The U.S.-Mexico-Canada Agreement passed in the House of Representatives with a vote of 385-41, with all but two Republicans and 193 Democrats voting yes. This was the biggest vote for a free trade deal in the House since the Canada Free Trade agreement in 1988, and many of the top Democrats in the House say it will serve as a template for future trade deals. It was a far more resounding “yes” than the original NAFTA vote of 234-200, when just 102 Democrats voted yes.
The World Trade Organization may have its first answer to what happens when a party appeals and there's no appellate body to resolve the dispute. The U.S., which killed the appellate body by not agreeing to appoint any replacements, is appealing a compliance report for a case in which India won the argument that the U.S. antidumping and countervailing case against Indian steel didn't fully follow trade law (see 14081205 and 1706090021).
The U.S.-Mexico-Canada Agreement passed the House of Representatives with a vote of 385-41. The implementing legislation will be taken up by the Senate in the new year. If the impeachment trial begins in early January, it is expected to wait until that trial is over.
A bipartisan resolution supporting the administration's desire to get reforms to the World Trade Organization, but also urging that the Geneva delegation work with other countries, passed the House Ways and Means Committee on Dec. 17. Rep. Ron Kind, D-Wis., a leader on free trade in the Democratic caucus, co-authored the bill. He told fellow committee members that he is talking to the Senate to see if they will raise a similar resolution.
The Craft Beverage Modernization Act, which covers beer, wine and spirits, will remain in effect through 2020, instead of expiring at the end of this year. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that the CBMA made it into a tax extenders package that was negotiated after midnight on Dec. 17. The provision allows importers and exporters a refund on alcohol excise taxes.
The House Ways and Means Committee, with near-unanimity, recommended the U.S.-Mexico-Canada Agreement go to the floor. A vote on the replacement for NAFTA is expected on Dec. 19. For about three hours, Democrats and Republicans praised the rewrite of North America's free trade pact, though many Republicans complained that it took a year to get the opportunity to vote for it.
With the announcement of a phase one deal, Flexport chief economist Phil Levy said the promise is for stability in tariff levels -- even if the large majority of goods facing Section 301 tariffs will retain the 25 percent hike. But, he noted in a Dec. 16 webinar, many times over the last eight months, “a deal was announced, and it didn't last. That should sort of serve as a precautionary tale.” Levy, like many observers, doesn't believe that a phase two deal, that could lead to rolling back more tariffs, is likely in the next year.
Sen. Ron Wyden of Oregon, the senior Democrat on the Finance Committee, and Sen. Sherrod Brown, an Ohio Democrat who voted against NAFTA, have endorsed the NAFTA rewrite, known as the U.S.-Mexico-Canada Agreement. The two had said they would oppose the USMCA unless it included a labor enforcement mechanism that carried consequences for Mexican imports from factories that weren't honoring workers' rights.
With the last round of consumer goods imported from China spared, and a reduction in Section 301 tariffs on about $120 billion in goods that were first subject to additional tariffs Sept. 1, some business interests welcomed the de-escalation, but warned that the U.S. should stay focused on more significant economic reforms in China. The tariffs on List 4a, which are at 15 percent and apply to about 3,800 8-digit tariff lines, will go to 7.5 percent.
Although the Senate Finance Committee will still have a mock markup on the U.S.-Mexico-Canada Agreement, it will happen after the implementing bill has been sent to Congress, so it will be more “mock” than in past deals. The reason the process of Congress weighing in on a trade deal is a mock markup is that under fast track, or Trade Promotion Authority, Congress cannot amend the deals. But typically, the administration sends up a draft implementing bill, and then does incorporate at least some of Congress's suggestions on language before sending the final implementing bill.