Trade deal with U.S., Mexico could become endless ordeal
Canada likes pact but its partners may not
The trade agreement that replaces NAFTA was signed Friday in Buenos Aires, host of the latest annual G-20 summit. And one of Canada’s longest national nightmares has finally ended. If only. The United States-Mexico-Canada Agreement (USMCA) is to replace the North American Free Trade Agreement (NAFTA). But following the 13 months of fraught negotiations among the USMCA’s “three amigos” now there will be the start of yet another long USMCA negotiating process, with no assurance the treaty will ever be ratified.
The new deal remains a work in prog- ress and will not come to the floor of the U.S. Congress for ratification until next fall, at the earliest.
Between now and then, the proposed deal will be fought over clause by innumerable clause.
Both the Democrats, who will take control of the House of Representatives in January, and the fellow Republicans of U.S. President Donald Trump will try to change the wording and intent of the supposedly agreed-upon USMCA.
The current deal is underwhelming. Prime Minister Justin Trudeau described its initial signing, in September, as “a good day for Canada,” not a great one. By contrast, Donald Trump, the U.S. president, equated the USMCA with the Battle of Midway. It’s “the most important trade deal we’ve ever made by far,” Trump said Oct. 1.
A tough reality for the Trump admin- istration is that even U.S. experts regard the proposed deal as a mere rebranding of NAFTA, and a somewhat inferior trade pact to the one it is meant to replace.
NAFTA has been a tremendous net benefit to its partners. A failure of the USMCA would simply mean reverting to the existing NAFTA, which only the U.S. Congress, not Trump, can revoke.
That strengthens the hand of the USMCA’s many opponents. They know that if their efforts to change the deal fail, they have a quite satisfactory NAFTA to fall back on.
The Trudeau government is so keen to get this debacle behind it that it will try for parliamentary ratification of the new deal as soon as possible.
The forces jeopardizing the new trade pact are in the U.S. and Mexico.
The American skeptics are already making their objections plain. In Mexico, discontent with the agreement is latent, but is a wild card that could kill it. Alook first at the U.S. political circus As a matter of craven politics, the Democrats who will take control of the House in January have no incentive to hand Trump the political victory he has claimed with the proposed USMCA ahead of the fast- approaching 2020 presidential elections. At the very least, Democrats are expected to use the trade deal to extract Trump concessions on everything from immigration reform to restored social-services spending.
The Democratic leadership of the next U.S. Congress is unhappy about key provisions of the proposed pact.
To pick a major example, the Democrats demand stronger organized labour protections for Mexican workers.
“The deal was not a deal,” Congressman Bill Pascrell says of the USMCA. “You’re going to see a lot of changes.” The New Jersey Democrat will be one of the most powerful voices on trade in the new Congress.
The Democrats are determined to reclaim the role as labour’s biggest champion that they lost to Trump in the 2016 presidential campaign.
To win back rust-belt swingstates in the 2020 presidential contest that were lost to Trump, Democrats will demand the USMCA be reopened to force Mexico to upgrade its labour, environmental, genderequity and workplace safety standards.
Democrats will claim those upgrades will restore U.S. jobs in American workplaces already in compliance with the higher standards.
Trump is also taking fire from fellow Republicans who demand that USMCA language protecting LGBTQ rights in Mexican workplaces be removed. And a powerful coalition of U.S. manufacturers has told Trump that his steel and aluminum tariffs must be scrapped as a precondition of USMCA ratification. Now to Mexico Obviously, U.S.-demanded changes in the way Mexico manages its economy will infuriate Mexico City. Worse, the USMCA carries the taint of being negotiated by the deeply unpopular predecessor to Andres Manuel Lopez Obrador, the incoming Mexican president.
While not an opponent of the USMCA, Lopez Obrador has been no fan of it, either. As a matter of political viability, he will have to threaten to walk away from the deal and its anti-Mexican provisions, rather than meekly accept them as his predecessor was repeatedly accused to doing.
After all, those changes would weaken Mexico’s competitive advantage.
They would also be seen as yet another U.S. attack on the country’s sovereignty.
Lopez Obrador plans to reinvent a Mexican agriculture sector devastated by cheap, post-Nafta U.S. imported produce; to impose sweeping social-justice reforms; to negotiate peace with the country’s druglords; and to boost a robust Mexican manufacturing sector largely created by NAFTA by diversifying into highervalue exports.
While Lopez Obrador is expected to make progress on his ambitious agenda, his popularity will fade as his government inevitably falls short of the high expectations Mexicans have of it.
Lopez Obrador is a populist, if not starry-eyed one. It will be tempting for him to deflect attention away setbacks in his intended Mexican renaissance by scapegoating a Trump who has called Mexican émigrés “rapists” and accused Democrats soft on immigration of welcoming “infestation.”
The more debilitating to Mexico a renegotiated USMCA is seen to be, the more sense it would make for Mexico City to hold ratification of it hostage to Mexico’s long-standing campaign for better U.S. treatment of Mexican émigrés in the U.S. illegally.
Mexico is also a proxy for Latin America’s enduring distaste for the U.S. While it is unfair to put the estimable Lopez Obrador in bad company, he could seek to become a pan-Latin America leader, in the mold of regional influenceseekers Gamal Nasser and Saddam Hussein.
A high-profile USMCA would be an inviting early casualty of that campaign.
It wouldn’t take much to turn Lopez Obrador against the USMCA. Lopez Obrador had no role in creating it. And it is one of the few tangible accomplishments – such as it is – of a Trump who has suggested that many among the 124 million Mexicans are rapists and insects.
All to say that the two years of uncertainty over Canadian and Mexican trade and business investment will continue for at least another year and almost certainly longer.
There are some ordeals one can equate with a visit to the dentist. But a visit to the dentist ends. No such luck with the proposed USMCA, which appears to be root-canal surgery without end.