Miami Herald

‘Possible quagmire’ awaits new trade deal in Congress; Big Business is nearing panic

- BY FRANCO ORDOÑEZ fordonez@mcclatchyd­c.com

Corporate leaders across America watching President Donald Trump fight with Democrats fear their chance to secure the newly revised trade agreement with Mexico and Canada is slipping away.

Anxiety peaked last week after Trump’s extraordin­ary, 17-minute argument over border-wall funding with Senate Minority Leader Chuck Schumer and Nancy Pelosi, who is expected to be House speaker in January. The spat revealed the challenges that Trump faces in trying to reach any consensus with Democrats let alone on one of Trump’s controvers­ial trade initiative­s.

“Those concerns are real,” said John Murphy, senior vice president for internatio­nal policy at the U.S. Chamber of Commerce. “It arises from the reality that Canadian and Mexican markets are incredibly important to U.S. business and agricultur­e. They’re not just our two largest export markets. They buy more U.S.made manufactur­ed goods than the next 10 countries on the list. It’s supremely important.”

Late last month, Trump and the leaders of Mexico and Canada signed a revised trade agreement that was supposed to end an ugly dispute among the three nations. But to take effect, the new United States-Mexico-Canada Agreement must be ratified by lawmakers in those countrie. And Democrats, who will take control of the House, are showing they’re reluctant to hand Trump any kind of political victory.

Business leaders knew it was going to be hard, and pressed the White House as well as sent lobbyists to meet with Republican leaders about completing the deal during the lame-duck session of Congress.

“Manufactur­ers need certainty now, not later. With 2 million American jobs dependent on exports to Canada and Mexico,” National Associatio­n of Manufactur­ers President and CEO Jay Timmons said in a statement last month pushing for Congress to review the revised agreement before the end of the year.

But Senate Majority Leader Mitch McConnell, R-Ky., counted out that possibilit­y. Then, Trump threatened to scrap NAFTA without the revised deal in place, leading to near-panic among business leaders that their best opportunit­y to ratify the new agreement had been missed.

“I don’t think people fully realize how precarious all this really is,” said one official who is part of a major business group and was not authorized to speak publicly about concerns. “It’s going to shake confidence in the U.S. economy like it never has been shaken before.”

The U.S. Chamber of Commerce sounded the alarm when President and CEO Tom Donohue backed the revised agreement but warned that Trump’s “threat against a co-equal branch of government” by saying he would scrap the congressio­nally ratified NAFTA if lawmakers don’t now take up the USMCA could cost needed votes to pass the agreement.

Murphy said losing NAFTA without passing the revised agreement would have devastatin­g impacts on U.S. businesses that depend on trade between the countries.

The stakes are high for Missouri and Kansas, which has 145,000 jobs tied to trade with Mexico. Missouri and Mexico did $5.2 billion worth of business, and Kansas $2.7 billion. The 130year-old railway, Kansas City Southern, for example, has invested billions of dollars on rail links into Mexico to transport agricultur­al and manufactur­ed goods between the two nations.

Eric Farnsworth, a former State Department official and now a vice president of the Council of the Americas in Washington, said he doesn’t see how congressio­nal leaders could bring up the measure unless they’re certain they have the votes to pass.

Farnsworth is pushing for passage of the USMCA trade agreement. But Farnsworth, who also worked at the Office of the U.S. Trade Representa­tive, remembers the challenges of getting the original NAFTA through Congress in the George H.W. Bush and Clinton administra­tions during a time when Democrats and Republican­s worked better together.

“Where does NAFTA even fit in terms of the overall agenda and is there a political moment where the two sides can come together to pass this?” Farnsworth said of the USMCA. “I think that is an open question.”

Robert Lighthizer, the U.S. trade representa­tive who negotiated the deal, made clear that he was constructi­ng a deal with the Democrats’ priorities in mind, adding greater protection­s for labor and the environmen­t.

But Democrats are skeptical of some provisions about labor and environmen­t.

“While there are positive things in this proposed trade agreement, it is just a list without real enforcemen­t of the labor and environmen­tal protection­s,” Pelosi said in a statement after meeting with Lighthizer.

A dozen Senate Republican­s called for the White House to push to ratify the USMCA during the lameduck session or “face a possible quagmire” getting the trade agreement passed .

“We are concerned that if the administra­tion waits until next year to send to Congress a draft implementi­ng bill, passage of the USMCA as negotiated will become significan­tly more difficult,” Sen. Pat Toomey, R-Pa., wrote in a letter with 11 other Senators last month to the White House.

The official from a major business group criticized Republican leadership’s decision not to take up the matter considerin­g McConnell did agree to take up criminal-justice measures.

“We’re all a little confused why this isn’t a priority,” the official said of the USMCA. “Why are you throwing away your leverage . ... That criminal-justice bill couldn’t wait till next year? Give me a break.”

David Popp, a spokesman for McConnell, said the majority leader made clear before the agreement was signed that it would be a 2019 issue.

Congressio­nal staffers added that the date of the agreement leaves no time for the committee process. Senate Finance Committee Chairman Orrin Hatch claimed passage this year was impossible.

Eric Miller, a trade consultant who has worked for the Canadian government and continues to advise it on the negotiatio­ns, expects Trump will carry out his threat to end NAFTA, forcing Congress to decide between the USMCA and nothing versus the new agreement versus the old one.

But he also doesn’t see much incentive for the Democrats to expend their political capital to do Trump a favor by handing him a trade victory.

“In some ways the stew is going to have to get burnt before they realize they want to do it,” Miller said. “For now, it seems like it’s a game of chicken where the prospect of a [government] shutdown looks pretty high and the likelihood that the shutdown rolls on for a while also looks high. So within that framework, USMCA doesn’t exactly look like a likely first agenda item.”

Franco Ordoñez: 202-3024697, @francoordo­nez

 ?? MARTIN MEJIA AP ?? Flanked by Mexican President Enrique Peña Nieto, left, and Canadian Prime Minister Justin Trudeau, President Donald Trump smiles during a signing ceremony of their trade agreement on the sidelines of the Group of 20 summit in Buenos Aires, Argentina, on Nov. 30. To take effect, the United States-Mexico-Canada Agreement must still be approved by lawmakers in all three countries.
MARTIN MEJIA AP Flanked by Mexican President Enrique Peña Nieto, left, and Canadian Prime Minister Justin Trudeau, President Donald Trump smiles during a signing ceremony of their trade agreement on the sidelines of the Group of 20 summit in Buenos Aires, Argentina, on Nov. 30. To take effect, the United States-Mexico-Canada Agreement must still be approved by lawmakers in all three countries.

Newspapers in English

Newspapers from United States