Washington Insider: Bloomberg Cautions on New NAFTA Outlook

Bloomberg is reporting this week that the president’s new NAFTA – U.S.-Mexico-Canada Agreement (USMCA) – is “running out of room” to find a path to congressional approval. The report says that the administration’s biggest hurdle is “educating new lawmakers on trade priorities.” In addition, Bloomberg notes that for approval of his new NAFTA to become law “he’ll need the help of a political rival with a track record of blocking such deals.” In 2008, Nancy Pelosi, D-Calif., was House Speaker when Democratic lawmakers denied President George W. Bush’s request for a vote within 90 days on a trade pact with Colombia. The rejection delayed approval of deals the Bush administration negotiated with South Korea and Panama, though all three were later ratified. Once again Speaker, Pelosi will play a pivotal role for the administration’s renegotiated accord with Mexico and Canada – which isn’t one of her legislative priorities. “If the House doesn’t want to move on this, it doesn’t have to. So it’s really up to her,” said Edward Alden, a trade expert at the Council on Foreign Relations. Pelosi is expected to move the deal through the House only if she can find a critical mass of her caucus supporting it and if she extracts concessions unrelated to trade from the White House in return, senior congressional aides say. With 60 new Democratic members who still have to familiarize themselves with their districts’ priorities and the content of the trade deal, the biggest challenge is educating lawmakers, the aides said. U.S. Trade Representative Robert Lighthizer is expected to meet with freshman members in the coming weeks to make his case. Lighthizer is already wooing Democrats to support the updated NAFTA and sympathetic groups are thought to include the New Democrat Coalition, which includes 100 lawmakers who back pro-growth policies. However, the administration expects a tougher challenge from the party’s left flank that includes newcomers including some who identify as democratic socialists and back a sweeping plan to reduce carbon emissions, Bloomberg notes. “That’s the most amorphous piece of this: When is the caucus happy enough that she feels confident moving this? Hard to say," said the National Foreign Trade Council’s Vanessa Sciarra, referring to Pelosi. Bloomberg also notes that some Democrats are calling for changes to sections of USMCA dealing with labor standards and drug patents. The pact commits Mexico to reform its labor laws to allow workers to engage in collective bargaining. But senior Democrats have said the commitments are lack adequate enforcement provisions. America’s biggest federation of labor unions, the AFL-CIO, has said it won’t support USMCA in its current form and would oppose it if the business community forced a “premature” vote. “What we hear on the Hill is the same thing we’re saying: It’s not ready to be voted on,” AFL-CIO President Richard Trumka told Bloomberg on Friday. In addition, Mexico and Canada have warned they may not ratify USMCA unless the U.S. lifts tariffs on steel and aluminum – duties that also are unpopular with lawmakers from Trump’s own Republican Party. For example, Chuck Grassley, R-Iowa, the chairman of the Senate Finance committee, said the agreement wouldn’t be considered as long as the duties remain in place. The administration can make tweaks to the agreement to mollify concerns, but major revisions would require reopening talks with Mexico and Canada, a scenario Lighthizer has ruled out. Canadian Foreign Minister Chrystia Freeland met with Lighthizer and Democratic lawmakers earlier this week in Washington, where she discussed USMCA and urged the removal of metals tariffs. However, time is not be on the administration’s side, Bloomberg thinks. A report on the pact’s economic impact is expected in mid-April and following that, the administration expects to submit legislation to implement the agreement. But if the deal isn’t passed by the time Congress leaves town in August, it may be doomed to languish until after the presidential election in November 2020. Senator Ron Johnson, R-Wis., told Bloomberg that Republicans tried to press the administration to ratify the deal when they controlled the House. “Now, it’s going to be a heavy lift, I fear," he told Fox News. The president has repeatedly threatened to withdraw from the existing NAFTA to pressure lawmakers to approve his new deal, a plan that Pelosi calls “not a good idea.” On Friday, the president said if congressional Democrats don’t ratify USMCA, his alternative would be to “maybe go pre-NAFTA” with trade practices in North America. But with a strong economy expected to be one of Trump’s campaign talking points, he may be more hesitant now to pull the plug. “It’s pretty clear that he’s not willing to take that gamble, given the effect that would have on markets ahead of the 2020 election,” said Alden, of the Council on Foreign Relations. With very important trade deals and policies under consideration in several regions, these ongoing talks are critical to future sector growth — and should be watch closely by producers as they intensify, Washington Insider believes.