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Key USMCA step taken as Trump announces tariffs on Mexico

The administration sent to Congress a draft statement to propel USMCA implementing legislation Thursday, the same day Trump tweeted he plans to impose tariffs on Mexico.

   The Trump administration on Thursday sent to Congress the draft statement of administrative action (SAA) for expected U.S.-Mexico-Canada Agreement (USMCA) legislation, completing a key statutory requirement for Congress to consider the agreement.
   But at about the same time that news broke, President Donald Trump tweeted that the U.S. will impose a 5% tariff on all goods from Mexico starting June 10, which could complicate congressional consideration of the USMCA.
   “This is a misuse of presidential tariff authority and counter to congressional intent,” Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said in a statement. “Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country.”
   Trump tweeted the planned tariffs will remain in place “until such time as illegal migrants coming through Mexico, and into our Country, STOP,” adding that the tariffs will gradually increase until the illegal immigration problem is “remedied.”
   Trump added, “Details from the White House to follow.”
   U.S. Chamber of Commerce Chief Policy Officer Neil Bradley in a statement said tariffs on Mexico are “exactly the wrong move,” adding that they won’t solve the “very real problems at the border.”
   Regarding timing of congressional USMCA consideration, the administration must wait 30 days after submission of the draft SAA before submitting draft USMCA implementing legislation, but the Trade Promotion Authority (TPA) statute requires such legislation to be sent on a day both chambers of Congress are in session, Wiley Rein attorney Stephen Claeys wrote in a blog post.
   So the earliest the draft legislation could be sent to Congress is July 9, the first day that both chambers currently are scheduled to be in session after the 30-day clock expires, wrote Claeys, who worked as Republican trade counsel on the House Ways and Means Committee from 2011 to 2017, helping to draft the TPA law setting forth requirements for free trade agreements.
   Even though the draft legislation legally could be sent as early as July 9, it is likely a draft bill will be submitted after then, as the administration continues to work with Congress to address lawmakers’ concerns, Claeys wrote.
   “The SAA for past trade agreements has often been used to set out how congressional concerns will be addressed, so the USMCA’s draft SAA will likely be a focus of the negotiations between the administration and Congress,” he said.
   While TPA provides for implementing legislation for free trade agreements to undergo expedited congressional consideration without amendment, House Speaker Nancy Pelosi, D-Calif., has the power to change House rules to stall consideration of USMCA if she chooses.
   In 2008, Pelosi, as House speaker, changed House rules, which effectively delayed congressional passage of the U.S.-Colombia Free Trade Agreement until October 2011, after the Obama administration renegotiated parts of the deal reached by the George W. Bush administration.
   In a statement Thursday, Ways and Means Chairman Richard Neal, D-Mass., reiterated Democrats’ call for improvements to USMCA’s labor, environmental, enforcement and pharmaceutical provisions.
   “The timeline for the consideration of a renegotiated NAFTA will be determined by the completion of the work that remains to be done by Democrats and [U.S. Trade Representative Robert] Lighthizer to address these concerns,” Neal said. “The premature submission of a draft statement of administrative action has no impact on that outstanding work or the timeline moving forward.”
   Pelosi also issued a statement Thursday, saying the Trump administration sent the draft SAA before House Democrats finished working with Lighthizer on improvements to the USMCA, noting the submission was “not a positive step.”
   The USMCA negotiation formally concluded Nov. 30, when U.S., Mexican and Canadian heads of state signed the agreement.
   “We all agree that we must replace NAFTA, but without real enforcement mechanisms we would be locking American workers into another bad deal,” Pelosi said. “A new trade agreement without enforcement is not progress for the American worker, just a press release for the president. We have been on a path to yes, but it must be a path that leads to an agreement that delivers positive results for American workers and farmers.”
   Canadian Prime Minister Justin Trudeau touted the USMCA in a speech in Ottawa alongside Vice President Mike Pence on Thursday, one day after introducing implementing legislation to Canadian Parliament.
   “Millions of families on both sides of the border depend on the Canada-U.S. partnership,” Trudeau said. “Look no further than the new NAFTA — a good deal that protects middle-class jobs and helps us build strong communities.”
   Pence said he was grateful for the introduction of Canadian ratification legislation.
   “President [Trump] and I are working with members of the United States Congress to … pass the USMCA this summer,” Pence said. “For too long, we’ve allowed an outdated trade deal to hurt good-paying jobs that built our middle class in your country and in ours. The USMCA simply is an idea whose time has come, and once it becomes the agreement between our nations, the law of the land, the people of the United States and Canada, we believe, will flourish like never before.”
   Written by Lighthizer, a cover letter sent with the draft SAA states that the Trump administration recognizes “there is still work to be done,” and “that is why it is so important that we begin discussions immediately on the implementation package.”
   Lighthizer said submission of the draft SAA doesn’t formally start the countdown to a vote on the USMCA, but noted that completion of the procedural step ensures that Congress will have “sufficient time to consider the USMCA before the August recess if the leadership deems that appropriate.”
   Lighthizer indicated that the draft SAA leaves open the possibility for tweaks to the text of the USMCA and/or implementing legislation to address Democrats’ concerns.
   “The draft SAA is just that — a draft,” the letter states. “It does not in any way prejudice the content of the final implementation package, i.e., the final SAA, final implementing legislation and the final, binding text. Accordingly, submission of the draft SAA does not limit our ability to find solutions to address concerns members have raised about enforcement of the labor and environmental provisions of the agreement and pharmaceutical pricing.”
   The letter continues, “We are confident those concerns can be addressed to the satisfaction of the vast majority of members from both parties through the implementing legislation or otherwise.”

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Brian Bradley

Based in Washington, D.C., Brian covers international trade policy for American Shipper and FreightWaves. In the past, he covered nuclear defense, environmental cleanup, crime, sports, and trade at various industry and local publications.