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Politico: Freshman Democrats grill Lighthizer on USMCA

By Sabrina Rodriguez

Washington, April 3, 2019
FRESHMAN DEMOCRATS GRILL LIGHTHIZER ON USMCA: The U.S. trade chief on Tuesday walked freshman Democrats through the Trump administration’s view of the U.S.-Mexico-Canada Agreement, and some of them left the meeting unsatisfied with how he’s going to handle their concerns blocking them from backing the deal.

Tensions over pharma: Freshmen exiting the meeting all echoed that the issue of pharmaceuticals took up the biggest chunk of time. House Democrats have become increasingly vocal about concerns that intellectual property protections in USMCA would lock in high prescription drug prices and make it harder for lawmakers to deliver on their campaign promise to tackle high drug prices.

Rep. Susan Wild (Pa.) described the meeting as “contentious,” adding that Lighthizer was “steadfast” that there would be no changes to those provisions, saying it was “non-negotiable.” That marks a shift for Lighthizer, who in a meeting with the House Democratic caucus last month indicated that pharmaceuticals was a “legitimate issue” that could be addressed in the implementing legislation, according to an aide who was present.

“I don’t understand why it has to be put in since [Lighthizer] has admitted neither Mexico or Canada have requested it,” said Rep. Donna Shalala (Fla.).

Steel, aluminum concerns: Rep. Lizzie Fletcher (Texas) told Morning Trade that some of the most “impassioned statements and comments” came from lawmakers upset about the administration’s tariffs on steel and aluminum from Mexico and Canada.

“I’m not sure that there is a satisfactory answer that I’ve heard, that anybody’s heard, about a resolution on the tariffs,” she said.

Room for compromise? Fletcher expressed optimism that the administration is taking Democrats’ issues into consideration. “Overall, it was my sense that the ambassador certainly gave pretty candid responses and talked through, and kind of brainstormed” through lawmakers’ concerns and the administration’s rationale, Fletcher said.

Asked whether Lighthizer expressed flexibility to make changes to USMCA, Rep. Haley Stevens (Mich.) told Morning Trade: “He wants to cut a deal.”

PELOSI WANTS CHANGES TO USMCA TEXT: The speaker said Tuesday at a POLITICO Playbook event that any fixes to the new NAFTA’s enforcement language must be reflected in the text of the agreement, not the implementing legislation. She said the implementing bill “only bears on how we act. It doesn’t have to bear on how all three countries act.”

“There’s a compromise brewing on that,” said Rep. Bill Pascrell on whether the deal will be reopened to satisfy Democrats’ concerns or dealt with through implementing legislation. The New Jersey Democrat said any changes “must be in the major context of the bill, not put in some annex out in left field.” However, he shied away from saying that would involve a major renegotiation of the agreement.

“As I understand it, that would be my opinion, we don’t have to reinvent the wheel,” he said, adding that Canada and Mexico would have to agree. “We can’t have an agreement with ourselves.”

Rep. Ron Kind (Wis.) was a little less circumspect: “There are ways of accomplishing the same objectives without having to open up the entire agreement because things can get dicey pretty quickly if you start to open up and start to renegotiate. Then suddenly it becomes a free-for-all.”

But freshman Democrats see it differently: “Our view is that there is substantial precedent for reopening agreements when it’s helpful to passage in the Congress. We’ve done it before,” said Rep. Tom Malinowski (N.J.) following the meeting with Lighthizer. He referred to biologics as an issue that would have to be changed. “It should be possible to do that without reopening the whole thing. One way or another it has to be fixed.”

Canada says: Canadian envoy David MacNaughton told a gathering of New Democrat Coalition lawmakers on Tuesday that Ottawa’s official position is not to reopen any part of the deal. But he also told lawmakers that Canada wasn’t particularly happy with the biologics provisions, according to sources in the room.

Different ways to get there: There are other ways to make the changes Democrats want besides reopening USMCA, some congressional aides and trade experts told Morning Trade. One aide close to the process said all options are on the table, including side letters that would effectively amend the agreement. The real question is whether the administration will support the alterations.

BLUMENAUER’S MESSAGE TO NEW DEMS: House Ways and Means Trade Subcommittee Chairman Earl Blumenauer dropped by a meeting of the New Democrat Coalition to talk about USMCA’s path to approval. He made clear that he was not interested in a deal that would only get 30 Democrats — a direct rebuke of his Rep. Vern Buchanan’s (R-Fla.) view that the administration could get the agreement approved with only that many Democrats. He also said changes are necessary, particularly to its biologics provisions, according to sources in the room.

TRUMP WARNED NOT TO CLOSE BORDER: Senate Majority Leader Mitch McConnell and Pelosi agreed Tuesday that closing the southern U.S. border to stop migrants from entering the U.S. was a bad idea that would backfire on the U.S. economy. But Trump reiterated he was prepared to carry out that threat if he believes Mexico is not doing enough to help with the problem and he can’t get a deal with Congress on immigration reform.

Top officials at the U.S. Chamber of Commerce called the potential move “incredibly destructive,” while the Center for Automotive Research warned it would shut down the U.S. automotive industry within days. The Plastics Industry Association said even a temporary closure would put jobs at risk. “Global competitors would no doubt capitalize on the opportunity to convert our customers to more stable suppliers overseas,” the group said.

Over at the White House, top economic advisors Kevin Hassett and Larry Kudlow showered papers and data on Trump, hoping to convince him that economic growth could slow down even if he shut down the border for just one day. But the president seemed unswayed. "We're going to have security in this country. That is more important than trade," Trump said. Nancy Cook and Andrew Restuccia have more.