The Trump administration is likely to blow through its deadline to strike a deal with Canada on revamping the North American Free Trade Agreement, but Congress could give the White House a pass if it likes the final product.
U.S. trade negotiators have until Sunday to reach an agreement with Canada, but comments from both sides over the past two days show they’re likely too far apart to meet the deadline.
That means that the administration may hand in half of a trade deal—one with only Mexico—to Congress, with language allowing Canada to join in the next two months. Then, it’s up to lawmakers to OK the Trump administration’s process, and that could hinge on the details of the agreement.
“If they do something with Canada between now and then I think all will be forgiven, because I think Congress wants Canada in [the deal],” said William Reinsch, a senior adviser at the Center for Strategic and International Studies and a former congressional staffer on trade and other issues.
Senate Finance Committee Chairman Orrin Hatch hasn’t publicly opened the door to a Mexico-only agreement. A committee aide said it’s hard to see how there is any appetite for a deal with just Mexico, given how the economies of the U.S., Canada, and Mexico are integrated.
“If Canada can’t get to yes, the result is likely to be that the U.S.-Mexico deal won’t pass, causing serious disruptions for all three North American economies,” the aide said.
But while Congress has so far been firm on opposing a Mexico-only deal, that could change as the deadline looms.
House Ways and Means Committee Chairman Kevin Brady left open the possibility Tuesday, telling reporters that while it’s everyone’s desire to have a three-country agreement, “if that’s not the case, we’ll take a look at the landscape after that.”
And it’s increasingly likely that on Monday, the administration will have only a bilateral agreement with Mexico.
On Tuesday, U.S. Trade Ambassador Robert Lighthizer offered a dim outlook on the U.S. and Canada reaching an agreement before the end of the month.
“I think Canada would like to be in the agreement, I think the U.S. would like them to be in the agreement, but there is still a fair amount of distance between us,” Lighthizer told an audience in New York.
Lighthizer said Canada wasn’t making the concessions needed to reach a deal, pointing to dairy imports, auto tariffs, and a dispute-resolution regime as key points of disagreement.
If the U.S. and Canada fail to reach an agreement, Lighthizer said the administration would put its deal with Mexico, announced in late August, before Congress.
“We’re going to go ahead with Mexico,” he said. “If Canada comes along now, that would be the best. If Canada comes along later, then that’s what will happen.”
In a Wednesday press conference before leaving a United Nations General Assembly meeting, Canadian Prime Minister Justin Trudeau left the door open to continued talks with the U.S. after this weekend.
“We will keep working as long as it takes to get to the right deal for Canada,” Trudeau said, adding that they will keep working on a “broad range of alternatives” if the U.S. moves forward on a Mexico-only deal.
President Trump took a shot at Trudeau and Canadian trade officials during a Wednesday press conference, telling reporters that he was “very unhappy” with Canada’s negotiating style.
Trudeau’s "tariffs are too high, and he doesn't seem to want to move,” Trump said. “And I've told him, forget about it, and frankly, we're thinking about just taxing cars coming in from Canada. That's the mother lode, that's the big one."
The Trump administration is eager to advance its trade agreement with Mexico before the new Mexican president, Andrés Manuel López Obrador, takes office in December. To do that, officials must submit text of an agreement to Congress by Sunday. Congressional rules governing the fast-track Trade Promotion Authority require that the administration submit text within 30 days after announcing plans to file an agreement. TPA allows the administration to expedite the agreement though Congress with an up-or-down vote and no amendments.
If Trump blows through that deadline, he has two options.
“The administration, at the end, has a choice: They can submit it separately—two bills, two votes, and two agreements—or they can just hold the Mexican one and just wait for the Canada to catch up and combine them into a single implementing bill,” Reinsch said.
There’s no punishment if the administration submits the Canada portion late, Reinsch said. What that does, however, is open up the legislation implementing the agreement to challenges that the process did not follow TPA rules.
Reinsch said that Congress is likely to take up the implementing measure, which will approve the trade deal and make any changes to U.S. law needed to conform to the agreement, next year. That’s the point at which Congress must ultimately decide whether the administration's process was acceptable, and whether they like what’s in the agreement.
That could add a wrinkle for the administration if Democrats take back the House, which they are favored to do in the latest polling.
“It would be a heavy lift to get it though at that point,” Reinsch said.