WASHINGTON, D.C.—A congressional working group was meeting Wednesday with U.S. Trade Representative Robert Lighthizer in an attempt to come to a resolution that would see the House of Representatives ratify the new NAFTA within the next two months.

Pressure is mounting, as most observers agree that if it does not happen this year, it is unlikely to pass next year during an election season, pushing it to the end of 2020 or beyond.

Canada has said it will ratify the deal — called the United States-Mexico-Canada Agreement (USMCA) here — once the U.S. Congress does. Mexico, the other party to the agreement, has already ratified it.

President Donald Trump has been relentlessly badgering what he calls the “do nothing Democrats” in the house for their failure to pass the agreement. House Speaker Nancy Pelosi has repeatedly said the deal is “on a path to yes.” But members of her Democratic party are under pressure from unions concerned primarily about whether Mexico will enforce labour provisions. Earlier this month, Richard Trumka, who heads up the AFL-CIO federation of American unions, told the Washington Post his organization opposes a deal as the agreement stands, “If there was a vote before Thanksgiving, the agreement would be defeated,” he said.

In the midst this, Scotty Greenwood, head of the Canadian American Business Council that has been advocating for the agreement, said she was optimistic a deal would emerge. “It feels like there’s momentum,” she said, speaking from the Capitol where she was meeting with members of the working group throughout the day. “It feels like hopefully we’re getting towards the goal-line.”

But it won’t be simple. Daniel Ujczo, an international trade lawyer with Dickinson Wright, says that “whether both ends of Pennsylvania Avenue can come together to make a deal” — meaning the White House and Congress — depends on a lot of factors.

The issues that are sticking points, he explains, are whether Americans can be confident that Mexico will adequately enforce labour standards, environmental concerns especially about pollution, and provisions that would standardize the lengths of patent protection for prescription drugs to 10 years.

Currently, Canada protects pharmaceutical patents for eight years, Mexico for five years, and the United States for 12 years, leading to cheaper generic drugs coming to market faster in Canada and Mexico. Drug companies want longer time frames so they can profit from their investments in research and development. Some Democrats in Congress, however, have been promising to shorten U.S. patent protections to make prescriptions cheaper, and are worried that codifying the timeline in a trade agreement would tie their hands.

This week, a further possible wrinkle emerged in reports that provisions in the agreement could see Trump’s White House try to dictate where auto production takes place — which would be a big concern for Canada and Mexico, but hasn’t been a big part of the debate here.

Resolving the remaining obstacles in Washington, Ujczo says, involves “three bargains that need to be made.” The working groups in Congress have to come to an agreement with Lighthizer, then they will need to get agreement from their constituents, including the labour movement. Then, the third bargain: “The end game is going to be Speaker Pelosi saying, ‘We’re ready to go on USMCA. What are you going to give me President Trump?’ Is that pension reform? Which is part of the deal, which may be required to get labour on side? Is it prescription drug reform? Is it guns?”

Resolving this in less than two months — amid impeachment proceedings against Trump and the need for a deal to continue to fund the government during that time — appears to be a “Herculean task,” Ujczo says.

Still, Gary Locke, the former governor of Washington state and Commerce Secretary under Barack Obama, says things are moving forward. “I’m very hopeful,” he said by telephone. “Everybody from both sides say the discussions have been very fruitful, very productive and very cordial. And they’re making progress.”

And what if it can’t be finished by the end of this year?

Ujczo says that if it fails to pass in 2019, the most likely scenario is that the existing NAFTA agreement stays in force indefinitely. “Our view is that if we do get into kind of a bump-and-blame scenario where each side bumps this until after the 2020 election and blame the other, that the current NAFTA will remain in force. Even in the unlikely scenario that President Trump tries to withdraw from NAFTA, that starts a six month clock where we would anticipate either Congress or the courts stepping in. So we do not see a scenario where there would be neither the NAFTA nor USMCA through 2020.”

Loading... Loading... Loading... Loading... Loading... Loading...

While agreeing that’s a possible scenario, Greenwood says failing to pass the agreement opens the door to uncertainty. “If to the extent that the president of the United States is impatient with lack of progress on his trade agenda, does he revert to the world of tariffs, and we’ll get back into a world of tit-for-tat retaliation, which we’ve seen unfold over the last year. And it’s really damaging to our economy to our competitive position vis-a-vis the rest of the world,” she says. “There’s this notion that if you can’t get a deal done with Canada and Mexico, how the heck are you gonna get one done with anybody else?”

For now, she believes it can get done. “The economics of the deal really overwhelm the alternative, so the pros outweigh the cons by a lot. It’s not a perfect deal, but it’s an improvement over the old NAFTA. It’s important for everybody that it gets done. And members of Congress from both parties, from all kinds of regions, recognize that. So yeah, I’m optimistic.”

Read more about: