Canada, Mexico, Congressional Leader See Path for USMCA Approval
The perspectives from Congress, Canada and Mexico -- and a former acting U.S. trade representative -- diverge wildly on how much can be changed in the new NAFTA to garner votes for approval and how difficult it will be to get it passed in 2019. Miriam Sapiro, who was acting USTR and is now with SVC Public Affairs, used the term “lovely miracle” to describe how she’d feel if it passed this year. Rep. Kevin Brady, R-Texas, the ranking member on the House Ways and Means Committee, said it's clear that the metals tariffs on Canada and Mexico -- without quotas -- have to have a date certain to come off before Congress members are really about to start “to count the noses.”
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Sapiro, Brady, Canada’s Chamber of Commerce and the chief negotiator for Mexico all portrayed different problems with the text of the U.S.-Mexico-Canada Agreement and its prospects for passage in 2019 while speaking at the Washington International Trade Association annual conference Jan. 29. Brady wouldn’t handicap the chances of the pact’s passage or predict when it might happen. But he said it has “some real wins” in customs, phytosanitary measures and services. He said his fellow Republicans have concerns about investor-state dispute settlement, de minimis and procurement. Democrats, who control the calendar and the majority in the House, “are voicing the need for strong enforcement on labor,” he said, but it’s not yet known what exactly their demands will be to USTR Robert Lighthizer on enforceability.
The Section 232 tariffs are a major irritant to Canada, which provides almost half of U.S. aluminum imports, but Perrin Beatty, CEO of the Canadian Chamber of Commerce, also portrayed the NAFTA rewrite itself as a letdown for Canada. “I don’t see it as NAFTA 2.0,” he said. “I see it as NAFTA 0.8.” He said there shouldn’t be any difficulty getting USMCA through the Parliament of Canada, but he said Canada won’t want to “get ahead of the American process.” He didn’t specifically say that Canada wouldn’t vote until after Congress does, but he said they’ll want to be sure they don't vote until they know the agreement will not be reopened. Beatty said that after the Canada-European Trade Agreement was signed, Belgium had new conditions on approval, and Canada doesn’t want to go through that sort of experience again.
Beatty is very negative about the possibility of reopening talks to assuage Democratic criticisms. “The difficulty comes when you start picking at the threads in the fabric, it starts to unravel,” he said.
Sapiro said, “If you try to reopen the text of the agreement, it essentially would mean there’s essentially nothing to ratify this year.” But she suggested that side letters could provide “tweaks,” and some of those could be contemplated if the USTR thinks he could get another 10 votes for one. The USTR is required under Trade Promotion Authority to give Congress a report on legislative changes needed under the USMCA by Jan. 29.
Kenneth Smith Ramos, the lead Mexican USMCA negotiator, in contrast, defended the new NAFTA, saying some of its chapters “are the most advanced of any up to date, including” the Trans-Pacific Partnership. He pointed to digital trade and phytosanitary measures, for example.
When asked by International Trade Today if Mexico would be open to changing the length of exclusivity for biologics -- one of the Democratic priorities -- Smith Ramos was cautious. He said the 10-year period Mexico agreed to is the outer limit of balancing consumer interests and drug industry interests, and said, “even in Mexico, maybe we have people in favor of reopening” to shorten that time period. But, Smith Ramos said, he doesn’t know if the new administration would want to, because the U.S. might want another concession to make the change.
Smith Ramos did say there is no sense in reopening the labor chapter. He said if Democrats had asked for the exact same language in past years, people would have said, “in your wildest dreams, you would get that.” He said both labor and environmental provisions are state-of-the art. He said he doesn’t think there are “any arguments to reopen.” Sapiro said she thinks it would help get USMCA through Congress if Mexico and Canada voted first: “It actually makes it harder for anybody to speak seriously about reopening the text.”