Despite all the attention to the presidential impeachment political circus in Washington, there has been work done on a key American agricultural trade treaty. Since the Democrats control the agenda in the House, satisfying their complaints about the U.S.-Mexico-Canada Agreement (USMCA) has been a focal point of U.S. Trade Representative Robert Lighthizer’s attention. He has been meeting with a Democrat working group, that has in turn been working with American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) President Richard Trumka. The labor unions have been critical of the treaty and, of course, are key supporters of the Democrat party.
Congress was on recess last week. The working group has asked Lighthizer to meet with Trumka during that time. Trumka was also scheduled to meet with Canadian Prime Minister Justin Trudeau. Canada’s Parliament has been on recess for the summer and then for national elections. They have been waiting for the U.S. to ratify the treaty but are expected to do so.
The union’s concerns have been boiled down to making sure Mexico actually implements labor rules in the treaty. Mexico has resisted having inspections conducted in Mexican factories. Past treaties have just required certification by governments.
House Ways and Means Chairman Richard Neal (D-MA) provided an example of the kind of deal making that goes on in Washington. He explored attaching a bill protecting pension benefits for union members to the USMCA, according to Politico. That was likely intended to get Trumka’s support. It may not have worked. Trumka has said attaching the pension bill to the treaty bill would not be enough to get the union’s backing. Trumka may or may not be bluffing.
Other Democrat concerns include new infrastructure to prevent cross border pollution and intellectual property protection on pharmaceutical biologicals.
The biggest surprise on the China front was definitely from left field. Americans think politics are stormy here. But this has been a turbulent summer in many countries, with protests or riots in Hong Kong, Lebanon, Iraq, Spain, Indonesia, Bolivia, and Chile. The riots in Chile have caused it to cancel its hosting of the upcoming Asian Pacific Economic Cooperation (APEC) summit.
Consequently, the planned sideline venue for China’s President Xi and President Trump signing the phase one trade deal has vanished. So has the pressure of that deadline to pull the agreement together. A new signing venue will have to be found and the negotiators have continued working.
China hardliner White House advisor Peter Navarro is said to be very unhappy with the outlines of the phase one treaty. He is concerned that certain things might be left out regarding intellectual property protection. Key issues like forced technology transfer and state subsidies are being left to future phases. But both sides want something to show for many months of work—therefore, a phase one treaty that is expected to include major Chinese purchases of ag commodities, some currency manipulation preventions, and some intellectual property protections.
Major corporations are afraid phase one won’t be enough for Trump to delay more tariffs Dec. 15. Those would include more direct consumer pain than seen so far—including computers, cell phones and apparel—that would do more significant damage to their bottom lines. Neither they nor Trump want serious hits to the economy in 2020. GDP growth was 1.9 percent in the third quarter, not great but decent, considering the trade troubles. Most corporate earnings reported better than analysts’ expectations. And the impact of the new deal with Japan hasn’t kicked in yet.
Then there is UK Prime Minister Boris Johnson’s Brexit gamble. Very few thought Johnson could get an improved deal from the EU. But he did. However, he had not been able to get his new Brexit deal through Parliament, with his Conservative Party in the minority. With a 10 percent lead in political polls, Johnson did win a battle to call a general election for Dec. 12.
Johnson is gambling the Conservatives can get a majority because many Britons are sick of Parliament’s delays, not sold on the Labour Party’s campaign for higher taxes and nationalizing companies and still want Brexit. But there are several smaller parties that could foil the Conservatives’ bid for a majority.
Parliament did force Johnson to request another Brexit extension from the EU, until Jan. 31.
There is no question the impeachment circus will suck a lot of oxygen and time out of Congress’ remaining calendar. As usual, it has not passed most of the 12 appropriations bills they were supposed to have completed by the end of the budget year Sept. 30.
It remains to be seen if they do find time for USMCA. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter.)
