USMCA requires increased North American content in cars and trucks built in the region.

United States House of Representatives overwhelmingly approved a new North American trade agreement on Thursday that includes tougher labor and automotive content rules but leaves $ 1.2 trillion in US trade-Mexico-Canada annual flows largely unchanged. US House of Representatives passed legislation to implement the US-Mexico-Canada Agreement (USMCA) 385-41, with 38 Democrats, two Republicans, and one independent member voting “no”.

Bipartisan voice contrasts with only Democratic votes Wednesday night to impeach US President Donald Trump.

Transmit sound building measures to the Senate, but it is unclear when the Republican-controlled chamber will take it. Senate Republican leader Mitch McConnell said that the consideration of measures is likely to follow the impeachment trial in the Senate, which is expected in January.

The USMCA trade pact, first agreed in September 2018, will replace the North American Free Trade Agreement of 1994. Trump promised for years to stop or renegotiate NAFTA, which he blames for the loss of millions of US factory jobs to lower-wage Mexico.

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House Speaker Nancy Pelosi gave USMCA green light last week after striking a deal with the government Trump, Canada, and Mexico to strengthen enforcement of labor provisions and eliminate some of the drug patent protection.

Pelosi said she did not care about handing Democrats a political victory USMCA Trump because they tried to remove him from office.

“It will be a benefit guarantee if we can come together to support working families in America, and if the president wants to take credit, so be it,” Pelosi said during the House floor debate before the vote.

Concessions to Democrats

Changes negotiated by Democrats, including more stringent environmental regulations, will also be set up a mechanism to quickly investigate violations of labor rights in the factories of Mexico. They have gained the support of some US labor unions as opposed to NAFTA for decades.
US Trade Representative Robert Lighthizer make concessions by dropping the requirement for 10 years of data exclusivity for biologic drugs, a provision that Democrats feared would keep drug prices high and that they are called “giveaway” for the big drug manufacturers.

Some of the most vibrant trade skeptics in Congress have voiced support of the deal, including Representative Debbie Dingell, who represents the autoworker-heavy district in southeast Michigan. Dingell said in a television interview that he supported the bill, although he was skeptical it would bring jobs back to Michigan carmaking. Representative Ron Kind, a pro-trade Democrat of Wisconsin, one of the top milk-producing countries, praised the new access to the Canadian dairy market closed below USMCA.

“A ‘no’ vote is a return to the old failed policies of NAFTA, the status quo, rather than a more modern version of this,” Kind said in floor debate.

Car, digital, currency

The agreement with the modernization of NAFTA, adding language that protects the US model for the Internet, digital services, and the development of e-commerce, industries that did not exist when NAFTA was negotiated in the early 1990s. Eliminating some barriers to food security for US agricultural products and contains language that prohibits the manipulation of the currency for the first time in trade agreements.

But the biggest change requires an increase in North American content in cars and trucks built in the region, 75 percent of the 62.5 percent in NAFTA, with a new mandate to use the North American steel and aluminum.

In addition, 40 to 45 percent of vehicle content must come from the area of ​​high-wage paying more than $ 16 per hour – namely the United States and Canada. Some of the vehicles assembled in Mexico, especially with components of Mexico and outside the region, it may not qualify for the US tariff-free access.

The US Congressional Budget Office estimated earlier this week that the car will pay nearly three billion dollars more in rates over the next decade for cars and parts will not meet local content rules is higher.

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