(Bloomberg) -- House Democrats are expressing optimism as they begin what could be the final stage of negotiations to approve the U.S.-Mexico-Canada trade agreement, paving the way to vote on President Donald Trump's top legislative priority.
Speaker Nancy Pelosi on Tuesday is expected to formally name lawmakers to the working groups that will work with the administration on the labor, environment and pharmaceutical provisions that Democrats are seeking to strengthen. Pelosi has also emphasized the need for strong enforcement mechanisms in the accord that will overhaul the North American Free Trade Agreement.
Ways and Means Chairman Richard Neal, the Massachusetts Democrat leading talks with U.S. Trade Representative Robert Lighthizer, said Monday he hopes a deal can be finalized within 30 days. The Trump administration has signaled plans to send a bill implementing the USMCA to Congress by the end of the month to prod lawmakers to vote on it before the August recess.
These signs of progress come after Trump withdrew his threat to impose tariffs on Mexican imports over unrelated immigration concerns. Senate Republicans applauded that decision, and Senate Finance Chairman Chuck Grassley met Monday with Pelosi, Neal and Ways and Means Republican Kevin Brady to discuss how to move forward on the USMCA.
"We just wanted to point out despite the chaotic nature of the tariff situation, we still wanted to stitch this up," Neal said.
Grassley requested that meeting, and he told House Democrats he wants to be helpful in completing the USMCA, according to a Democratic aide. Pelosi used the meeting to explain the provisions that need to be reinforced to get more House Democrats to support the deal, the aide said.
"We want to be on a path to yes," Pelosi said at a Peterson Foundation event Tuesday, stressing the need for strong enforcement. If all parties can't be held to the agreement, she said, "you're just having NAFTA with sprinkles on top."
Grassley described Monday's meeting with Pelosi as "very successful."
"I think they're putting a good-faith effort to work out differences," Grassley said of House Democrats. "There's a process in place to do it. But those differences will have to be worked out before we move it.
The Senate Finance Committee will hold a hearing June 18 with Lighthizer to discuss the USMCA, Grassley later said in a statement.
For weeks Republicans have said that the USMCA already has enough votes to pass, counting on a combination of pro-trade lawmakers from both parties. Acting White House Chief of Staff Mick Mulvaney said Tuesday "everybody knows it will pass the House," but suggested that Pelosi is holding out to get not only a majority of the full House of Representatives, but also a majority of her caucus.
Trump also urged Congress to "do its job" and pass the trade deal that farmers are counting on to secure the export markets they count on for their livelihood.
White House economic adviser Larry Kudlow said ratifying the USMCA could be a more important boost to the U.S. economy than reaching a trade deal with China. Congressional approval of Trump's trade deal, which modernizes but doesn't fundamentally change the decades-old NAFTA, could add half a percentage point to economic growth, Kudlow said in a Tuesday interview on CNBC.
A bicameral, bipartisan trade committee staff delegation returned Saturday from a fact-finding mission in Mexico, armed with suggestions on how the labor sections of the USMCA can be improved. Democrats are working on turning those ideas into a concrete offer to the White House, according to another Democratic aide who asked not to be identified when talking about private discussions.
"There are some unresolved issues; the task force is being formed now," said Democratic Representative Ron Kind, a member of the Ways and Means Committee. "The time has come to put something on paper."
Kind said Trump's decision not to impose the Mexico tariffs and to lift the steel and aluminum tariffs the president previously imposed on Mexico and Canada "will help focus a lot on the issues that need to be resolved."
The Wisconsin Democrat said he is pushing the administration to increase funding for the arm of the U.S. Labor Department that monitors international labor rights as part of any deal.
Pelosi said Tuesday she was interested in a proposal from Democratic Senators Sherrod Brown and Ron Wyden that could help Mexico enforce the provisions to support workers.
"There is a growing awareness that you don't get in the ballpark without a tough enforcement regime," Wyden said. "There's been a lot of back and forth and long meetings with the Trump administration on this. "
The House Democratic staff returned from Mexico hopeful that country can implement its labor revisions, while acknowledging that it could take four to six years.
Among the staff suggestions are changes to the USMCA to aid Mexico's labor overhaul, which includes setting up new institutions and auditing 700,000 collective bargaining agreements. Mexico is engaged in austerity measures that could stymie the labor changes by depriving them of workplace inspectors. The staff delegation also discussed environment issues and is working on proposals on that.
In Good Faith
"I talked to Ambassador Lighthizer last night and everyone understands the things that need to be fixed," said Representative Debbie Dingell of Michigan. "There are a number of us who want to get a trade bill. We need a new NAFTA."
"People are working toward getting a good bill," Dingell added.
Democrats say they will continue to work in good faith even as they fear that Trump could once again threaten Mexico if he feels pressure over migration. The key sticking point may be how to improve enforcement.
Under the original NAFTA, its provisions are enforced by binding arbitration panels. Those are no longer used because the country accused of a violation can simply block the formation of a panel. Democrats are mulling whether to propose outlawing panel-blocking under the new agreement.
Rhode Island Democrat David Cicilline, the Democratic Policy and Communications Committee chairman, said he is also optimistic.
"I think everyone has been very clear about what it would take to have sufficient Democrats votes to prevail," he said.
(Updates to add Finance hearing and Kudlow comment beginning in the 10th paragraph.)
--With assistance from Laura Litvan.
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