‘Most likely outcome is it dies’: New NAFTA ratification in doubt as Trump impeachment gains momentum
With impeachment in the air, an election campaign heating up and a highly regarded gauge of the American economy showing its worst reading in a decade, the U.S. Chamber of Commerce made an urgent plea to policymakers Tuesday to ratify the revamped North American Free Trade Agreement.
“We believe we’re in this critical moment,” Chamber vice-president Neil Bradley said on a call with journalists. “Our conversations with both Democrats and Republicans on Capitol Hill and our conversations with the administration lead us to believe that we are close to a final agreement between House Democrats and the administration on a bill that can be voted on.”
The urgent call came hours after the Institute for Supply Management said its manufacturing index fell to 47.8 per cent in September — the lowest level since the 2009 recession and its second month below the 50 per cent threshold indicative of growth.
Asked if the Democrats’ impeachment inquiry centring around U.S. President Donald Trump would derail the process, Bradley insisted “elected officials can walk and chew gum at the same time.”
But that doesn’t mean House Speaker Nancy Pelosi will take the political gamble of putting the hard won pact forward for a vote by the Democrat controlled Congress. Indeed, the trilateral deal remains likely to be downed by a tangle of political tripwires that include union skepticism, a lack of broader support in Congress and a desire to deny Trump a win during the impeachment inquiry, analysts say.
“The most likely outcome is it dies,” said Todd Tucker, a senior fellow at the New York-based Roosevelt Institute. “With the political landscape changing as rapidly as ours is every day, there’s just no clear route to getting it done.”
With the political landscape changing as rapidly as ours is every day, there’s just no clear route to getting it done.
Todd Tucker, senior fellow, Roosevelt Institute
Even Trump has cast doubt on the deal he calls the U.S.-Mexico-Canada agreement or USMCA, telling reporters last week, “I don’t know that they’re ever going to get to a vote.”
Democrat working groups have continued to meet with U.S. Trade Representative Robert Lighthizer’s team through a two-week Congressional recess as they seek to reshape provisions related to the environment, pharmaceutical drugs, Mexican labour standards and enforcement.
However, Pelosi sounded upbeat on Wednesday that Congress would still be able to work with the White House to approve the trade pact despite the impeachment inquiry.
“They have nothing to do with each other,” Pelosi told reporters in Washington. “The president has said he wants this U.S.-Mexico-Canada trade agreement to go forward. … Does it mean that he can’t do that? That’s really up to him.”
Pelosi likely already has the 218 Congressional votes she needs to pass the deal, said Dan Ujczo, an Ohio-based trade expert with the law firm Dickinson Wright. Indeed, virtually all of the 180 Republicans in Congress are expected to vote in favour of new NAFTA, leaving just a small number of Democrat votes necessary to push it through.
But Pelosi will want to see support that goes well beyond that in order to avoid deepening any divisions in the party prior to the 2020 election, he said.
“She would need about 130 votes to be comfortable,” said Ujczo.
That could be a tall order. Last month, more than 100 Democrats signed a letter to Trump demanding the USMCA include binding environmental standards and a commitment from the United States to remain in the Paris climate agreement. That suggests a significant portion of Congressional Democrats think the deal doesn’t go far enough on environmental protection, potentially making a vote too much of a political risk for Pelosi, Tucker said.
“She’s already expending political capital engaging with Trump on this,” he said. “So she’ll want a majority of her party behind her on it and that’s hard when 100 of them are making major demands on climate change.”
I think all the homework will be done so it’s in a position of go or no go by Halloween. The question then is whether it gets done or gets lost in the jet wash of impeachment.
Dan Ujczo, trade expert with the law firm Dickinson Wright
Further complicating the political calculus is the United Autoworkers strike against General Motors. The labour movement — highly influential among Democrats — continues to harbour concerns about the new NAFTA’s provisions related to the enforcement of Mexican labour reforms. The original NAFTA is widely viewed to have fallen short of its promise in this regard and unions are determined to ensure the changes are implemented and enforced this time around.
With so much union skepticism still surrounding the deal “there is literally no scenario where this gets passed with the UAW on strike,” Ujczo said. “It just looks terrible.”
Some still see a route to ratification in the U.S., even if it is narrowing. The need to have something to show for their time in Congress may be enough to push the Democrats forward particularly as the U.S. China trade war continues to squeeze farmers.
“The Democrats took control of the House in the fall of last year and since then they haven’t really done anything,” said international trade lawyer Mark Warner. “I don’t know how they go into an election next year like that. There are clouds hanging over this but I don’t think it’s over yet.”
But with the U.S. legislative calendar soon to run into an election year, time is running out.
“I think all the homework will be done so it’s in a position of go or no go by Halloween,” said Ujczo. “The question then is whether it gets done or gets lost in the jet wash of impeachment.”
The votes might be there but if Warren or Biden put the thumbs down, it’s hard to see it being put up for a vote.
Gary Hufbauer, senior fellow, Peterson Institute for International Economics
Indeed, despite their public commitment to keep the processes on separate tracks, many Democrats might find it tough to give Trump a win on trade while simultaneously seeking his impeachment.
Where they land on that question might come down to what current party leadership frontrunners Elizabeth Warren and Joe Biden have to say about it, said Gary Hufbauer, senior fellow at the Peterson Institute for International Economics.
“That’s the missing part of this story,” Hufbauer said. “They can say they are trying to get to yes but we still haven’t heard from the two people who really matter. The votes might be there but if Warren or Biden put the thumbs down, it’s hard to see it being put up for a vote.”
That would leave the deal to languish until next year and possibly be dropped altogether by a Democrat-controlled White House, said Tucker.
“The original NAFTA is there and the new deal isn’t all that different,” he said. “They may be happy to move on to other things.”
Canada says it’s following the ratification process in the U.S. closely.
“Minister (Chrystia) Freeland has spoken to members of Congress from both parties and will continue to do so,” said Adam Austen, a spokesperson for Global Affairs Canada. “She is also in very close touch with USTR Ambassador Bob Lighthizer. Our goal remains to move in tandem with the U.S.”