Senate Committee Advances USMCA

OMAHA (DTN) -- Taking another step to completing the U.S.-Mexico-Canada Agreement, the Senate Finance Committee voted 25-3 on Tuesday to advance the trade deal to the full Senate.

USMCA has been a priority for most agricultural groups as a way to provide some certainty on tariffs and trade with two of the country's largest buyers of agricultural commodities. After nearly a year of negotiating between the Trump administration and congressional Democrats, the trade deal passed the House on a 385-41 vote last month.

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, credited efforts by President Donald Trump to demand an updated trade agreement that also would reduce some of the trade deficit between the U.S. and Mexico.

"Soon the entire country will benefit from the crusade that started when he ran for president," Grassley told reporters in a Tuesday morning call. "USMCA will bring much-needed certainty and benefits to American farmers and businesses."

With the bill passing out of the Senate committee, timing for a floor debate is now up to Senate Majority Leader Mitch McConnell, R-Ky., as well as when House Speaker Nancy Pelosi, D-Calif., chooses to send over the articles of impeachment against the president. Once the articles of impeachment arrive, Grassley said, all other Senate work will stop to focus on a Senate trial.

"Impeachment remains a wildcard with scheduling a full Senate vote on USMCA," Grassley said.

McConnell has indicated the trade deal could come to the floor later this week, but Grassley also said the "parliamentarian put a little sand in the gears" and indicated at least three other committees could have a chance to also hold markups if they choose to do so. Still, if the impeachment articles do not arrive, the Senate could pass USMCA as early as next week.

"But if articles of impeachment come up, it could be the end of the month," Grassley said.

It's possible if USMCA is quickly passed that President Trump could sign the trade deal shortly after he signs the phase-one trade agreement with China that is set for Jan. 15. The China trade deal is an executive action that would not need congressional approval. The text of that China trade deal would likely be released shortly after it is signed, Grassley said.

The Senate Finance Committee meeting largely consisted of each senator offering their opinions on USMCA and its predecessor, the North American Free Trade Agreement (NAFTA), as well as the Trump administration's handling of trade policy. The committee was not allowed to amend the text of the legislation as it came from the House.

Sen. Ron Wyden, D-Ore., ranking member of the committee, credited work by himself and Sen. Sherrod Brown, D-Ohio, that added tougher labor enforcement standards for Mexico as well as a quicker mechanism to respond to labor violations. Wyden also credited U.S. Trade Representative Robert Lighthizer for his negotiations on the trade deal, calling Lighthizer, "The hardest-working man in the trade business."

Overall, with $1.3 trillion in trade between the three countries now, USMCA is projected to add about $68 billion in trade, which includes about $2.2 billion for U.S. agriculture. Dairy, poultry, egg, wheat and wine producers are all expected to see more access, especially to Canadian markets. Dairy trade is projected to grow by $229 million to Canada and another $48 million to Mexico.

Sen. John Thune, R-S.D., said farmers and ranchers in his state would benefit, but Thune also added he wished the trade deal had gone further and addressed country-of-origin labeling for meat. Canada and Mexico had sued the U.S. under the WTO over the meat labels.

"I wish the administration would have been able to find a solution to restore COOL," Thune said, though he added, "But we cannot let the perfect become the enemy of the good."

Sen. James Lankford, R-Okla., noted Canada's wheat grading system had degrading U.S. wheat coming across the border, which would be changed under USMCA.

"This deal finally deals with the wheat issue we have had in Oklahoma for a long time with NAFTA," Langford said.

Still, the deal -- and the negotiating tactics of the president -- also drew criticism. Sen. Mark Warner, D-Va., said tariffs against trading partners, threats to withdraw from NAFTA and President Trump's threats to close the border with Mexico all hurt U.S. credibility on trade. Warner said he and others want to curb the president's ability to use national security "Section 232" rules to impose tariffs.

"Alienating our closest allies with the misuse of national security tariffs is counterproductive and endangers American security," Warner said.

Some of the strongest criticism came from Sen. Pat Toomey, R-Pa., who said USMCA would hinder free trade with tougher rules on the origins of automobiles raising costs, while the 16-year limit on the agreement would also limit investments by businesses. The labor enforcement provisions and rules on intellectual property, as well as settling business disputes, all would hinder trade, not improve it. Toomey said the trade deal would not add to economic growth.

"In my view, we have taken a free-trade agreement that needed modernization, and there is modernization, but then we have slapped on all of these provisions designed to restrict trade and investment," Toomey said. "We'll get no economic growth out of this, and then we in the Senate Finance Committee are allowing ourselves to be marginalized."

Toomey voted against advancing the trade deal, along with Sen. Bill Cassidy, R-La., and Sen. Sheldon Whitehouse, D-R.I. Whitehouse criticized USMCA because it does not address greenhouse-gas emissions.

The most colorful commentary on USMCA came from Sen. Pat Roberts, R-Kan., chairman of the Senate Agriculture Committee. Roberts cited the challenging times in agriculture over the last six years and said he had heard from Kansans who wanted Congress to immediately pass the trade bill, and he colorfully quoted former President Lyndon B. Johnson about the economic challenges facing farmers.

"As LBJ once said, 'Sometimes you just have to hunker down like a jackass in a hailstorm,' and that is just about the way our farmers have been doing it for the last four years," Roberts said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(AG/)

Copyright 2020 DTN/The Progressive Farmer. All rights reserved.