Time to say goodbye to NAFTA’s replacement?
Last week, White House acting chief of staff Mick Mulvaney was sanguine about the prospect of Congress rejecting NAFTA’s proposed replacement, the United States-Mexico-Canada Agreement (USMCA). “You could stay status quo,” Mulvaney told a California business conference. “Your real Plan Bs are either NAFTA or withdraw from NAFTA.”
It might be that U.S. President Donald Trump has reverted to his years-long preference to simply kill NAFTA without replacing it.
Trump won’t budge on the reasonable changes that Congressional Democrats seek to make to the USMCA agreement.
He also seems determined to keep in place the steel and aluminum tariffs he applied against Canada and Mexico about a year ago. And that alone pretty much guarantees that all three national legislatures will reject USMCA.
Citing the harm that Canada and Mexico’s retaliatory tariffs have done in his state, U.S. Republican Senator Chuck Grassley, in charge of spearheading USMCA’s passage in the U.S. Senate, said last month that “If these tariffs aren’t lifted, USMCA is dead.”
Yet U.S. Vice President Mike Pence said recently that the tariffs will be revisited only after USMCA ratification. That makes USMCA ratification unlikely.
But the odds of NAFTA’s demise are also low. Only Capitol Hill, not the president, can kill a treaty.
Grassley, for one, won’t be a party to NAFTA’s demise. His state, Iowa, has reaped a quadrupling of agricultural exports under NAFTA.
Canada’s plan for salvaging NAFTA must include continued pressure on U.S. federal and state legislators, and constant reminders of the 12 million U.S. jobs tied to the trade agreement.