Automakers in the U.S. opposed these rules during the trade negotiations but they are now going along with them out of fear that Trump will make things even worse by pulling out of Nafta. It is debatable if the president has the legal authority to do that. In any case, abrogating Nafta without a replacement would devastate the auto industry in states Trump needs to win in 2020, including Texas.
House Democrats can easily afford to call his bluff.
A better approach for Congress would be to defer consideration of legislation until U.S. trade officials fix what’s wrong with the pact, starting with consumer protections in pharmaceuticals and stronger enforcement of labor and environmental provisions. Importantly, revisions should also scale back the damaging auto provisions exposed by the U.S. International Trade Commission study. And the Democrats should insist that the pact cover climate change issues, a glaring omission in the version Trump signed.
Trump may not go along with this path. But there’s little economic cost in deferring action and planning how the USMCA can be properly fixed in the post-Trump era. The USMCA requires more than cosmetic changes. It’s time for Congress to set that process in motion.
Bloomberg News.