Auto industry's D.C. agenda hinges on Trump-Pelosi relationship
Washington — Automakers' hopes for congressional approval of President Donald Trump's proposed replacement for the North American Free Trade Agreement are resting on a Capitol gripped by a looming impeachment fight setting aside partisan bickering long enough to compromise on a trade pact.
Democratic leaders have suggested that they can work with Trump on the trade pact, known as the United States-Mexico-Canada Agreement, or USMCA, even as they attempt to impeach him. But labor leaders have attempted to pump the brakes and most observers are skeptical that Democrats, who control the U.S. House of Representatives, will want to give the president a win heading into an election year.
“I can honestly say that I think every day we're becoming closer,” Speaker Nancy Pelosi, D-Calif., said during her weekly news conference on Thursday, referencing meetings on Wednesday and Thursday between Democratic negotiators and U.S. Trade Representative Robert Lighthizer.
"The people who are saying it don't know what they're talking about or have a different agenda that they want to present," Pelosi continued. "But we feel very good about being on a path to yes. We're not there yet because we don't have the enforceability assurance that we need to have. While we have some good things in the bill, it's only a list of good things unless it can be enforced."
Automakers have said free trade with Canada and Mexico is vital to their ability to compete with internationally owned competitors. Democrats have pushed for stronger enforcement of labor provisions to ensure buy-in from politically influential unions. USMCA supporters counter that it would be difficult to ask Canada and Mexico, which has already ratified the deal, to go back to the negotiating table.
The resulting uncertainty has left automakers in lurch about the trade rules that will govern them at a time when Mexican production was front and center in fractious labor negotiations between the United Auto Workers and General Motors Co., sparking a month-long strike only now on the verge of concluding.
The fate of the USMCA could rest on Trump and Pelosi's fractious relationship, as well as Democrats' strong ties to organized labor. Trump has accused Pelosi of "wasting her time" on a "manufactured crisis" with the impeachment push, and labor leaders have pushed back on suggestions of a pre-Thanksgiving to approve the new trade pact.
"Nancy Pelosi needs help fast! There is either something wrong with her 'upstairs,' or she just plain doesn’t like our great Country," Trump tweeted Wednesday after a contentious national security meeting with Pelosi. "She had a total meltdown in the White House today. It was very sad to watch. Pray for her, she is a very sick person!"
Pelosi similiarly accused Trump of having a "meltdown" in the national security meeting.
U.S. Rep. Debbie Dingell, D-Dearborn, said the impeachment fight has not affected Democrats' desire to work with Trump on trade, even as Trump and Pelosi squabble publicly on issues like the president's decision to stand aside as Turkey occupies land held by Kurdish former allies in northern Syria.
"I think trade continues to move forward," she said. "It's a priority for both Democrats and Republicans. We have to do something, but we're not so desperate that we have to do something that's not right. The (UAW) strike makes it more important that we get something done with trade, not less."
U.S. Rep. Tim Walberg, R-Tipton, agreed that passing the new deal should be a big priority for lawmakers in both parties, even as he disagreed vehemently with embrace of the idea of impeaching Trump by the Democratic Party's leadership.
"We need to get it done," he said. "Mexico got it done .... Some people out there like (AFL-CIO President) Richard Trumka want to make sure the president doesn't get a win, even if it costs his members. The way I'm looking at it, Michigan stands to get thousands of jobs if we pass the USMCA."
Trumka has thrown cold water on the idea of quick passage of the USMCA before the end of the year, saying in an interview with the Washington Post: “If there was a vote before Thanksgiving, the agreement would be defeated."
The new deal calls for increasing to 75% from 62.5% the percentage of a car's parts that have to come from one of the three countries to qualify for duty-free treatment. It also requires that 40-45% of an auto's content be made by workers earning at least $16 per hour. Vehicles not meeting the requirements would be subject to a 2.5% duty.
Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research, said Trumka's comments could be seen as a bellwether for the broader labor's movements positioning on the USMCA.
"I've been saying all along to keep an eye on Richard Trumka," she said, adding that Trumka's interview is "pretty telling about where we are.
"A lot of folks think this is lined up and ready to go," Dziczek continued. "It could go either way. They could say 'we're doing our work and we can walk and chew gum at the same time.'
"There was a trade act of 1974," she said, referencing the year that former President Richard Nixon resigned in the face of likely impeachment.
Walberg acknowledged the looming impeachment battle is likely to present another roadblock to the USMCA's passage.
"It's sure standing in the way of just about anything, from energy to opioid abuse to trade to issues involving our veterans," he said. "They're all being held up because the Democrat-controlled House is focused on trying to impeach the president, or at least give the appearance that they are going to impeach the president."
Walberg said he was encouraged by remarks made by Pelosi in early October where the House Speaker said lawmakers were "on a path to yes" on the USMCA, but the California Democrat has made no guarantees the agreement would be approved quickly.
The White House has sought to put pressure on Democrats in Washington to focus on my legislative priorities like the USMCA and less on the idea of impeaching Trump.
"We remain confident that if the USMCA is brought to the floor of the Congress, it will pass," Vice President Mike Pence said during a recent campaign trip to Iowa. "It will pass the United States Senate. And we believe it will create great prosperity — more than 175,000 jobs all across the country, billions of dollars of investment — and particularly in a place like Iowa, a state where half of their exports go to Mexico and Canada."
Adding to the uncertainty for automakers is a looming court battle with California over tailpipe emissions. The Trump administration has moved to rollback stringent gas mileage rules that were enacted by former President Barack Obama and to revoke California's right to set its own gas mileage rules for vehicles.
The U.S. Environmental Protection Agency and Department of Transportation have said that their agencies will revoke the Clean Air Act waiver that has been used by California since 1967 to set its own emission standards. That would undo California's Advanced Clean Car Rule, which calls for automakers to reduce pollution from new cars from 2012 model-year levels by 40% by 2025.
Thirteen states and Washington, D.C., have adopted California’s mileage rules, meaning the rules for automakers for a quarter of the country could be left up in the air until a case that is likely to end up before the U.S. Supreme Court is decided.
Brett Smith, director of propulsion technologies and energy infrastructure for the Center for Automotive Research, said the fight of gas mileage rules have left "enormous amounts of uncertainty for automakers.
"By law, they were supposed to have (fuel economy rates for) the 2021 model year set by 18 months before the model year begins," he said. "It was supposed to be done by April 1 of this year, they're six months late and everybody's afraid to do anything.
"It's not a hypothetical thing," Smith continued. "We're into the model year planning for 2021. They don't know whether they're going to be working under the Obama rule or the Trump rule. They say they're going to go forward with product planning, but if that's true, why care what the rules are. But they can risk betting on the Trump administration's rule and ending up with the Obama administration's rules."