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NAFTA Replacement Deal Signed but Lawmakers Warn of Hurdles Ahead

The United States, Canada and Mexico signed on 30 November on the side-lines of the G-20 summit in Argentina a trade agreement updating the quarter century-old NAFTA. President Trump told reporters after the conclusion of the summit that he would be “formally terminating NAFTA shortly” but prospects for congressional approval of the U.S.-Mexico-Canada Trade Agreement remain uncertain.

Congress is not likely to take up legislation to implement the USMCA until early 2019. For one thing, the U.S. International Trade Commission has up to 105 days after the agreement’s signing (until approximately 15 March) to submit a report on its likely economic impact. While that investigation is already underway, the deadline for public comment is not until 20 December. In addition, the final agreement text must be submitted at least 30 days before implementing legislation is introduced in Congress, and both the House and Senate are statutorily allowed specific periods of time to consider and vote on that bill.

This timing could make it more difficult to pass implementing legislation because as of January Democrats will have a majority in the House of Representatives and key Democrats say they will oppose the agreement unless its labour, environment and enforcement provisions are strengthened. House Ways and Means Committee Ranking Member Richard Neal (Democrat-Massachusetts) added that the agreement “needs to establish economic conditions and incentives that will create the good paying jobs that support middle class families.” Senate Minority Leader Chuck Schumer (Democrat-New York) highlighted that “Congress has a role in crafting implementing legislation” and said Democrats will work to ensure the agreement “isn’t simply a rebranding of the same old policies.”

At the same time, some Republicans have expressed concerns about various aspects of the agreement as well. For example, Ways and Means Chairman Kevin Brady (Republican-R-Texas) said on 30 November that while the USMCA includes “many provisions that will increase our ability to sell more American goods and services,” for the agreement to gain widespread congressional support “it must increase certainty as to the durability of the agreement, be fully enforceable to hold our trading partners accountable across all sectors, and increase – not diminish – our ability to sell into these markets.” Trade Subcommittee Chairman Dave Reichert (Republican-Washington) added that the White House needs to “continue to work with my colleagues to ensure the agreement meets the standards laid out by Congress.”

The current trade promotion authority law guarantees a congressional vote on a USMCA implementing bill regardless of any lawmaker objections. However, if those concerns are not sufficiently addressed the House could vote the bill down or revoke its TPA protections, which in either case could effectively kill the agreement.

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