Time is running out for the Trump administration to seal a deal with Canada to rework the North American Free Trade Agreement. But the White House also needs Congress on board, and the Hill may prove to be an equally difficult negotiating partner.
Canadian and U.S. trade officials resumed their talks this week toward crafting a new NAFTA, with the pressure on to complete a deal, after the U.S. and Mexico reached a revised, bilateral agreement in late August. Congress has been observing the talks closely, but some key GOP lawmakers have, so far, declined to openly demand that President Trump bring them a deal that includes Canada.
Last week, House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady didn’t say whether they would reject a bilateral deal with Mexico, with Ryan explaining that he would need more details on the pact.
“I want to see this run its course before making a judgment on that,” Ryan told reporters at a press conference last Wednesday.
Democrats didn’t hold back, however.
“The president doesn’t have a deal, he doesn’t have a plan, and he doesn’t even have the power to follow through on his empty threats,” Senate Finance Committee ranking member Ron Wyden said in a statement after the president asserted that he could withdraw from the trade agreement without the approval of Congress.
Although Democrats are vocalizing more, there is unease on both sides of the aisle about the administration potentially excluding Canada from the trade deal. The deadline for the White House to submit new NAFTA language to Congress is Sept. 30, meaning that lawmakers likely must know whether Canada is on board by then.
Per congressional rules, Trump officially notified Capitol Hill last year of his plans to renegotiate NAFTA, not to strike separate deals with Canada and Mexico. If he brings a Mexico-only deal to Capitol Hill, he could face a challenge to Congress's ability to expedite the agreement with an up-or-down vote and no amendments—known as Trade Promotion Authority—and sparking a showdown with lawmakers only weeks before the midterms.
In late August, the White House gave Congress the mandatory 90-day notification that the administration would be signing a revised NAFTA with Mexico and Canada, but only if Canada “is willing.” The timing was crucial, because it allows for the three countries to finalize a deal before Mexico’s new administration takes power in December.
Still, questions remain about whether the U.S. can reach a deal with Canada before the full language is due Sept. 30.
“The notification at the end of August said Mexico and ‘maybe Canada,’” said William Reinsch, a senior adviser at the Center for Strategic and International Studies and a former congressional staffer on trade and other issues. “That opens the door to a debate over whether that’s basically a bait-and-switch or whether it meets the terms of last year’s notification of intent.”
Three key points remain unresolved between the U.S. and Canada. First, Canada says it requires protection for its publishing and broadcasting industries, with Prime Minister Justin Trudeau saying safeguards from buyouts by U.S. media companies are critical to preserving Canadian culture. Canada also says it will not sign a deal that doesn't preserve the resolution system for anti-dumping disputes, which the U.S. and Mexico agreed to scrap in their August announcement. And the U.S. wants Canada to end protections for certain dairy products and subsidies for dairy farmers.
The White House said Monday that it hopes to reach a three-country deal soon.
“We continue to have ongoing conversations with the Canadians and are still hopeful that we'll come to an agreement with them,” White House press secretary Sarah Huckabee Sanders told reporters.
Any NAFTA agreement would likely have to wait until next year for final congressional approval because the International Trade Commission must still perform an economic analysis of the deal, Reinsch added. That leaves open the possibility of a Democratic House majority pushing back against a pact. House Minority Leader Nancy Pelosi has called a Mexico-only deal “woefully incomplete.”
But Congress could make its will known before the Sept. 30 deadline. One option would be to send a message to the administration though a resolution, Reinsch said.
Last week, Ways and Means Democrats pushed a resolution through the committee asking the White House for documents detailing its trade strategy for China and for background on how the administration chose its targets for steel and aluminum tariffs. Brady opposed the move, but Trade Subcommittee Chairman Dave Reichert—who is retiring at the end of this term—sided with the Democrats, and the panel reported the resolution out of committee “without recommendation.”
That sets up a potential vote in the full House—if Ryan chooses—and signals a shot across the bow from Congress over the president's management of trade disputes.
Reinsch said the same scenario could play out later this month in an effort to press the administration to ease some of its demands on Canada. If Democrats introduced a resolution in the coming days demanding that the president include Canada in any deal submitted at the end of this month, it could send a similar message, Reinsch said.
“It wouldn’t surprise me if either the House or the Senate Democrats try to do that in this case, on procedural grounds, not arguing that it’s a bad agreement with Mexico but arguing that [the administration] didn’t follow the rules,” Reinsch said.
Another scenario has the Trump administration blowing past the Sept. 30 deadline to submit language of a full NAFTA deal to Congress, submitting the Canada half of the deal after talks conclude. Congress may take that offer, because the end result is what many lawmakers want anyway. But again, it’s up to Congress to decide whether to accept such an arrangement, said Bruce Hirsh, founder of Tailwind Global Strategies and a former U.S. trade negotiator.
“It potentially would leave the agreement vulnerable to a point of order,” Hirsh said. “But at the end of the day, this is about Congress asserting its own prerogatives, and if, in fact, Congress is satisfied with the ultimate deal, then it would likely not be a problem. But at least there’s the potential for a problem, and Congress would really have to decide just how much they care about the rules that they themselves laid out.”
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