Congressional Republicans disregarded President Donald Trump’s announcement Monday that he would pursue a bilateral trade deal with Mexico unless Canadian negotiators quickly agree to a framework for an updated trilateral North American Free Trade Agreement, arguing that his plan may not even be possible due to procedural constraints.
“That would be almost impossible as it’s been described to me,” said Wisconsin Republican Ron Johnson when asked about Trump’s plan. “About all we can really do is fix NAFTA and keep it as a three-party agreement, which I think, first of all, we should want that.”
Trump, announcing the understanding with Mexico, said that he would like to rename NAFTA the “United States-Mexico Trade Agreement.” The “agreement” — used in the loosest sense of the term — is preliminary. Many details haven’t been shared yet, though it represents a key breakthrough for U.S. and Mexican negotiators who have quibbled over auto manufacturing requirements for months. It would include new minimum wage requirements for a percentage of the vehicle manufacturing process ($16 an hour) and increase the amount of U.S. or Mexican content that must be included in each automobile, from 62.5 percent to 75 percent, in order to obtain duty-free status.
“We will see whether or not we decide to put up Canada or just do a separate deal with Canada, if they want to make the deal,” Trump said.
Because the White House has to notify Congress 90 days in advance of signing an agreement, negotiators have only until Friday to strike a deal if they want to finish a new NAFTA before current Mexican president Enrique Pena Nieto is replaced by left-wing president-elect Andres Manuel Lopez Obrador in early December. Canadian Foreign Minister Chrystia Freeland is set to appear in Washington to meet with negotiators on Tuesday, but it remains to be seen just how flexible the Canadians are willing to be on a number of politically-sensitive issues, such as dairy tariffs. If Canada does not agree to a renegotiated NAFTA this week, the White House plans to notify Congress of the U.S.-Mexico deal on Friday instead, a senior Trump administration official told reporters on a phone call with reporters Monday afternoon.
“Ideally Canada will be in it and we’ll be able to notify that. If Canada’s not in, we’ll notify that we have an agreement with Mexico and we’re open to Canada joining us,” the official told reporters.
It is unclear why the office of the U.S. Trade Representative thinks this is an option.
In order to negotiate trade pacts quickly in accordance with Trade Promotion Authority, the White House has to notify Congress of its intentions in writing. U.S. Trade Representative Robert Lighthizer did that in the spring of 2017—but with respect to NAFTA specifically, explicitly stating that both Mexico and Canada would be involved. “I am pleased to notify the Congress that the President intends to initiate negotiations with Canada and Mexico regarding modernization of the North American Free Trade Agreement,” Lighthizer wrote in his letter.
This kicked off a process that allows the administration to move more quickly in obtaining congressional approval, known as “ fast track” negotiating authority, which speeds up to process by limiting the amount of debate time available and preventing amendments from being submitted to trade agreements, among other things.
But Lighthizer has not taken any of the steps required to proceed on a bilateral basis to negotiate an entirely new U.S.-Mexico trade agreement. CNBC’s Kayla Tausche notes that the administration would have to ask Congress to approve the two-party negotiations and would later have to notify lawmakers of its plans to seek a vote on that trade deal. “That process would take, at a minimum, 180 days,” Tausche writes.
“What the administration submitted to Congress in setting up the opportunity to use TPA, and the expedited process that TPA allows, contemplated a revision to a tri-party agreement,” Pennsylvania Republican Pat Toomey told reporters on Monday night. “So it’s my understanding that this has to be a tri-party agreement.”
Lighthizer — perhaps hedging his bets on the consistent reluctance of congressional Republicans to differ with the president — instead hopes to bypass the procedural hurdles of TPA, submitting a bilateral Mexican trade agreement instead of the trilateral NAFTA modernization he obtained approval for in the first place.
“I don’t think anybody’s envisioning that,” Tennessee Republican Lamar Alexander said of a plan that the White House is most certainly envisioning. “Modernizing it is a good thing, but I hope that the president takes whatever agreement he has with Mexico and then gets one promptly with Canada and we’d get back to business.”
Ohio Democrat Sherrod Brown, often an ally of Trump’s on matters of trade, agreed that the final deal has to include Canada. “There is question about whether Trade Promotion Authority is allowed if you don’t include Canada. But I prefer that if you’re going to renegotiate NAFTA, you renegotiate with all three countries in it,” he said.
The chairmen of both congressional committees dealing with trade released statements lauding the progress that had been made with Mexico, but clearly signaling that they expect a three-party agreement in the end. “I look forward to carefully analyzing the details and consulting in the weeks ahead with my colleagues and constituents to determine whether the new proposal meets the trade priorities set out by Congress under Trade Promotion Authority,” House Ways and Means chairman Kevin Brady wrote.
And Senate Finance chairman Orrin Hatch said that a “final agreement should include Canada.” Asked specifically if Hatch thought a bilateral Mexican trade deal would be TPA-compliant, a spokesperson for the Finance committee reiterated, “The chairman’s preference is a trilateral agreement.”
If anything, given the procedural difficulty of a bilateral deal with Mexico at this point, the newfound solidarity between the United States and Mexico may be primarily intended to place additional pressure on Canada to make concessions. Mexico’s foreign minister appeared to be doing his part to strong-arm Ottawa into an agreement on Monday when he said that while a trilateral NAFTA is ideal, Mexico would be willing to continue towards its bilateral deal with the United States if Canada does not agree to a revised NAFTA by Friday.
Retiring Tennessee Republican Bob Corker raised the prospect that the U.S.-Mexico understanding was being exaggerated. “My guess is that this is more like Singapore and, you know, maybe there’s not really …” he trailed off. “We’ll see what comes out of it. I think all of us want to see. But you know, for it to work, you need a need a three-way deal.”
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