Senate passes USMCA, giving Trump back-to-back trade wins

The Senate passed President Trump’s United States-Mexico-Canada Agreement on trade in a bipartisan vote of 89 to 10 Thursday, giving the president his second major trade win in as many days.

The vote took place just before impeachment articles were presented in the Senate.

The USMCA, which replaces the 1994 North American Free Trade Agreement, now goes to the White House, allowing Trump to fulfill a key 2016 campaign goal.

“You’ve heard the phrase ‘a rising tide lifts all boats’? The new NAFTA we are working on puts a bigger oar in the water for our trilateral trade relationship with our northern and southern neighbors,” said Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, in the debate before the vote.

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USMCA largely keeps most of NAFTA intact but adds provisions aimed at ending outsourcing of manufacturing jobs to Mexico, limiting the use of supply chains abroad, and opening up Canada to more U.S. farm goods, such as dairy products. The deal was a big win for the high-tech industry, which got protections for digital trade, prohibitions on forced data localization, and enhanced copyright provisions.

The deal requires that 75% of an automobile’s parts be made in North America to be duty-free, up from 62.5%, and that at least 40% be built by people making at least $16 an hour. That will cost the industry $3 billion in additional tariffs over the next decade, the Congressional Budget Office has estimated.

The Senate’s vote comes the day after the president signed ‘phase one’ of a trade pact with Beijing, which gives new protections for U.S. businesses from currency manipulation, intellectual property theft, online piracy, and forced transfer of technology and trade secrets.

USMCA had a rocky road to Thursday’s vote. The underlying deal was reached with Canada and Mexico in late 2018, but it stalled in the House throughout 2019. Speaker Nancy Pelosi argued the initial version lacked sufficient enforcement methods, especially regarding labor standards for Mexico. After lengthy negotiations, a compromise was reached in December, and it passed by a bipartisan 385-41 vote.

The Senate vote was briefly delayed when the chamber’s parliamentarian determined that it had to be approved by seven committees. The final committee gave its approval Wednesday.

Thursday’s vote was broadly bipartisan, with several of Trump’s staunchest critics backing the deal. Democrats Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts said the compromise House version was a vast improvement.

“I will do something that I have never done in my career. Congress. I will vote with a trade deal,” Brown said. “This trade agreement, for the first time ever, put workers at the center of the agreement.”

Sen. Ron Wyden, an Oregon Democrat, singled out U.S. Trade Representative Robert Lighthizer for special praise, saying it was his extensive work with lawmakers that made the vote possible.

Critics of the deal came from the ideological edges of both parties. Independent Vermont Sen. Bernie Sanders read off a list of unions and environmental groups that remained opposed to the deal. “This allows oil and gas companies to continue to put profits ahead of our air, water, climate, and health,” he said.

Pennsylvania Republican Pat Toomey, a staunch supply-side conservative, warned his GOP colleagues that they were taking a step backward on support for free trade policies, noting the deal included higher standards for products to become duty-free. “It is really the end of free trade in automobiles and auto parts with respect to Mexico. The deal imposes minimum wage requirements that are designed to be impossible for Mexican factories to meet,” he said.