Political will evaporating for U.S. passage of new NAFTA

Unions are turning on it, Democrats are demanding to change it and Foreign Minister Chrystia Freeland is casting doubt over whether Canada will support it with the steel and aluminum tariffs in place.

Now the North American free trade pact, already laden with challenges to ratification, will have to find a route to passage amid hardening political positions in the wake of Special Counsel Robert Mueller’s report into Russian interference in the 2016 election, and a host of counter-investigations expected to “poison the well” for Democrats whose co-operation is crucial, analysts say.

“This was already going to be tricky but I think the political will as a practical matter is rapidly evaporating,” said Todd Tucker, a fellow at the New York based Roosevelt Institute. “If there was a 45 per cent chance of a path forward for this deal a few months ago, it’s closed down to 25 to 30 per cent now. It’s getting very hard to see how the stars will align.”

Indeed, trade experts say the increasingly acrimonious political atmosphere in the U.S. where convincing Democrats to support a deal Trump views as his greatest victory on trade is making approval of the trade pact much more difficult.

“If there’s any chance for it to go through, and I think those chances are receding, the more the Mueller investigation and counter investigations take root, the less likely you’ll get Democrats to switch sides,” said international trade lawyer Mark Warner. “We need to see what happens, but it could paralyze everything.”

The challenges facing the deal are already significant. A concerted push from U.S. Trade Representative Robert Lighthizer and various business groups to win support for the agreement has faced stiff resistance from trade unions and Democrats who have called for changes to provisions on labour standards and drug patents.

The AFL-CIO, the U.S.’S largest federation of unions has said it won’t support the pact in its current form and the United Steelworkers union has said it should not be ratified until tariffs on Canadian steel and aluminum are dropped.

“All the NAFTA renegotiation efforts in the world will not create U.S. jobs, raise U.S. wages or reduce the U.S. trade deficit if the new rules do not include clear, strong and effective labour rules that require Mexico to abandon its low wage policy,” Celeste Drake of the AFL-CIO said at a House Ways and Means subcommittee hearing Tuesday.

Freeland added her own pressure to the process a day earlier, warning that Canadians would be “very troubled’ by any move to ratify the deal with the U.S. tariffs on Canadian steel and aluminum in place.

“The existence of these tariffs for many Canadians raises some serious questions about NAFTA ratification,” she told reporters following a meeting with Lighthizer. Financial Post

With a file from Reuters