The White House and congressional Democrats are heading for a clash over the ratification of the revised Nafta agreement, raising the prospect of a protracted stand-off and possibly new negotiations with Canada and Mexico.
Just a few weeks into the new Congress, senior Democrats say they want changes to the trade deal signed by Donald Trump with Justin Trudeau, Canada’s prime minister, and Enrique Peña Nieto, Mexico’s former president, in November last year.
Some Democrats believe the agreement does not include strong enough provisions to enforce labour and environmental standards. Others also lament that the Trump administration has failed to lift steel and aluminium tariffs on its neighbours along with the deal. Without those modifications, Democrats are warning that “new Nafta” — rebaptised the US-Mexico-Canada Agreement by Mr Trump — could fail to win enough of their votes to clinch congressional approval.
“I appreciate the efforts to renegotiate Nafta but the president is not even close to being in the right place on Nafta,” Sherrod Brown, the Ohio Democratic senator and possible contender for his party’s 2020 presidential nomination, said on NPR radio this month. He stressed the importance of adding enforcement provisions to the deal.
As Democratic opposition to the deal has mounted, Mr Trump has threatened to issue a six-month withdrawal notice from the existing 1994 Nafta agreement to force Democrats to back off — essentially an ultimatum to choose between his deal or a return to the rules that governed trade in North America more than a generation ago.
“No matter how good something is, they might not want to approve it,” Mr Trump told the US farm lobby in a speech this month.
The mounting tussle over the ratification of the USMCA is making officials in Ottawa and Mexico City uneasy. Last year’s deal was reached after months of fraught negotiations. Although imperfect for both countries, the settlement with Mr Trump was met with relief because it averted a complete breakdown of Nafta. The concern is that this could now be back on the table, at a time when Mr Trudeau is facing a general election and Andrés Manuel López Obrador, Mexico’s new president, is in his first year in office.
“We’re trying not to get involved but obviously we are keeping a close eye on it because issues with ratification are relevant to us,” said one Canadian official. “We negotiated a deal that we were happy with, and it’s been signed. It’s hard to speculate on what could possibly happen.”
Luz María de la Mora, Mexico’s economy undersecretary told the Financial Times: “For us, this agreement is closed.”
Trade experts in Washington say the changes demanded by Democrats might not require a wholesale renegotiation and could be addressed in an annex or a side letter that would prove easier to deal with. At least one of the demands — that Mexico revamp its labour laws to cut the ties between political parties and trade unions — is expected to be approved soon by the Mexican legislature.
But business groups in the US are nonetheless becoming more nervous. “Many people in Congress and in the business community would be very concerned about a ‘new Nafta or no Nafta’ ultimatum,” said John Murphy, senior vice-president for international policy at the US Chamber of Commerce.
Even in the absence of such a dramatic move by the administration, the timeline for congressional approval is expected to be lengthy. It has become more so as the government shutdown is likely to delay the release of a key report by the US International Trade Commission on the economic effects of the deal.
But Democrats, who took control of the House of Representatives following big gains in the midterm elections in November, do not seem inclined to back away. “I don’t think Democrats are afraid to take on the administration and say ‘I am sorry, this is hard and painful, but this is what it means to govern’,” said one Democratic congressional aide.
The aide added: “It is unclear what game the president is playing other than swinging around a machete that he knows everybody is going to be very freaked out about.”
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