GOP senator warns quick vote on new NAFTA would be ‘huge mistake’

Sen. Pat Toomey (R-Pa.), a leading free-trade advocate in the Senate, on Tuesday warned against moving quickly on the trade agreement reached between President Trump and Speaker Nancy Pelosi (D-Calif.), saying the new trade deal would have little impact on economic growth.

The Pennsylvania Republican, who had been largely cut out of the talks between the Trump administration and congressional Democrats, said it would be a “huge mistake” to try to schedule a vote in the coming days on a revised version of the 1994 North American Free Trade Agreement (NAFTA).

Toomey said the administration wants to pass the trade deal as soon as next week, which would violate the statutory timeline set out by Trade Promotion Authority, also known as fast track.

He and other members of the Senate Finance Committee held a briefing with U.S. Trade Representative Bob Lighthizer earlier Tuesday.

“A trade agreement could always be considered under regular order, but we’re already out of time to have a meaningful debate, markup in the Finance Committee,” Toomey said.

Pelosi said Tuesday that she hoped to pass the legislation before Christmas, but would give time for Democrats to read and weigh in on the final negotiated deal.

Toomey predicted that the number of new jobs created over the next six years would be minimal and that eliminating intellectual property protections for biologic medications could hurt innovation in the promising field.

“On balance, it’s very likely we will have modestly less growth, less trade and less job creation than the underlying NAFTA,” he said. “Many of the changes are counterproductive.”

“There are serious problems with this agreement,” he argued, citing the deal’s expiration date, requirements in auto and auto parts sector, “where we essentially impose a minimum wage requirement on Mexico.”

“And we put limiting terms on the nature of the steel that can be used in cars,” Toomey added, saying the revision to auto-related trade rules “runs completely contrary to the principles of free-trade agreement.” 

He also slammed the “virtual” elimination of the investor-state dispute settlement mechanism, which gives investors the right to sue a state for discriminatory practices such as environmental regulations that threaten to reduce profits.

“That’s entirely gone with respect to Canada and mostly eliminated with respect to Mexico,” Toomey said.

“Not surprisingly, it’s not going to do anything for economic growth,” he said, citing a United States International Trade Commission (ITC) study that found the U.S.-Mexico-Canada Agreement (USMCA) would have a modest impact on growth.

“The job creation over the course of the six years they analyzed is trivial. Last month, we produced 266,000 new jobs in one month. According to the ITC, we’ll get 176,000 jobs over the next 72 months,” he said.

Toomey said the projected job growth comes from codifying some trade regulations that were uncertain, but argued that the negative effect of dramatically curtailing the investor-state dispute settlement program and the new uncertainty created by a looming expiration date haven’t been quantified.

He also criticized new concessions to Democrats in the deal, such as the likelihood of manufacturing facilities being subject to inspection by trade partners to ensure labor standards are being enforced.

Another area of concern for Toomey is the reduction of intellectual property protection for the makers of biologics, drugs manufactured from living organisms or cellular components such as proteins and DNA such as Botox and Humira.

“We understand that there was a complete capitulation to Democrat demands on intellectual property protections for biologics,” he said, noting that current U.S. law requires 12 years of data exclusivity for “one of the most promising new categories of medicines ever developed.”

The original USMCA negotiation proposed shortening that period to 10 years, but Toomey said his understanding was that has now been eliminated from the agreement.

“Any protection for biologics will be, at best, what is contemplated in the existing laws in these countries and in Mexico. It is my understanding that they have a five-year patent protection on medicines and they do not deem biologics to qualify,” he said. “It appears there will be simply no patent or data exclusivity protection whatsoever with respect to biologics in Mexico.”