Whither the USMCA?

There is a re­mote pos­si­bil­ity, how­ever, that the USMCA will not be put to bed in 2019

The Guardian (Charlottetown) - - OPINION - Peter McKenna Mex­i­can pres­i­dent En­rique Pena Ni­eto, left, U.S. pres­i­dent Don­ald Trump and Cana­dian Prime Minister Justin Trudeau ap­plaud af­ter sign­ing the United States-Mex­ico-Canada Agree­ment last week in Buenos Aires, Ar­gentina at the G-20 con­fer­ence. P

Now that the low-key sign­ing cer­e­mony for the United StatesMex­ico-Canada Agree­ment (USMCA) at the G20 meet­ing in Buenos Aires is over, the real work be­gins. While it won’t be as gru­elling as the 13 months of roller­coaster tri­lat­eral ne­go­ti­a­tions, it won’t be a walk in the prover­bial amuse­ment park ei­ther.

The cen­tral prob­lem lies in the ac­tual fi­nal rat­i­fi­ca­tion of the North Amer­i­can trade pact. More specif­i­cally, af­ter the Novem­ber U.S. midterm elec­tions, the Democrats will control the House of Representatives in early Jan­uary 2019—along with chair­ing and dom­i­nat­ing the piv­otal House Ways and Means Com­mit­tee (which needs to ap­prove the deal be­fore it goes for a full House vote).

Demo­crat Bill Pascrell from New Jersey—and the likely in­com­ing chair of the House Ways and Means sub­com­mit­tee on trade—has clearly in­di­cated his reser­va­tions about the agree­ment, and “. . . whether this deal meets my stan­dard for a bet­ter deal for Amer­i­can work­ers.”

More wor­ri­some, some House Democrats have started to make noises about pos­si­ble changes to the USMCA in or­der for it to get the req­ui­site con­gres­sional votes. The last thing that the Trudeau gov­ern­ment wants to do is to be seen as in­ter­fer­ing in the con­gres­sional process to arm-twist and to sway votes in its favour.

It looks like the Dems and the in­com­ing House Speaker, Nancy Pelosi, want the Mex­i­cans to cough up some im­por­tant con­ces­sions. As the party of Big Labour, the Democrats are look­ing to squeeze Mex­ico to put in place stronger lan­guage to guar­an­tee higher wages for Mex­i­can auto work­ers.

More­over, the em­pow­ered Democrats want the Mex­i­can gov­ern­ment to com­mit firmly to al­low­ing Mex­i­can work­ers to union­ize on their shop floors. In ad­di­tion, they are push­ing hard to get a prom­ise from Mex­ico to toughen its laws on en­vi­ron­men­tal pro­tec­tion.

A gag­gle of Repub­li­cans, for their part, are also very un­easy about the deal’s clause (which Canada in­sisted on in­clud­ing) on LGBTQ worker rights (lan­guage on dis­crim­i­na­tion based on gen­der iden­tity and sex­ual ori­en­ta­tion). Ev­i­dently, con­ser­va­tive law­mak­ers see this as an un­ac­cept­able in­fringe­ment of U.S. na­tional sovereignty.

In a let­ter to the Trump Ad­min­is­tra­tion, they made it very clear that they will not sup­port rat­i­fi­ca­tion un­less this lan­guage is re­moved from the le­gal text. “A trade agree­ment is no place for the adop­tion of so­cial pol­icy. It is es­pe­cially in­ap­pro­pri­ate and in­sult­ing to our sovereignty to need­lessly sub­mit to so­cial poli­cies which the United States Congress has so far ex­plic­itly re­fused to ac­cept,” it ex­plained.

These changes may cause the Trump White House to de­lay send­ing the USMCA im­ple­men­ta­tion leg­is­la­tion up to Capi­tol Hill. But I can’t see Trump back­ing away from the trade pact now.

The Dems want to take a pot shot at Pres­i­dent Don­ald Trump as they put their own stamp (and tweak­ing) on the USMCA. And that’s all part of how they plan to sell the deal to their par­ti­sans in 2020.

There is a re­mote pos­si­bil­ity, how­ever, that the USMCA will not be put to bed in 2019. That leaves a stale­mated U.S. Congress in 2020 and the prospect of a nasty pres­i­den­tial elec­tion cam­paign. Trans­la­tion: no rat­i­fied free trade agree­ment.

The old NAFTA would then kick back into place, which is just as well as far as Canada is con­cerned. But that would still leave the out­stand­ing trade dis­putes over soft­wood lum­ber and pun­ish­ing Sec­tion 232 tar­iffs on Cana­dian steel and alu­minum.

In the end, though, the Democrats are likely to hold their noses and rat­ify the USMCA with some spe­cific amend­ments and mi­nor tin­ker­ing. They have no in­ter­est in re-fight­ing the old NAFTA or a NAFTA 2.0 pact in the 2020 pres­i­den­tial elec­tion. And af­ter back­ing the ear­lier Trans-Pa­cific Part­ner­ship (TPP) deal (favoured by the for­mer Obama Ad­min­is­tra­tion), they would be raked over the coals if they blocked the USMCA.

Fi­nal rat­i­fi­ca­tion prob­a­bly won’t be easy mind you, but Canada will even­tu­ally get its mod­i­fied NAFTA. There are just too many forces aligned in favour of the deal in Wash­ing­ton, Mex­ico City and Ot­tawa for it to all fall apart now.


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