Where USMCA goes from here
President Donald Trump’s threat to terminate the existing North American Free Trade Agreement puts pressure on U.S. lawmakers to limit the changes they want in a new regional pact signed to great fanfare last week by the U.S., Canada and Mexico.
Trump declared late Saturday that he’d soon notify Congress of his intention to terminate NAFTA, a move that would give lawmakers six months to bless the deal to replace it. Even though the new agreement was signed by Trump and other leaders on Nov. 30, it must also be ratified by lawmakers in the three countries. Trump’s essentially leaving them a choice: take the new deal, or no deal at all.
In the U.S., the new agreement is all but certain to be taken up by Congress next year, when Democrats regain a majority in the House. Key Republicans and Democrats are withholding their support from the new pact, -- known as the USMCA -- and want to extract changes, most likely through legislation needed to implement the deal.
Democratic Senator Sherrod Brown of Ohio, a fierce NAFTA critic who has said he worked with the administration in re-negotiating the deal, said Sunday “the work’s not done yet” and there’s still an opportunity to ask Mexico to strengthen labor requirements.
The USMCA “doesn’t live up to the promise the president said of a renegotiated NAFTA,” Brown told CNN’s “State of the Union” without saying how he plans to vote.
The path for Trump to kill the current NAFTA is muddied. Under the existing agreement, the president can give six months notice of withdrawal, although that’s not binding -- he can give it and then never actually withdraw.
If he did quit, U.S. lawmakers would have to repeal laws that enact it, and may balk at doing so. It raises the prospect of Trump quitting, nullifying parts of the pact while other elements linger under U.S. law amid a fight with Congress -- or of him giving notice of quitting and then, after six months, declining to do so.
Trump’s termination threat, if carried out, would essentially remove a safety net from under the new agreement’s journey through Congress, leaving lawmakers less leeway to demand revisions. U.S. Trade Representative Robert Lighthizer, an architect of the deal, is open to changes, but only to a point. The U.S. can tuck some changes into the trade deal’s implementing legislation and request that Mexico and Canada go along with it.
“The negotiations are not going to be reopened, right? The agreement’s been signed,” Lighthizer said to reporters Friday after the new accord was signed at the Group of 20 summit in in Buenos Aires. “We’ll get the support of a lot of Democrats, a very high number of Democrats. Absolutely, just no doubt about it.”
Named by Trump as the U.S.-Mexico-Canada Agreement -- though neither Canada nor Mexico is calling it that -- the deal will replace the 1994 Nafta pact in the three countries, which trade US$1 trillion annually. Talks for a Nafta refresh began in 2017 under threats by Trump that he’d quit Nafta if he didn’t get a better deal, so Saturday’s comment so the president, effectively, come full circle.
The new deal got early backing from one key figure in the debate: Republican Senator Chuck Grassley of Iowa, who beginning in January will chair the Senate Finance Committee that will consider the pact. Grassley vowed to usher the deal through Congress, saying it’ll benefit the U.S. economy and bolster agriculture interests in the Midwest.
Lighthizer didn’t say what he might change to win Democrats’ support, nor did he indicate a timeline for how quickly the ratification would proceed. He said he’s already in talks with Democratic leaders, though.
“This was negotiated from the beginning to be a bipartisan agreement. Democrats were involved from the beginning, the middle and the end,” Lighthizer said. “We shouldn’t be in a position where we’re passing trade deals by a vote or two.”
Lawmakers in both parties are still reviewing the details, and many are making no promises as they work to ensure exporters in their home states can thrive under the proposed trade ground rules.
“There is still more work to be done in Congress to ensure any final agreement stops the outsourcing of jobs to other countries, strengthens Buy America, puts in place real enforcement of labor provisions, and allows the United States to take action on currency manipulation,” Senator Tammy Baldwin, a Wisconsin Democrat, said in a statement. “I will only support this new deal if we can make it a better deal for Wisconsin farmers, manufacturers, businesses and workers.”
Two other Democratic Senators, Mark Warner of Virginia and Sherrod Brown of Ohio, fell short of a commitment to back the agreement on Sunday. Warner said on CBS that he’s “not ready at all” to say how he’d vote, while Brown said on CNN that the agreement “doesn’t live up to the promise” made by Trump. “The work’s not done yet,” Brown said.
The deal signed Friday already included some tweaks from the one struck two months earlier, changes apparently aimed at wooing congressional support. Trade analysts noted that it added an exclusion for the U.S. that effectively shields it from provisions protecting workers on grounds of sexual orientation and gender identity. Those provisions had prompted push-back from conservatives in the U.S.
The free-trade leanings of many Republican lawmakers will clearly bump up against their home-state demands. Senator Marco Rubio of Florida tweeted on Friday that the deal as drafted would put Florida’s seasonal vegetable growers “out of business.”
How quickly it will proceed through Congress remains unclear. A dozen Republican senators, including Pat Toomey of Pennsylvania, advocated for a vote before the next Congress, though Senate Finance Committee Chairman Orrin Hatch has rebuffed the push, saying that timeline was “not realistic.”
“Now that the agreement has been signed, the Senate Finance Committee will review it with a fine-tooth comb and have the opportunity to weigh in,” Grassley said in a statement. “As incoming chairman of that committee, I’ll work closely with committee members and the Trump administration to guide the agreement through Congress.”
The trade pact is challenged also by Democrats taking control of the House in early January. House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer both made clear on Friday that the trade agreement will need protections for workers and the environment, along with other changes, to get their support.
“The trade agreement formerly known as Nafta is a work in progress,” Pelosi told reporters. Schumer even insisted that the deal “recognize that climate change is a grave threat to our countries’ economies and the health and safety of our citizens.”
Another key Democrat had already called for revisions. New Jersey Representative Bill Pascrell, who’s set to chair the Ways and Means Trade subcommittee, has called for both changes and tougher enforcement of the deal.
--With assistance from Nick Wadhams