Reuters API
Apr 8, 2019
New NAFTA deal 'in trouble', bruised by elections, tariff rows
Reuters API
Apr 8, 2019
More than six months after the United States, Mexico and Canada agreed a new deal to govern more than $1 trillion in regional trade, the chances of the countries ratifying the pact this year are receding.
The three countries struck the United States-Mexico-Canada agreement (USMCA) on Sept. 30, ending a year of difficult negotiations after U.S. President Donald Trump demanded the preceding trade pact be renegotiated or scrapped.
But the deal has not ended trade tensions in North America. If ratification is delayed much longer, it could become hostage to electoral politics.
The United States has its next presidential contest in 2020, and Canada holds a federal election in October.
The delay means businesses are still uncertain about the framework that will govern future investments in the region.
"The USMCA is in trouble," said Andres Rozental, a former Mexican deputy foreign minister for North America.
Though he believed the deal would ultimately be approved, Rozental said opposition from U.S. Democrats and unions to labor provisions in the deal, as well as bickering over tariffs, made its passage in the next few months highly unlikely.
Canada's Parliament must also ratify the treaty and officials say the timetable is very tight. Current legislators only have a few weeks work left before the start of the summer recess in June, and members of the new Parliament would have little chance to address ratification until 2020.
Trump, a Republican, has shown frustration with the Democratic-led U.S. House of Representatives for failing to sign off on the USMCA. He has threatened to pull out of the old pact, the North American Free Trade Agreement (NAFTA), if Congress does not hurry up.
If Trump did dump NAFTA, the three nations would revert to trade rules in place before it came into effect in 1994.
WORKERS
U.S. Democrats have threatened to block the USMCA unless Mexico passes legislation to improve workers' rights, a demand shared by the Canadian government.
A bill already in Mexico's Congress to strengthen trade unions should be approved this month, the government says.
Trump blamed NAFTA for millions of job losses in the United States as companies moved south to employ cheaper Mexican labor. Trump is running for re-election in 2020, and his 'America First' policy will likely feature prominently in the campaign.
Forcing Mexico and Canada to rework NAFTA was one of Trump's signature pledges during his shock win in 2016, and Democrats are pulling out the stops to avoid losing again.
"The closer the election gets, the harder it will be for Democrats to grant Trump a victory" by ratifying the USMCA, said Sergio Alcocer, a former deputy Mexican foreign minister.
Some Democrats are pushing to change the deal - an idea that both Canadian and Mexican officials resist.
"People need to be very careful around opening up what could really be a Pandora's box," Freeland said on Thursday.
Canadian officials say they fear that if one part of the treaty were reopened, it could spark clamour for other sections to be renegotiated as well.
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