The deal reached Tuesday by the White House and Democrats for a new trade pact with Canada and Mexico drew praise in Minnesota, where farmers, food companies and manufacturers have been eager for government officials to take the brakes off the flow of goods.
House Speaker Nancy Pelosi announced a compromise that should hasten congressional approval of a key economic initiative for President Donald Trump, who threatened to scrap the North American Free Trade Agreement pact from 1994 and pressed Canada and Mexico, the nation’s two largest trade partners, to negotiate a new one.
Pelosi highlighted changes to the deal that she called “infinitely better” than the administration’s initial effort, citing stronger “enforcement for our workers’ rights, for environment and for the prescription drug issue … three of the areas that we had put out there.”
Hours later, U.S. Trade Representative Robert Lighthizer and Canadian Deputy Prime Minister Chrystia Freeland met with Mexican officials, including President Andrés Manuel López Obrador, to sign the United States-Mexico-Canada trade agreement, or USMCA, at a ceremony in Mexico City.
Pelosi and Trump made the compromise even as House Democrats took a formal step to impeach Trump for seeking to press Ukraine into targeting his political rival, former Vice President Joe Biden, for investigation, using military aid as leverage.
“Not any one of us is important enough to hold up a trade agreement that is important for American workers,” Pelosi said.
Farmers in the Midwest have been suffering through low prices for soybeans for a year and a half thanks to the trade war with China, and the new trade deal will do nothing in the near-term to solve that problem. But trade experts have said for months that without a new North American trade deal, Trump would have little leverage against China.
“In the current global trade war and tariff-prone environment, I am extremely happy that USMCA is moving forward, creating the certainty with critical trading neighbors that will benefit all involved — including U.S. farmers,” said John Griffith, senior vice president for global grain marketing and renewable fuels for Inver Grove Heights-based CHS Inc.
News of the deal came as a surprise to some business leaders who believed USMCA would take a back seat to impeachment.
“We hope this paves the way for final agreement,” said Doug Loon, president of the Minnesota Chamber of Commerce. “Trade with our North American partners means prosperity for Minnesota farmers, manufacturers, small businesses and their employees.”
In October, Dave MacLennan, chief executive of Minnetonka-based Cargill Inc., spent a day in Washington petitioning a dozen members of Congress to move forward on the pact.
As one of the world’s largest grain traders, Cargill is a vocal proponent of U.S. trade agreements with China and a new version of NAFTA. MacLennan last week told the Star Tribune he wasn’t expecting significant movement on the deal until after the new year. “I think if we got it to the floor for a vote, we’d get it approved,” MacLennan said.
On Tuesday, Cargill issued a statement saying it was “grateful” that Democrats and the White House reached a deal. “This is a major win for farmers, businesses, workers, and consumers,” the company said.
Pelosi on Tuesday signaled the vote will likely be next week, though the deal is not yet across the finish line. Senate Majority Leader Mitch McConnell said Tuesday the U.S. Senate would not take up USMCA before the congressional recess at the end of next week.
And some business leaders in Mexico said the new deal may have passed the limit of what is in Mexico’s best interests. Labor provisions championed by Pelosi and the AFL-CIO are seen by some in Mexico as a violation of their nation’s sovereignty.
Gary Wertish, president of the Minnesota Farmers Union, said the new deal is better than the old one, citing provisions that should discourage U.S. companies from moving jobs to Mexico.
He also echoed Pelosi’s message that the final deal is better than the one put forward by Trump initially, though it won’t mean dramatic change for farmers.
“As far as agricultural commodities, it’s really not all that different from the previous one,” Wertish said. “The main thing is just to be done with it.”
Cattle ranchers object
But cattle ranchers are upset that the new agreement eliminates country-of-origin labels for beef.
R-CALF USA, a beef producers trade group, said its members wanted such labels to “compete against the duty-free, cheaper and undifferentiated cattle and beef flowing into our country and depressing our markets.” On Tuesday, the organization said, “We’ve been ignored.”
Lighthizer, Trump’s chief trade negotiator, praised Mexico’s Obrador effusively Tuesday, calling the agreement a bipartisan “miracle.”
“It’s going to make America richer, it’s going to make Canada richer, and it’s going to make Mexico richer,” Lighthizer said. “We in the United States have a stake in Mexico being richer. It’s important for us that Mexico succeed and I think this agreement is going to make that more likely.”
Canada and Mexico combined bought more than $39.7 billion in U.S. agricultural goods in 2018.
The biggest obstacle to trade for Minnesota farmers, the trade war with China, remains. Wertish said that while USMCA is a step in the right direction, there’s no reason to think it will “automatically” translate to progress on talks with China.
“China is a whole different animal,” Wertish said. “That one’s a lot more complicated.”