Something is shaping up in the political background around the USMCA.
Yesterday Mexican President Andres Manuel Lopez-Obrador (AMLO) sent a second letter to House Speaker Nancy Pelosi urging USMCA ratification. Team Trump and Team AMLO are working together against Team Pelosi & AFL-CIO Richard Trumka.
Essentially AMLO has been saying the labor provisions within the USMCA trade pact are already being put in place by Mexico, and Pelosi should quit trying to hide behind labor concerns to avoid ratification.
source: sundance at CTH
Tomorrow, on the eve of Thanksgiving at the request of the Trump administration, U.S. Trade Representative Robert Lighthizer, Mexican Foreign Minister Jesus Seade and Canadian Deputy Minister Chrystia Freeland are holding a meeting to discuss the AFL-CIO/Pelosi issues within the USMCA labor provisions.
FM Chrystia Freeland is irrelevant to the meeting; she’s a potted-plant rubber stamp for whatever scheme Pelosi is cooking. It is House Speaker Pelosi who is using her pressure over labor unions to hide behind AFL-CIO Richard Trumka and claim U.S. labor unions have issues with the USMCA labor provisions. It ain’t about labor; it is all political cover.
However, it is interesting that USTR Lighthizer, a man with the patience of Job, called Jesus Seade and Freeland to DC:
WASHINGTON – The three trade ministers from the United States, Canada and Mexico are set to meet in Washington on Wednesday to discuss the deal to replace NAFTA, seven people familiar with the plans told POLITICO.The meeting involving U.S. Trade Representative Robert Lighthizer, Deputy Canadian Prime Minister Chrystia Freeland and Mexican Undersecretary for North America Jesús Seade comes as the Trump administration is nearing a compromise with House Democrats to make changes to the USMCA.
Lighthizer has been negotiating with a group of nine House Democrats to address four main concerns involving the pact’s labor, environmental, enforcement and drug pricing provisions.Any changes to the text would have to be approved by Canada and Mexico before the Trump administration can finalize the agreement and send it to Congress for a vote. Canada is expected to accept changes to the text without issue. (more)
In her effort to stall the growth of the North American economy, Speaker Pelosi has been trying to block the USMCA by demanding [falsely and with cover by Trumka (AFL-CIO)] that Mexico start a national Social Security program for all Mexican workers.
There’s a bucket load of political obfuscation on the issue, but that’s generally Pelosi’s intentional poison pill. Meanwhile Mexican President Lopez-Obrador has told Lighthizer that Pelosi can go drink a bucket of spit if she thinks the U.S. is going to dictate domestic economic policy to a sovereign country.
Now remember, the USMCA is an agreement between Lighthizer and Seade that Canada joined. The architecture of the agreement was exclusively the U.S. (Team Trump) working with Mexico (Team AMLO) when the deal was constructed in 2018. Canada joined after everything was already assembled; the deal hardly changed at all… you’ll see why.
My hunch is that Robert Lighthizer (Trump) has informed Jesus Seade (AMLO) that Pelosi is just trying to kill any USMCA compact simply because she is attempting to derail the U.S. economy for maximum 2020 political benefit (which she is).
This meeting is going to be Lighthizer and Seade extending some deal framework that will functionally stop Nancy Pelosi and Richard Trumka from making ridiculous claims.
Something akin to modified provisions within the agreement where Mexico agrees to a border enforcement mechanism if a labor dispute panel arbitrates a U.S. labor union challenge within the deal. A mini three nation binding arbitration trade panel of sorts (example: 2 from Canada, 2 from Mexico and 3 from U.S.). This panel would create faster labor/trade dispute resolution than going through an extensive multi-year court case.
There’s going to be paper here…. not talk… an actual papered outline. Trump wouldn’t be having Lighthizer call for Seade if he and AMLO had not already worked the paper.
This is a little weedy, and my hunch is that Lighthizer (Trump) is telling Seade (AMLO) the U.S. panel would be stacked in favor of Mexico [nudge-nudge, wink-wink, say-no-more, say-no-more]. An effort to cut-off Pelosi’s scheme to derail the agreement.
The multinationals are lined up and ready to go all-in, BIGLY, on North American investment that will benefit Mexico. There are tens-of-billions of private sector dollars ready to go, they just need to clear the insufferable Pelosi blockage.
This $44bn investment package is why AMLO has been willing to assist the Trump administration on border security etc. President Trump has leveraged major economic benefit to Mexico because in the larger picture the USMCA, in combination with prior ASEAN agreements, is the economic breech that drains China. However, to receive the benefits, Mexico has to be a stable partner on geopolitical issues including immigration, border security, internal corruption and dealing with drug cartels.
If all goes according to the Trump/AMLO plan Wall Street’s U.S. investment in China will have an alternative in Mexico, and that’s the cornerstone that allows President Trump to begin a more consequential decoupling with Beijing. [Insert India watching here]
Phase-One of the U.S-China deal, if cemented, will be the only phase; and that phase objective is simply constructed to fill the purchase void for the U.S. Agriculture Sector. China opens the financial sector and makes Ag purchases, in exchange POTUS stalls further tariffs on designated sectors that touch upon Phase-one agreements.
If the landscape ends were the compass is heading, there isn’t going to be a multi-sector (manufacturing, IP, big-tech, etc.) phase-two or phase-three deal in the U.S-China future. Instead there will be a decoupling of the U.S-China relationship in direct proportion to the opportunity opened within the U.S-Mexico alliance. [Insert Stock Market Stability Here]
This is the incentive for AMLO, via Jesus Seade, to work with Trump, via Lighthizer, to get Pelosi out of the picture. Once she’s out of the way, the big picture starts moving forward.
Chrystia Freeland and Justin Trudeau are irrelevant, Canada has already destroyed its manufacturing base and cannot enjoy the benefits of massive North American investment. Canada has consigned itself to be a service-driven economy living in the shadow of the U.S. and Mexico. If Canadian politics and social outlooks change later on, well… !