House Dems organizing first big statement on USMCA changes

With help from Doug Palmer, Megan Cassella and Sabrina Rodriguez

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— House Democrats are amassing signatures for a letter that will demand changes to the USMCA’s pharmaceutical provisions, setting in motion a process to push the Trump administration to alter the pact before it is considered for ratification.

— China could pledge to keep its currency from depreciating beyond 7 renminbi to the dollar as part of a trade deal, but Beijing has been hesitant to make a long-term commitment, according to an analyst closely following the talks.

— Beijing and Brussels could trip up efforts to reach a trade deal on e-commerce as some observers are skeptical that negotiations won’t eventually break down.

IT’S THURSDAY, FEB. 21! Welcome to Morning Trade, where your host knew that zebra-print jacket would come in handy one day. Got any news, tips or gossip? Send it my way: [email protected] or @abehsudi.

HOUSE DEMS ORGANIZING FIRST BIG STATEMENT ON USMCA CHANGES: House Democrats are unifying around the first major issue they want to change in Trump’s new U.S.-Mexico-Canada Agreement: rules on pharmaceuticals. In a draft letter obtained by POLITICO, House Democrats ask for USMCA to be “amended” by appealing to Trump’s broader goal of lowering drug prices. It’s one of at least three issues, including labor and environment, Democrats say need to be addressed before they consider ratifying the trade deal.

“Improving patient access to more affordable medicines, in particular biosimilars, is essential to lowering prescription drug prices and a critical component of the administration’s Blueprint to Lower Drug Prices,” states the letter, which is addressed to U.S. Trade Representative Robert Lighthizer.

The letter requests changes to the trade agreement’s data protection provisions on biologics — a new and often costly class of pharmaceutical drugs that have shown promise in treating cancer and other serious illnesses — to allow cheaper, generic versions to enter the market more quickly.

What it means for the deal: House aides familiar with the effort say the letter could get signatures from anywhere between 100 and 175 Democratic lawmakers. The letter doesn’t provide specifics for how the deal should be altered.

The plan is to unite a broad group of members from various wings of the party on at least one issue, one aide said. That could provide House Speaker Nancy Pelosi the first real data on how her caucus feels about the deal and could give momentum on coalescing around how to improve other issues like labor and environment protections and overall enforcement rules. Read the full story here.

CHINA CURRENCY PLEDGE EXPECTED IN MOU: A pledge by China not to allow its currency to depreciate beyond 7 renminbi to the dollar could be part of a trade deal with the United States, said Derek Scissors, a China policy expert with the American Enterprise Institute. That would eliminate one tool Beijing has to blunt the impact of any market openings they make.

But there’s still more work to done. “The hang-ups have been (i) naturally, the Chinese do not want any sort of long-term commitment, even while the sides negotiate for [a Memorandum of Understanding] supposedly extending into the second half of next decade and (ii) it’s hard to find language demanding constant government currency intervention that fits with demands for internal liberalization,” Scissors said in a email. Doug has more here.

A currency MOU is reportedly one of six on commitments China will make on structural issues, Reuters reports.

TRUMP TO EU: AUTO TARIFFS ARE STILL ON THE TABLE: So much for the temporary trade truce Trump established over the summer with European Commission President Jean-Claude Juncker. Trump told reporters in the Oval Office on Wednesday that he will not hesitate to move forward with auto tariffs against the EU if the two sides are unable to reach a broader trade deal.

“We’re trying to make a deal,” he said. “They’re very tough to make a deal with, the EU. ... We’re negotiating with them. If we don’t make the deal, we’ll do the tariffs.” More for Pros.

The EU trade deal that Trump forgot: In the same press spray with reporters, Trump emphasized the need to “make a deal with the EU that’s fair.”

“This has been going on for many years,” he said. “They wouldn’t meet with the Obama administration, and they’re meeting with us. So we’ll see what happens.”

But the Obama administration and EU officials in fact launched formal bilateral trade negotiations in June 2013 and met for 15 negotiating rounds in an attempt to wrap up the Transatlantic Trade and Investment Partnership, or TTIP. Those talks were put into a “deep freeze” in the fall of 2016, just after the election, and Trump has not revived them.

JAPANESE AUTOMAKERS WARN ON AUTO TARIFFS: Japan’s car companies are making a rare public statement in opposition to Trump’s potential auto tariffs, warning that the impacts could ripple across the U.S. economy.

“Introducing import restriction measures would not only negatively affect our U.S. customers, but would also disrupt the operations of U.S. vehicle and auto parts manufacturers as well as auto dealerships. Adverse effects on the U.S. economy and American jobs should be avoided,” Akio Toyoda, chairman of the Japan Automobile Manufacturers Association, said in a statement. Toyoda is also the president of Toyota Motor Corp.

Japanese auto companies have 24 manufacturing plants and 44 research-and-development and design centers in 19 states and directly employ 92,000 people. The U.S. and Japan are preparing to launch trade talks where auto issues are likely to be front and center.

MEXICO STARTING PUSH FOR USMCA PASSAGE: The new government of Mexican President Andrés Manuel López Obrador is taking steps toward a more formal push for the three countries to ratify the new North American trade pact.

A Mexican delegation that includes Foreign Minister Marcelo Ebrard and Jesús Seade, undersecretary for North America, will be in Washington, D.C., this weekend to discuss USMCA at the National Governors Association’s winter meeting, a source confirmed.

Ebrard on Sunday will speak on a panel about how states can maximize opportunities under USMCA. Seade, who will be in D.C. until Tuesday, served as López Obrador’s chief NAFTA negotiator during the transition from former President Enrique Peña Nieto.

A familiar face: López Obrador’s team has tapped Mónica Lugo, one of Mexico’s NAFTA negotiators under Peña Nieto, to work with Seade’s office in overseeing the effort to get the deal through the Mexican Senate.

E-COMMERCE TALKS WILL BE A GRIND: Brussels and Beijing could very well control the fate of negotiations for an e-commerce trade deal among a group of World Trade Organization members, and observers aren’t expecting an agreement to come easy, if one comes at all.

“This is going to be long and painful,” said Deborah Elms, executive director of the Asian Trade Centre, a Singapore-based trade consultancy. “There are so many problems that are going to come along.”

Chinese policies that keep foreign e-commerce platforms like Amazon from going head-to-head with Alibaba and other domestic giants could make it hard for Beijing to be a constructive player — and some question why China was invited to participate. The 28-nation European Union, meanwhile, will have to grapple with how to maintain its strict data privacy rules in the face of U.S. pressure to remove all barriers to data flows.

Then there’s the broader question of how the talks might impact the survival of a moratorium on tariffs on electronic transmissions among the entire WTO membership. Yours truly has the story here.

CROWLEY JOINS USMCA LOBBYING EFFORT: Former Rep. Joe Crowley will join the “Pass USMCA Coalition” as an honorary co-chairman. In a statement, the Democrat called the deal “a landmark trade victory for America’s workers.” The coalition is led by Gary Locke, a former Commerce secretary, ambassador to China and governor of Washington state, and Rick Dearborn, who served as Trump’s deputy chief of staff until March.

LIGHTHIZER ON THE HILL: The House Ways and Means Committee has summoned Lighthizer to appear at a Feb. 27 hearing on U.S.-China trade, panel Chairman Richard Neal announced Wednesday. The meeting will be the first public congressional hearing on trade since Democrats took over the House in January. It will also be the first public testimony in many months for Lighthizer, who is the only invited witness.

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ITC LAUNCHES WASHING MACHINE TARIFF PROBE: The U.S. International Trade Commission said this week it will investigate the domestic impact of tariffs that Trump imposed in January 2018 on washing machine imports. The ITC is required to conduct such a probe when the duration of any safeguard action is longer than three years. Trump’s action, which expires on Feb. 7, 2021, lasts for three years and one day. The ITC will hold a hearing on June 25. The report is due to Trump and USTR by Aug 7.

— Canadian shelves ‘would run dry’ if the U.S. allows the import of drugs from north of the border, POLITICO Pro reports.

— There are growing concerns in the U.S. and China that Trump and Chinese President Xi Jinping will cave to the other side, The Wall Street Journal reports.

— A top British official says a U.S. campaign to get European countries to oppose Huawei may not be working, The New York Times reports.

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