(Bloomberg) -- With just a week left before U.S. Congress takes a summer break, the debate over President Donald Trump’s new free-trade deal for North America briefly heads south of the border.
A group of U.S. lawmakers will meet in Mexico City starting Friday with industry experts and officials including President Andres Manuel Lopez Obrador, hoping to resolve their concerns about the U.S.-Mexico-Canada Agreement. House Ways and Means Trade Subcommittee Chairman Earl Blumenauer is leading the delegation. House Democrats want to discuss what they see as deficiencies in the USMCA’s labor and environment chapters.
Lopez Obrador earlier this week said he encourages passage of deal as soon as possible, and Canada is also rooting for progress. “We obviously see the ratification of the USMCA as being critically important,” Canadian Finance Minister Bill Morneau said in a Bloomberg Television interview. “I’m optimistic that we are going to get there.”
There’s been a flurry of activity in Washington in recent days:
- U.S. Trade Representative Robert Lighthizer has been is holding weekly meetings with Democrats to discuss changes to the deal and is pushing for a vote in the fall.
- House Ways and Means Committee Chairman Richard Neal told reporters the agreement shouldn’t be allowed to “languish into next year” without a vote.
- Trump says congressional Democrats could block USMCA but he has a “plan B.” “If it doesn’t happen, I have a better plan, so don’t worry about it,” Trump said this week.
- The U.S. should remain in the old pact — Nafta — if USMCA isn’t approved by Congress, Senate Majority Leader Mitch McConnell told Fox Business Network. “I don’t think we ought to walk away from Nafta if we can’t get this done,” he said.
At stake is a lot more than the $1.2 trillion in goods the U.S. traded last year with its two closest neighbors. Trump ran in 2016 touting his deal-making prowess and securing a revised Nafta would bolster that impression heading into his reelection bid.
Charting the Trade War
A year into a trade war, America’s trade deficit with China isn’t much narrower than it was the day Trump took office. U.S. and Chinese officials spoke by phone on Thursday, the second call since late June, as the world’s two largest economies try to negotiate new terms of cross-border commerce.
Today’s Must Reads
- Saving the WTO | Canada and the European Union are in talks to preserve the World Trade Organization’s embattled appellate body as the U.S. tries to choke its power.
- Steel turnaround | Nucor (NYSE:NUE) CEO calls the bottom in steel prices amid “strong” demand, a potential turnaround that would be a welcome change for the battered industry.
- Finger pointing | Japan’s foreign minister pledged “necessary measures” against South Korea in a diplomatic dispute that has spilled into trade relations between the two neighbors.
- Fragile factories | In the U.S., manufacturing output has declined for two consecutive quarters, a common definition of recession within the industry.
- Global trade fallout | Central bankers the world over are grappling with a new reality as their economies gear down: As tariffs go up, interest-rates must go down.
Economic Analysis
- South Korea’s surprise | The nation’s central bank cut rates, underscoring its mounting trade challenges.
- China’s yuan respite | The U.S.-China trade truce allowed the central bank to step back from supporting the yuan since late May.
Coming Up
- July 21: South Korea trade data
- July 23: IMF updates its World Economic Outlook
- July 23-24: WTO General Council meeting
- July 25: Hong Kong trade balance, CPB monthly world trade monitor