Pelosi says 'moving ahead' on trade deal; Mexico optimistic

WASHINGTON/MEXICO CITY (Reuters) - The U.S. House of Representatives is proceeding with work on a trade agreement with Mexico and Canada, U.S. House Speaker Nancy Pelosi said on Thursday, allaying worries an impeachment inquiry into President Donald Trump would delay approval of the deal.

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Pelosi, whose support is key to getting the United States-Mexico-Canada Agreement (USMCA) passed into law, said House Democrats had discussed the pact on Wednesday, a day after she announced the inquiry into Trump.

“We’re moving ahead on the U.S-Mexico-Canada agreement,” Pelosi said at a news conference. “We’re, again, hoping to be on a continuing path to ‘yes’” to approve the deal aimed at replacing the North American Free Trade Agreement (NAFTA).

Pelosi has not said when she thought a vote could be held for the deal, which must still be approved by U.S. and Canadian legislators. Mexico’s Congress has ratified USMCA, but passage through Congress is likely to become harder once campaigns for the 2020 U.S. Presidential election gather momentum.

Trump warned on Wednesday that the inquiry into whether he sought foreign help to smear Democratic rival Joe Biden could derail congressional approval of the pact. Launch of the inquiry dragged down Mexico’s peso and stock market and prompted warnings from trade experts that USMCA was in danger.

U.S. Trade Representative Robert Lighthizer has been talking with Democrats to address concerns over labor and environmental enforcement measures in USMCA, which aims to boost union rights and wages in Mexico to reduce offshoring of American jobs.

Mexico’s chief negotiator for the deal, deputy foreign minister for North America Jesus Seade, said late on Wednesday he was optimistic those issues could be resolved within weeks.

“I hope the green light from Speaker Pelosi will come before the end of October,” Seade told Reuters. “By January, I think it will be much harder to discuss in a calm way anything that is not election-related.”

Seade said concerns from Pelosi and other Democrats had touched on whether Mexico had set aside sufficient resources to implement a reform that promotes union freedoms, after a 2020 budget proposal appeared to reduce spending on labor issues.

But the labor ministry budget cuts only affected a youth grants scheme, and Mexico had in fact substantially increased funds available for implementing the reform in 2020, he said. “This is not going to be a final obstacle,” Seade added.

Mexico, Canada and the United States should be able to allay concerns among U.S. lawmakers that a loophole in the way dispute resolution panels are formed could allow one country to refuse to attend to a labor complaint, Seade said.

“There are medicines that can be applied. It is something that Mexico would accept and I think Canada would accept,” he said, adding that he did not rule out changing the wording in the text of the deal.

“These are issues that can be touched in the agreement or outside. I think in general, there are ways of doing it without reopening the agreement, which is what we prefer.”

Reporting by Susan Cornwell and Frank Jack Daniel; Writing by Susan Heavey and Frank Jack Daniel; Editing by Chizu Nomiyama and Bill Berkrot