NAFTA being Pushed to Pass Congress Quickly
New Negotiated NAFTA in May?
United States, Canada, and Mexico are aiming to announce an agreement to a new negotiated NAFTA in principle by early May. Negotiators are working around the clock on this and plan to work through the weekend and the ministers will regroup on Tuesday, April 24, 2018.
The United States Trade Representative is continuing to think of strategies for getting the renegotiated NAFTA through US Congress and ramping up engagement with Capitol Hill. Possible strategies include withdrawing from existing NAFTA and introducing implementing legislation for the new NAFTA deal, relying on a majority of Republican support despite advancing proposals GOP members publicly opposed, or potentially bypassing Congress altogether.
According to Politico.com, Lighthizer is favoring a hardball tactic with Congress, a “take it, or leave it” type-deal. In fact, “One strategy that has seemed to gain favor is to force a congressional approval on the new NAFTA by withdrawing from the existing pact even before the new one is ready. The thinking is that Congress will have to approve whatever terms are in the new deal quickly, lest the U.S. is left hanging without an agreement with two of its largest trading partners.”
Basically, President Trump is widely expected to submit a notice of withdrawal along with an implementing bill for the new deal or shortly before NAFTA 2.0 is submitted to Congress to pressure lawmakers to pass it. That strategy would force both sides of the aisle to weigh the prospect of losing two major export markets against voting for a new deal they do not favor.
According to Canada’s CBC, Sources say negotiators are now extremely close to an agreement on the issue of [automobiles and the auto rules of origin – which govern what share of a car needs to be made in the three countries to be traded duty-fee under NAFTA] and are discussing final details…Mexico’s Ildefonso Guajardo said a new NAFTA will be about more than cars and that negotiators are well advanced in adjustments to telecommunications, energy and digital trade rules.” In fact, The countries are said to have concluded the chapter on telecommunications, the seventh completed out of about 30 potential chapters.
Guajardo continued to state that the countries will all need to be flexible to obtain a quick deal.
Important Dates coming up for the talks from Bloomberg.com.
May 1: Steel and Aluminum Tariffs
Trump exempted Canada and Mexico from his new tariffs of 25 percent on steel and 10 percent on aluminum indefinitely, and then added a May 1 expiry on the exemption. Unless that’s extended — the U.S. has said it could be — Mexico and Canada will be slapped with new tariffs and face new political pressure to dig in on Nafta.
May or Earlier: Start U.S. Process for Approval in Congress
Lighthizer has said he wants to pass a new Nafta in the current Congress.
June 7: Ontario Election
Voters in Canada’s most populous province head to the polls in June. Canadian Prime Minister Justin Trudeau relies on this region substantially for support, though he doesn’t face re-election himself until 2019.
July 1: Mexico’s Election
This election matters more. Mexicans vote on July 1 with leftist Andres Manuel Lopez Obrador the clear presidential frontrunner. He has warned he’d redo a bad Nafta deal if elected — though his Nafta chief generally supports the deal’s continuation.
This is a crucial milestone that makes any deal after April politically difficult for Mexico, because it would land in the middle of a campaign, between governments or in the hands of a new leader. Any deal loaded with what look like concessions to Trump could both lift Lopez Obrador to power and give him a stronger mandate to reboot talks.
Sept 1: Mexico’s New Senate Arrives
Any new Nafta deal needs to be approved by Mexico’s Senate, which takes office Sept. 1 — three months before the new president.
With Lopez Obrador’s poll performance, his Morena party is likely to have more power in the incoming chamber — and an inclination to oppose a deal negotiated by the ruling Institutional Revolutionary Party of current President Enrique Pena Nieto. That increases the urgency to try to get a Nafta deal approved in a potential special session before September, or possibly before the current spring session ends on April 30. The new president will be inaugurated Dec. 1.
Nov. 6: U.S. Midterm Election
This date is essential. Members of Congress are unlikely to want to vote on Nafta while running for re-election, even though the accord generally has had broad bipartisan support. That means a vote is unlikely around this time. Although the current group of lawmakers could vote after election day and before the next Congress takes office in January, a shift of power could make either party reluctant to cooperate.
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