US House Votes for NAFTA Update

The U.S. House of Representatives overwhelmingly approved a new North American trade deal that includes tougher labor and automotive content rules but leaves $1.2 trillion in annual U.S.-Mexico-Canada trade flows largely unchanged.

RELATED:

US Deports Mexicans Far from Border To Deter Their Return

The result of the votes 385-41 (with 38 Democrats, two Republicans and one independent member voting no) contrasted sharply with the Democrat-only vote to impeach U.S. President Donald Trump last Wednesday night

According to procedure, the approved legislation is now on the hands of the Senate, but it is unclear when the Republican-controlled chamber will pass it. Senate Republican leader Mitch McConnell has said that consideration of the measure would likely follow an impeachment trial in the Senate, expected in January.

The new trade pact would replace the 1994 North American Free Trade Agreement. House Speaker Nancy Pelosi said on the matter that she was not concerned about handing Trump a political victory with this bill as they are trying to remove him from office.

“It would be a collateral benefit if we can come together to support America’s working families, and if the president wants to take credit, so be it,” Pelosi expressed during House floor debate before the vote.

Representative Ron Kind from Wisconsin declared that a “no vote” is a step back “to the failed policy of the old NAFTA, the status quo, rather than this more modernized version.”

The improvements to the agreement include 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. It also eliminates some food safety barriers to U.S. farm products.

The biggest changes require increased North American content in cars and trucks built in the region, to 75% from 62.5% in NAFTA, with new mandates to use North American steel and aluminum. In addition, 40% to 45% of vehicle content must come from high-wage areas paying more than $16 an hour - namely the United States 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.

The changes negotiated by Democrats, which include tighter environmental rules, will also set up a mechanism to quickly investigate labor rights abuses at Mexican factories. They have earned the support of several U.S. labor unions that have opposed NAFTA for decades.