NAFTA Renegotiation, Explained

The impact that the North American Free Trade Agreement (NAFTA) has had on American jobs and wages was a key issue in the 2016 campaign. Trump relied on promises to replace NAFTA and end NAFTA ongoing job outsourcing to win the key swing states that made him president. Since he took office, Trump has made renegotiating the terms of NAFTA a major plank in his trade agenda. Last year, the US, Mexico, and Canada reached an agreement (which Trump is calling the United States-Mexico-Canada Agreement, or USMCA) that includes some improvements that progressives have long demanded and some new terms that would make NAFTA worse. The new deal also leaves some key problems with NAFTA unresolved. Congressional Democrats have demanded more improvements before any vote on the deal while Trump wants to ram the deal as-is through Congress now.

The NAFTA 2.0 text as it stands now is not a transformational replacement of the original, corporate-rigged agreement. In this document, we’ll review a few of the key issues with NAFTA, the process for Congress to approve any changes to the deal, and how you can make an impact in this fight.

What you need to know about NAFTA and NAFTA 2.0

The question of whether NAFTA would harm or benefit working people and the environment has been contentious since it was first negotiated. Progressives feared that the deal’s investor protections would make it easier to outsource jobs to low-wage Mexico, and that the lack of enforceable labor and environmental standards in the deal would keep wages in Mexico low, push down US wages, and result in environmental degradation.

NAFTA 2.0, as written, would not reverse the race-to-the-bottom in labor and environmental conditions. Although labor and environmental standards were added, these terms have some key flaws and lack the enforcement mechanisms needed to actually improve conditions. Without strong labor and environmental standards that are subject to swift and certain enforcement, US firms will continue to outsource jobs and pollution to Mexico.

Additionally, NAFTA 2.0 introduces unacceptable new monopoly protections for Big Pharma. The agreement requires that governments guarantee pharmaceutical corporations 10 years of marketing exclusivity for biologic drugs (which include some of the most innovative drugs on the market today, like cutting-edge cancer treatments). This would prevent generic drugs from being introduced that could help reduce drug costs. The deal also locks in other monopoly rights for Big Pharma that would keep U.S. medicine prices high and export our bad system to Mexico and Canada, undermining peoples’ access to affordable medicines throughout North America.

The deal also falls short on the environment. The NAFTA 2.0 text, like that of the Trans-Pacific Partnership, fails to even mention climate change—a glaring omission in a time of climate crisis. But NAFTA 2.0 also does not require countries to adopt or enforce domestic laws that would achieve the goals of seven core multilateral environmental agreements. Congressional Democrats forced this obligation into George W. Bush’s final four trade agreements.

The bottom line is: NAFTA 2.0 as written will not stop the ongoing job outsourcing, downward pressure on wages, and environmental damage created by NAFTA—and it would lock in high medicine prices. More work is still needed. That is why Speaker Pelosi and congressional Democrats have insisted that the Pharma giveaways be eliminated and the labor and environmental terms strengthened before any vote on the deal.

Process for renegotiating NAFTA

Congress will have a major role to play in finalizing any changes to NAFTA. A trade deal can only go into effect if both the House and Senate pass it. With the Democrats controlling the House of Representatives, Speaker Pelosi has the power to decide if and when a House vote will occur. House Democrats have insisted that the text of the deal be improved as a condition for allowing a vote. For months, the Trump administration refused to make any changes to the text. But recently, the administration signaled that it would negotiate with House Democrats about changes. This process was about to begin, when Trump abruptly threatened new tariffs on all Mexican goods unless Mexico stops the flow of Central American immigrants through Mexico to the United States. Effectively, Trump prioritized his racist attacks on immigrants and Mexico over delivering on his pledge to fix NAFTA. If the needed improvements are not agreed and Congress doesn’t pass this legislation, we would remain a part of NAFTA as it is now—unless Trump pulls out of NAFTA, which he has threatened to do.

In recent days, the administration has hinted that it might send the deal to Congress as-is. The deal would be subject to the “Fast Track” process, which means that if the agreement is sent for a vote, both the House and Senate would be required to vote within 90 days with no amendments allowed.

But, a House Speaker can stop the Fast Track railroading of a bad trade deal through Congress. To do so, a Speaker must decide an agreement must be stopped and then get a majority of House members to vote to stop the Fast Track process. That is exactly what Speaker Pelosi did in 2008 when George W. Bush tried to ram a damaging trade deal with Colombia through Congress.

It still isn’t clear how members of each party will vote on Fast Track or on the deal itself—in part because there still isn’t a final package to judge. Many Democrats have signaled that they will not support the renegotiated deal in its current form. Key Democratic Senators including Elizabeth Warren, Bernie Sanders, Sherrod Brown, and Democratic Majority leader Chuck Schumer, along with Speaker Nancy Pelosi, Progressive Caucus Chair Mark Pocan, and many others have demanded key improvements. But other Democrats have said that could support the deal as-is. The outcome of the vote is still up in the air. Trump wants to hold a vote to try to pass the damaging deal he signed last year with mainly Republican votes supplemented by a few Democrats. So far, Speaker Pelosi has said she won’t allow a vote unless Democrats obtain the improvements they have demanded.

What can I do?

Many Democratic Members of Congress, particularly those who are newly elected, don’t have clearly defined stances on trade issues—which means your input can make a huge difference. All Democrats need to support the needed changes to the deal Trump signed last year, and commit to oppose any deal that does not include these changes.

NAFTA 2.0 as it is written now is not an acceptable replacement for the original agreement. But if Democrats can eliminate the Pharma giveaways, secure swift and certain enforcement of strengthened labor and environmental standards, and succeed in incorporating some other key improvements, the final package could end some of NAFTA’s continuing, serious damage to people and the environment across North America. And that would be a big deal.

We’ll track developments as the congressional Democrats fight to force the needed improvements to the deal Trump signed. We will keep you updated on when your advocacy will be most impactful in helping to end the outsourcing and environmental degradation that have resulted from the original agreement and to make sure that Big Pharma does not lock in high medicine prices using the deal Trump signed last year.