House Passes New North American Trade Deal

A new North American trade deal has been passed in the U.S. House of Representatives after more than a year of negotiations. The chamber has voted 385 to 41 to approve the United States-Mexico-Canada Agreement (USMCA). Thirty-eight Democrats and three Republicans voted against the measure.

The trade pact will replace the North American Free Trade Agreement (NAFTA), which has governed the movement of products among the three countries for nearly three decades. The accord essentially eliminated tariffs on most goods traded among the three countries, but critics claim that it was also responsible for massive losses of high-paying manufacturing jobs in the U.S. as companies moved production to low-wage Mexico. Calls to revise the agreement have been coming for years.

The new agreement contains stronger provisions regarding the enforcement of labor standards and secures more than $600 million for environmental problems in the NAFTA region. It also includes a process that could lead to inspections of factories and facilities in Mexico that are not living up to labor obligations. A provision that would have increased the time it takes for generic versions of brand-name drugs to be made available to consumers was stricken from the final agreement.

Some of the biggest impacts would be felt in the U.S. automotive industry. The agreement dictates that a higher percentage of autos be made from parts manufactured in North America and aims to see more cars produced where workers earn an average of at least $16 an hour. An analysis by the International Trade Commission found that these provisions would create 30,000 jobs in American auto parts plants.

The trade pact now heads to the Senate, which is expected to pass USMCA with bipartisan support. It is unclear when exactly the chamber will ratify the agreement, but the GOP-controlled Senate probably will take up the legislation when members return to Washington after the holidays. The deal will not take effect until all three countries ratify it.