From: Jon Johnson
To: Canadians Concerned about NAFTA
Date: September 5, 2018
Re: The NAFTA Die is Cast – Sort of
The US Bipartisan Congressional Trade Priorities and Accountability Act (TPA Law) requires that the president notify Congress of his intention to enter a trade agreement at least 90 calendar days before doing so. At least 60 days before the president enters into the trade agreement, the president must publish its text on the USTR website.
Last Friday, August 31, President Trump notified Congress of his intention “to enter into a trade agreement with Mexico --- and with Canada if it is willing, in a timely manner…”
There are multiple problems with the notice. It is questionable whether at the time the notice was delivered there even was any agreement that could be entered into, given it was not clear who would be the parties.
The TPA Law requires that the president provide notice at least 90 calendar days before initiating negotiations and whether he is seeking “an agreement, or changes to an existing agreement.” US Trade Representative Robert Lighthizer notified Congress in May 2017 that the president intended to initiate negotiations with Canada and Mexico regarding the modernization of NAFTA. No mention was made of the possibility of a bilateral agreement with Mexico to which the August 31 notice refers, with Canada only as a possibility. However, the May 2017 notice triggered a series of consultation obligations with various committees of Congress. These consultations were based on a trilateral negotiation of NAFTA and not simply a bilateral agreement with Mexico. There are also significant issues around consultations that did take place. By letter dated August 28, Rep. Bill Pascrell notified the chairmen of the House Ways and Means Committee and the Ways and Means Trade Subcommittee that there had been no consultations with the House Advisory Group on Negotiation (with which consultations are obligatory) since May 2017.
These flaws by themselves are not fatal unless Congress chooses to make them so. In the event of lack of notice or consultations, Congress, through disapproval resolutions passed by each chamber, can ensure that the “trade authorities procedures” not apply to an implementing bill submitted respecting a trade agreement. The “trade authorities procedures” are the fast-track procedures established under the Trade Act of 1974 that limit debate and provide for an up-or-down vote on implementing legislation. Without these procedures, the administration cannot implement any trade agreement. Even with the procedures in place, Congress can vote against the agreement.
Despite its numerous flaws, the August 31 notice has the advantage of forcing the parties to produce a trilateral text, including Canada, by October 1 if Mexico’s desire that President Peňa Nieto sign before his term expires on November 30 is to be accommodated.
The US administration has already achieved a huge win with the automotive rules of origin. In the end, the question will be whether this is not worth preserving as opposed to embarking on the much more difficult and destructive task of withdrawing the US from NAFTA as President Trump is threatening. Meanwhile, Canada will finally have to come to grips with its own red lines.
Jon Johnson is a former advisor to the Canadian government during NAFTA negotiations and is a Senior Fellow at the C.D. Howe Institute.
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The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.
