In October of 2017, I noted that U.S. Trade Representative Bob Lighthizer said he hoped to “get back to the days where there was a substantial majority of people in both parties that voted for these trade agreements,” adding “that is my objective right now. I want to have a huge number of Republicans and a huge number of Democrats.” I said that I liked his optimism, and made some suggestions for how he might accomplish that. He didn't follow my guidance as closely as I would have liked, but a few of my suggestions did make it into the final USMCA package. Today, the final results from the House vote on USMCA are in, with 385 for and 41 against. Wow! I've got to give him credit for reading the political landscape well. There is still the Senate to go, but that vote will happen at some point and I don't think it is in doubt.
But there are some questions about what exactly has been passed. Here are four:
-- Is the panel blocking problem actually fixed? Based on the text released last week, I think so, but there are still some Rules of Procedure to come. What will they do with this issue?
-- The biggest trade impact from the USMCA could be that it undermines tariff-free trade in autos and auto parts. But the extent of the impact depends on implementation of the new rules of origin. I can imagine there will be battles over this in the coming months and years. What will auto trade between the U.S., Canada, and Mexico, and between North America and the rest of the world, look like after this is all settled? And as production may shift from internal combustion engines to batteries, will it actually be settled?
-- The new rapid response labor mechanism (described by Kathleen here) is still kind of mysterious. We've only had eight days to consider it, but the House has now voted on it. Only two Republicans voted no. Do they have any idea of what they voted for? How often will this mechanism be used? Will there be two complaints a year? Ten? Hundreds? Will there be complaints against the U.S.? We will find all that out soon enough and then we can hear their explanation as to what they thought they were voting for.
-- How will the joint review/sunset clause work? I would say that rather than a big review after six years that is the basis for a decision on whether or not to extend the agreement, we should be monitoring and reviewing the agreement on a regular basis. And we can always withdraw, so there's no need to force a decision on that after six years. Nevertheless, the first six year joint review is going to be very interesting and I'm eager to see how it all plays out. (My main recommendation is going to be to get rid of the six year joint review/sunset clause and do regular reviews instead.)
