October 24, 2019
WASHINGTON — Members of Congress — including some from the Texas delegation — are putting in last requests as a vote for the long-awaited United States-Mexico-Canada Agreement approaches the U.S. House floor.
The USMCA, the trade deal that will replace the North American Free Trade Agreement, has been signed by the leaders of all three countries and was ratified by Mexico last summer. It awaits its final drafting with provisions from Congress so it can be put on the floor for a vote, then implemented.
Texas has more ports of entry with Mexico — or any country, for that matter — than any other state in the U.S. Maintaining trade flow between the two has major implications for the state’s economy.
The biggest changes between the deals affect car manufacturers, many of which lie in Mexican cities that border Texas. Automobiles must have 75% of their components manufactured in Mexico, the U.S., or Canada to qualify for zero tariffs, which is up from 62.5% under NAFTA.
But the most contentious area of the deal is the new labor provisions. Under the new deal, 40% to 45% of automobile parts must be made by workers who earn at least $16 an hour by 2023. Mexico has passed labor reform that would put it in that threshold, but Democrats are undecided on how to secure enforcement for that.
In a press briefing last week, House Speaker Nancy Pelosi, D-California, said the deal is contingent on finding an efficient enforcement method to include in the bill.
But U.S. Rep. Vicente Gonzalez, D-McAllen, said his main concern has nothing to do with labor. It’s security on the Mexican highways that lead to McAllen, where cartel activity makes it expensive and less efficient to cross goods.
“I’m a yes, if Mexico secures its trade route from Monterrey to my border,” Gonzalez said. “When we’re talking about taxes and tariffs, we need to be talking about security costs because if I’m having to be paying extortion fees or extra security costs to get my product to the border, how is that not a tax or a tariff?”
The insecurity of the highway between Monterrey and Reynosa has made it riskier to travel between the Rio Grande Valley and Mexico, and Valley cities like McAllen have seen significant dips in sales tax revenue as a result.
“It’s a two-way deal,” Gonzalez said. “We could keep asking for things, but at the very minimum, people in Monterrey who come and spend money in our community, who own second homes, who bank in our banks, who stay on the island for the weekend are no longer coming because of the insecurity of that highway.”
Like several of the issues with the deal, that relies on Mexico being able to deliver. Gonzalez’s hopes are contrasted by bloodshed that occurred last week in Culiacan, Sinaloa, Mexico, where Mexican soldiers were overpowered by the Sinaloa cartel after they arrested Ovidio Guzmán López, the son of the infamous drug kingpin Joaquin Guzman, also known as El Chapo. The Mexican government ultimately released the son from custody.
U.S. Rep. Henry Cuellar, D-Laredo, said that for him the USMCA, or “NAFTA 2.0,” as he calls it, will have to include stronger environmental provisions along with the security Gonzalez mentioned. He said Mexico has done “everything possible that can be done on the enforcement part.”
“It’s not a matter of trust,” he said. “I want the Mexicans to do more. I told this to [former] President [Felipe] Calderón, I said this to [former] President [Enrique] Peña Nieto, I haven’t had the opportunity to tell this to [current President Andrés Manuel López Obrador], but the U.S. can do a lot more to help them on security. A lot, lot more.”
According to Gonzalez, several Democrats have voiced support for including security provisions, and he expects them to back him. But Republicans and some Democrats have grown impatient with the pace of the legislation and will likely pass what comes to the floor.
These negotiations, of course, are just one of the many pressing issues on Congress’ to-do list before Thanksgiving. The impeachment inquiry, the budget and USMCA are all things Democratic leaders have promised to finish this year.
Republicans in the House and Senate have often accused Democrats of being preoccupied with the presidential impeachment inquiry, causing them to slow down USMCA negotiations. This week, Trump said on Twitter that he can’t believe “that Nervous Nancy Pelosi isn’t moving faster on USMCA.” On Wednesday, U.S. Sen. Chuck Grassley, R-Iowa, told reporters the House seems “increasingly less likely” to pass something this year.
U.S. Rep. Kenny Marchant, a retiring Republican from Coppell and a member of the House Ways and Means Committee, said he trusts his Democratic colleagues to come to a decision soon.
“I’m ready to go,” he said. “I’m pretty close to the everyday of it, and I know that they are working actively to get themselves internally to agree and present it.”
Cuellar, one of the members in the delegation closest to the negotiations, has been fielding calls from Pelosi and Mexican diplomats since the deal was signed. Although he’s not on the relevant committees, he’s been dubbed as the “USMCA whisperer” by some.
And throughout his discretions, he made one thing clear: Democrats are close.
“I feel very confident that it’s going to be done this year,” Cuellar said. “I think there’s a good possibility we can get it done soon. I feel extremely good that it’s coming soon.”