Democrats, Trump trade negotiator near deal for trade pact

House Democrats and U.S. Trade Representative Robert Lighthizer are nearing a deal for Congress to pass a modified U.S. trade agreement with Canada and Mexico, though hurdles remain, according to people familiar with the negotiations.

House Democrats and Mr. Lighthizer have been meeting for months to hammer out a deal to amend the U.S.-Mexico-Canada Agreement, or USMCA, and have narrowed differences over key sticking points in recent days, the people said. The biggest divide is over revising the agreement on the enforcement of labor rules, a priority for Democrats.

Mexico’s chief trade negotiator, the undersecretary for North America, Jesús Seade, who was in Washington last week, delivered a status update to Mexican senators in Mexico City on Sunday. Afterward Foreign Minister Marcelo Ebrard, who attended the meeting, said while the government remains opposed to allowing U.S. inspectors to enforce labor rules in Mexico, he welcomed the use of arbitration panels to resolve disputes over labor standards.

What compromises were offered to bridge the gaps couldn’t be determined. A spokesman for Mr. Lighthizer didn’t return a request for comment. Democrats are reviewing a proposal from Mr. Lighthizer’s office, a person familiar with the negotiations said.

An administration official said, “We are very, very, very close to completion.” When asked about timing, he suggested that work could finish by the Christmas holiday.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

President Trump has used speeches and tweets to try to pressure House Speaker Nancy Pelosi (D., Calif.) to take up the agreement. The White House has yet to send the deal to Congress, trying to work out an agreement that would satisfy House Democrats and Mexico.

Mexico’s Senate ratified the agreement earlier this year. House Democrats, however, have held up ratification to demand changes to the USMCA, which was negotiated by the administration last year as a replacement to the North American Free Trade Agreement. Canada has signaled that Ottawa is likely to accept changes agreed to by Mexico and the U.S.

Democrats’ demands include lowering the intellectual-property protections for biologic drugs as well as increasing enforcement measures for labor standards in the agreement.

What compromises were offered to bridge the gaps couldn’t be determined. A spokesman for Mr. Lighthizer didn’t return a request for comment. Democrats are reviewing a proposal from Mr. Lighthizer’s office, a person familiar with the negotiations said.

An administration official said, “We are very, very, very close to completion.” When asked about timing, he suggested that work could finish by the Christmas holiday.

President Trump has used speeches and tweets to try to pressure House Speaker Nancy Pelosi (D., Calif.) to take up the agreement. The White House has yet to send the deal to Congress, trying to work out an agreement that would satisfy House Democrats and Mexico.

Negotiators have come close to a deal before, only to see disagreements arise and sour the mood among lawmakers, labor unions and U.S. and Mexican officials. While any agreement would need to satisfy Democrats’ demands without alienating Mexico, many lawmakers see the window for passage in Congress narrowing, given that the presidential race next year will likely diminish chances for compromise.

Passing a revised version of USMCA through all three countries’ legislatures would eliminate the old Nafta and replace it with an agreement that adds new provisions covering such areas as technology. Ratification would remove uncertainty for investors and mark a victory for Mr. Trump, who vowed to scrap Nafta and negotiate a better deal.

The Mexican government’s proposal to use arbitration panels, but not U.S. inspectors, to enforce labor standards would go some way to meeting Democrats’ demands. Some Democratic aides, however, have said that some industries in Mexico are already subject to inspections, so the Mexican government shouldn’t object to expanding the practice to other industries.

To secure enough Democratic votes to pass the House, the agreement will likely require the acquiescence, if not explicit backing, of labor unions, which have demanded tougher provisions for the enforcement of labor standards. A spokesman for Richard Trumka, president of the AFL-CIO, did not return a request for comment on the negotiations.

Mexican Foreign Minister Ebrard also said Sunday that Mexico has devised several proposals for reducing the period for exclusive protections for biologic drugs. The drugs, which are produced from living cells or tissue, are frequently expensive, and big pharmaceutical companies have sought lengthy periods of exclusivity. Many House Democrats campaigned last year on lowering the cost of prescription drugs and so want to reduce that time to make way for competitively priced alternatives.

While next year’s elections diminish the time for compromise, the impeachment inquiry into President Trump is driving some Democrats in competitive districts to pressure party leaders to conclude the trade deal. It would represent a legislative victory, especially one that shows they can work with Mr. Trump.

CLICK HERE TO READ MORE ON FOX BUSINESS

Democrats who supported the original Nafta in 1993 did so over the opposition of many labor groups, costing the party critical support. Union workers in places such as Pennsylvania, Wisconsin and Michigan supported President Trump in 2016, partly because he promised to end or renegotiate Nafta and bring manufacturing and other jobs back to the U.S.

—William Mauldin and Alex Leary contributed to this article.

Write to Natalie Andrews at Natalie.Andrews@wsj.com and Anthony Harrup at anthony.harrup@wsj.com