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With the US-China trade war, there is greater urgency in getting the USMCA passed and in force

The end of 2019 has long been informal deadline to get the US-Mexico Canada Agreement (USMCA) approved and fully functioning amid concerns that it will get lost in the noise of the presidential election campaign if it remains unratified in 2020.

But the election campaign itself could add to pressure for action, as Democrats seek to defend their still shakey, House majority that could easily be lost again. “If you are a Democrat in a highly competitive district, you are looking for at least one bipartisan vote that you can point to, to burnish your independent credentials,” said longtime Republican political advisor Phil Cox, who now co-chairs the bipartisan Trade Works for America coalition, which is pushing for passage of the USMCA.

The problem for Democrats is that they want the measure passed, as do most Americans do, and hate being cast in the role of the only one blocking the passage of what everyone desires including Canada and Mexico.

At the same time, they hate the prospect of handing their much loathed US president, Donald Trump, a victory as it was he who refashioned the North American Free Trade Agreement (NAFTA), wresting free trade concessions from Canada obliterating its highly protectionist dairy marketing policy and smoothing differences with Mexico.

Thus, recently elected Democrats, like Virginia Congresswoman Abigail Spanberger and other newly elected Democrats who won Republican districts and handed their party the majority in 2018 want the USMCA passed. And even though that would give Trump a victory heading into the 2020 election, members of this group have put pressure on House Speaker Nancy Pelosi to bring the measure to a vote.

But this is too much for the recently radicalised Democratic majority, still smarting from the failure of their much vaunted Russia probe to produce any evidence of Russian collusion on the part of the Trump administration despite many promises from many quarters that piles of evidence would do just that.

With that failure behind them, Democrats then launched Presidential Impeachment proceedings for High Crimes and Misdemeanors, but fell to quarreling as they searched for crimes, which President Trump might have been committed, ever confident there was a crime somewhere if only they could find one.

What worries less crazed Democrats is prospect of the hunters becoming the hunted as the provenance of the prosecutorial efforts in Russian collusion probe appear tainted with impropriety by the police who formulated the charges against Trump. But some House Democrats were bent on taking up impeachment proceedings against the president nonetheless, perhaps as a distraction to re-focus the media narrative.

Democratic House Speaker Nancy Pelosi, who is not keen on impeachment, has bought time by setting up a working group to negotiate possible changes to the agreement to replace NAFTA.

But Ms Spanberger and others like her are growing impatient. Industries from big business to farming and auto manufacturing are pressing Congress to pass the deal and provide a shred of certainty in a volatile trade environment. The US-China trade war is causing much of the anxiety, and now Canada and Mexico have become America's biggest trading partners, locking in the new North American deal could go a long way toward boosting morale among exporters and importers and spark new investments.

 “Any good trade deal, I want it passed,” said 34-year-old farmer John Shepherd as he and Ms Spanberger stood on his Virginia farm between the cornfields and the grain bins storing the crop he’s been unable to sell. The USMCA, he said, is “better than what we’ve had”.

The truth is there is very little Republicans oppose in the changes demanded by Democrats, which is a problem for Democrats who wish to find obstacles to put in the path of Republican approval, that is, offers they must refuse. In this way, the Democrats can blame the Republicans for the failure to pass the bill, deflecting blame from themselves and denying the GOP a victory in an election year.

The conundrum they face is that most Democratic proposals, demanding more exacting labour conditions and worker rights for Mexicans are quite acceptable to Republicans, albeit for different reasons. Democrats see their demands as improving working conditions for the Mexican working class while Republicans are pleased to approve of such demands as they only make Mexican output less competitive. Such moves only annoy the Mexicans who rightly object, having already signed the deal, now face new rule changes that make their products and services harder to sell in US markets.

True, Democrats have found "very egregious" pharmaceutical provisions that extend drug patents far too long, and that may be a stumbling block for Republicans, but as Big Pharma is as much a financial help to Democrats as to Republicans, so issue is not expected to become as contentious as it might be because it is as dangerous to one side as much as the other.

Trade experts differ on whether the shift in terms is significant enough to warrant a shift in perspective from the White House. Former US Trade Representative to former US president Bill Clinton, Mickey Kantor, who oversaw the signing of NAFTA, said, “It’s really the original NAFTA.”

Representatives from the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO) have criticised the labour standards in the USCMA as unenforceable and toothless.

Said Democratic presidential candidate Senator Elizabeth Warren of Massachusetts: “The new rules will make it harder to bring down drug prices for seniors and anyone else who needs access to life-saving medicine,” reflecting on the measure that expands the patent length for biological substances to 10 years, limiting market access for generic drugs.

The United States Trade Representative publishes Fact Sheets which highlight the accomplishments of this negotiated form of the USMCA, provide the counter-arguments to such criticisms, citing new digital trade measures, the strengthening of protection for trade secrets, supporting manufacturing through its automobile Rules of Origin adjustments, as some of the benefits of the trade agreement.

Republican Senator Chuck Grassley of Iowa, wrote in the Wall Street Journal, stating that "Congress won’t approve USMCA while constituents pay the price for Mexican and Canadian retaliation," referring to Mexico and Canada's retaliatory tariffs.

President Trump's top economic advisor Larry Kudlow twice asserted that the USMCA would increase GDP by half a percentage point and job creation by 180,000 per year after ratification. The International Trade Commission analysis to which Mr Kudlow was referencing, actually found the agreement would increase GDP by 0.35 point and jobs by 176,000 after six years following ratification. Analysis cited by another study from the Congressional Research Service found the agreement would not have a measurable effect on jobs, wages, or overall economic growth.

So while the new NAFTA maybe little different from the old NAFTA, the new version does correct a number of things from an American perspective, bringing freer trade than there was before, and on balance a plus to Trump's legislative record.

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U.S. Trade Specialists