As effusive as President Donald Trump was about the significance of his NAFTA rewrite, he was cautious about its chances of getting through Congress next year. Polls suggest Democrats could retake the majority in the House of Representatives, and there is a significant number of Democrats voted against the original NAFTA, or who pledged to vote against the Trans-Pacific Partnership. The earliest a vote could come, because of timelines laid out in fast track, would be in February. But it's likely to be later, since that doesn't include the time needed for Congress to draft implementing legislation.
Democrats will be crucial to ratifying a new NAFTA if House Republicans lose the majority in November, whether the deal includes Canada or not. U.S. Trade Representative Robert Lighthizer has said repeatedly that he expects significant numbers of Democrats to support the new NAFTA. Changes he won from Mexico should be good for domestic manufacturing, he believes, between bringing labor provisions into the body of the agreement and changing auto rules of origin to encourage manufacturing in the U.S. (and Canada, if it decides to join the deal).
The U.S. will be seeking a quite different agreement with Japan than what was garnered through the Trans-Pacific Partnership, U.S. Trade Representative Robert Lighthizer said on a call with reporters Sept. 26. Lighthizer, who called TPP "a very weak agreement," said he didn't want to go into a litany of all of TPP's problems, but he mentioned rules of origin. Democrats criticized the TPP because it only required 45 percent of a car's content to be made in the region (see 1601120051), and given that Mexico and Canada were signatories to the agreement, that could have been a back door way to get cars into the U.S. duty free from its neighbors that had more Chinese or European content than North American content.
A bill that would allow Congress to reject safeguard tariffs and Section 301 tariffs, and that would require congressional approval before Section 232 tariffs could go into effect was introduced in the House of Representatives Sept. 26. The bill, called the Promoting Responsible and Free Trade Act, has co-sponsors Rep. Jim Cooper, D-Tenn., and Rep. Mark Sanford, R-S.C., who was defeated in a primary earlier this year, ostensibly in retaliation for being insufficiently loyal to Donald Trump.
When Mexico was confronted with an administration that doesn't agree that free trade is good for America, it had "no option but to play ball," given the interdependence of the Mexican and U.S. economies, said Karen Antebi, economic counselor for the Trade and NAFTA Office at the Mexican Embassy. Antebi, one of the speakers at the Global Business Dialogue event Sept. 26, said Mexico wanted to reassure foreign investors, preserve economic access to the U.S. market and maintain North American competitiveness in a new NAFTA. "Clearly U.S. demands drove the negotiations," she said. "What can I say? This was a pragmatic, not a principle-driven negotiation."
Both Democrats and Republicans said auto tariffs aren't going to help add U.S. manufacturing, and numerous members of the Senate Finance Committee questioned the logic of the Trump administration's national security rationale for threatening them. Sen. Rob Portman, R-Ohio, noted that he has a bill that would not allow the president to act unilaterally to raise tariffs on autos or auto parts under Section 232, and that Honda North America has endorsed it. But little of the two-hour hearing focused on how Congress could take back power on trade to constrain the administration. Even committee ranking member Ron Wyden, D-Ore., who criticizes the president's trade policy as chaotic and ineffective, hedged that "perhaps" it is "time for the Congress to think about reclaiming that authority," in his opening statement.
A Canadian customs broker told a group of her colleagues from the U.S. that the last year "has been probably the most challenging year of my life." Kim Campbell, who is president of MKMarin Trade Services, fears it could get worse. If the Trump administration decides to levy tariffs on Canadian cars, car parts or uranium under Section 232, the amount of goods that now cross the border tariff-free would drop dramatically, she believes, because Canada would have to put in place counter-tariffs.
U.S. Trade Representative Robert Lighthizer cast doubt Sept. 25 on a trilateral NAFTA coming together, saying that the parties are "sort of running out of time," because if the deal isn't done before the current administration in Mexico leaves office, the incoming president will want to reopen negotiations. The U.S. and Mexico have come to many agreements bilaterally in recent weeks.
The Office of the U.S. Trade Representative said it would like the Global Forum on Steel Excess Capacity to be able to restore a healthy market for global steel by reducing excess capacity, but after a meeting Sept. 20 in Argentina of officials from countries around the world, it is not confident it's going to work. The forum began nearly two years ago.
Several major issues between the U.S. and Canada remain unresolved as NAFTA negotiations proceed, Canadian and Mexican negotiators said on Sept. 20. Canada's Foreign Minister Chrystia Freeland didn't dispute a reporter's characterization that the fact that the word "progress" was missing from her description of NAFTA talks was significant. "I chose my words carefully. Today we discussed some tough issues. The conversation was constructive, we all continue to work very hard, and Canada's objective continues to be ... to achieve a deal and to achieve a deal that is good for Canada."