The U.S. House of Representatives overwhelmingly approved a new North American trade deal on Thursday that includes tougher labor and automotive content rules but leaves $1.2 trillion in annual U.S.-Mexico-Canada trade flows largely unchanged.
This story by David Lawder originally appeared in Reuters.
The House passed legislation to implement the U.S.-Mexico Canada Agreement 385-41, with 38 Democrats, two Republicans and one independent member voting no.
The bipartisan vote contrasted sharply with Wednesday night’s Democrat-only vote to impeach U.S. President Donald Trump.
The House vote sends the measure to the Senate, but it is unclear when the Republican-controlled chamber will take it up. Senate Republican leader Mitch McConnell has said that consideration of the measure likely would follow an impeachment trial in the Senate, expected in January.
The USMCA trade pact, first agreed upon in September 2018, will replace the 1994 North American Free Trade Agreement. Trump vowed for years to quit or renegotiate NAFTA, which he blames for the loss of millions of U.S. factory jobs to low-wage Mexico.
House Speaker Nancy Pelosi gave USMCA a green light last week after striking a deal with the Trump administration, Canada and Mexico to strengthen labor enforcement provisions and eliminate some drug patent protections.
Pelosi said she was not concerned about Democrats handing Trump a political victory on USMCA as they are trying to remove him from office.
The agreement modernizes NAFTA, adding language that preserves the U.S. model for internet, digital services and e-commerce development, industries that did not exist when NAFTA was negotiated in the early 1990s.
But the biggest changes require increased North American content in cars and trucks built in the region, to 75 percent from 62.5 percent in NAFTA, with new mandates to use North American steel and aluminum.
In addition, 40 percent to 45 percent of vehicle content must come from high-wage areas paying more than $16 an hour – namely the U.S. and Canada. Some vehicles assembled in Mexico mainly with components from Mexico and outside the region may not qualify for U.S. tariff-free access.
The U.S. Congressional Budget Office estimated earlier this week that automakers will pay nearly $3 billion more in tariffs over the next decade for cars and parts that will not meet the higher regional content rules.
