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Trump threatens Congress to approve Mexico, Canada, USMCA trade deal

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nieto trump trudeau
President
Donald Trump, center, reaches out to Mexico’s President Enrique
Pena Nieto, left, and Canada’s Prime Minister Justin Trudeau as
they prepare to sign a new United States-Mexico-Canada Agreement
that is replacing the NAFTA trade deal

Martin Mejia/AP

  • President Donald Trump said he would terminate the North
    American Free Trade Agreement (NAFTA) in the coming days.
  • The move appears to be a ploy to force Congress to pass
    Trump’s update to the NAFTA agreement, the US-Mexico-Canada
    Agreement (USMCA).
  • Both Democrats and Republicans have raised concerns with the
    USMCA.
  • But such a move would face legal challenges, and the
    likelihood of a NAFTA withdrawal is low.

Facing the possibility of an arduous and difficult approval
process for a new trade deal with Mexico and Canada, President
Donald Trump hinted he would attempt to force Congress’
hand. 

Trump on Saturday threatened to begin the formal process to pull
the US out of the existing
North American Free Trade Agreement (NAFTA),
a move that
would be designed to give Congress little option but to approve
the US-Mexico-Canada Agreement (USMCA).

I’ll be terminating it within a relatively short period of
time. We get rid of
NAFTA. It’s been a
disaster for the United States. It’s caused us tremendous amounts
of unemployment and loss and company loss and everything else,”
Trump told reporters aboard Air Force One. “That’ll be
terminated.
And so Congress will have a choice of
the USMCA or pre-
NAFTA, which worked
very well.


Trump formally signed the USMCA
alongside Canadian Prime
Minister Justin Trudeau and outgoing Mexican President Enrique
Pena Nieto at the G20 summit on Friday. In the wake of ceremonial
signing, lawmakers on both sides of the aisle
expressed some misgivings about the USMCA.

“I think President Trump’s goal here was to light a fire
under Congress,” Larry Kudlow, Trump’s chief economic adviser,
told reporters on Monday.

Congressional pushback

Under the Trade Promotion Authority that Trump is using to
advance the USMCA, only
a majority of each chamber
needs to vote for the deal for it
to become law. But Democrats, especially those in the incoming
House majority, have the chance to influence the deal through
so-called implementation legislation that changes US law to abide
by the trade deal’s rules.

Democratic leader Nancy Pelosi has repeatedly said that the
implementation legislation must include language that ensures
some aspects of the agreement are stringently enforced.

Whatever they’re calling it now, it has some kind of
gobbledygook name. The trade agreement formerly known as Prince
no, I mean, formerly known as NAFTA , is a
work in progress,” Pelosi said at a press conference on Friday.
We are admiring of the Trade Representative and the
attempts he has made to make sure that we are aware of what is in
it. But what isn’t in it yet is enough enforcement reassurances
regarding provisions that relate to workers and to the
environment.”


Read more:

Trump just sealed the landmark trade deal with Mexico and Canada,
but there’s still a long road toward victory»

Some Republicans have also raised concerns with the deal. In
particular, a group of nearly 40 conservative members in the
House pointed to language that would extend
workplace protections to transgender workers
, saying the
USMCA is “no place for the adoption of social
policy.”

Negotiators added a footnote to the USMCA prior that attempted to
address the concerns, saying that current US law would satisfy
the requirement. But some GOP members still balked at the
language. Rep. Andy Harris, one of the Republicans who signed
onto the letter, told Business Insider that his concerns remain.

Regardless of the footnote, I still have grave concerns
about the inclusion of this language in the USMCA, as well as the
precedent that the inclusion of this language in any trade
agreement represent,” Harris said in a statement.

Given the possibility of Democratic defections, Trump needs
almost every Republican vote for the deal to pass.

A risky game of chicken

Trump has decided to invoke a tricky tactic that could blow
up in his face, analysts said.

The leader of any NAFTA nation can invoke Article 2205 of
the deal, which would start a six-month clock before the US could
formally pull out of the deal. In the event that the US did pull
out of NAFTA, tariff rates between the US and the other two
members would revert to pre-NAFTA levels. The move would also
likely have major economic repercussions and rattle global
markets.

“The basic idea/strategy: Do not give recalcitrant
Democrats the choice between the status quo and USMCA,” Chris
Krueger, a strategist at Cowen Washington Research Group, wrote
Monday. “It is USMCA or bedlam at the borders with a
six-month NAFTA version of a hard Brexit.”

There are also legal questions about whether Trump can remove the
US from NAFTA unilaterally. 

“The President has the authority to terminate NAFTA, but it is
unclear whether Congressional approval is needed, and regardless,
would likely be fought in the courts,” wrote Sacha Tihanyi and
Brittany Baumann, strategists from TD Securities.

Democrats have repeatedly insisted that any attempt to remove the
US from NAFTA would require congressional approval.
A report
from the Congressional Research Service also
appeared to back up that assertion.

Tihanyi and Baumann suggested that the advanced stage of the
ratification process and possible negatives of failing to ratify
the USMCA likely neuter Trump’s threat.

“Termination risks are less meaningful at this stage,” the pair
said. “The agreement is signed, and the big changes in USMCA,
particularly rules of origin and wage clauses, have bipartisan
support. Furthermore, political incentive is low for lawmakers
(Democrat or Republican) to terminate trade agreements.”

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