Republican leadership, said the trade chief was upbeat about the prospects for getting the deal approved in the House. Thune said the discussion was “mainly about his talks with Speaker Pelosi and that he thinks there is a seriousness in the House about trying to get this done.”

Ohio senator Rob Portman said Lighthizer believed Democrats “are trying to get to yes” and that their negotiations with the White House are “productive and in good faith.” He said Lighthizer told the GOP caucus that no decision has been made on the timing for submitting the agreement for a vote, because “it depends on House leadership.”

--With assistance from Laura Litvan, Daniel Flatley and Eric Martin.

To contact the reporters on this story: Jenny Leonard in Washington at jleonard67@bloomberg.net;Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Anna Edgerton, Margaret Collins

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