In weekend summitry in Peru, Vice President Mike Pence indicated there was a real possibility that the United States could strike a deal on the North American Free Trade Agreement (NAFTA) “within the next several weeks.” Similarly, Commerce Secretary Wilbur Ross, at the same meeting in Peru, suggested the third week of May was a possible date for concluding the negotiations.
So how realistic are the chances that these contentious talks with Canada and Mexico actually come together? It’s not hard to see why the administration might be eager to strike a quick bargain. First, this is the only full-fledged set of trade negotiations they have going, so it serves as a “proof of concept” for the President’s unorthodox approach to trade. Second, trade deals have to go through the U.S. Congress; while the current Congress has Republican majorities in each house, it is not obvious that the next one will. Yet, only a few weeks ago, the U.S. Trade Representative was pushing for an “agreement in principle” to be announced at last weekend’s summit, and even that more modest goal proved elusive.
There is an element of trade negotiation timing that is very hard to predict – how long it will take for each side’s stances to converge. Then there is another element that is very easy to predict – the timetable that is laid out in law. Let’s give the administration the benefit of the doubt on the former and see what the latter implies, noting potential pitfalls along the way.
Suppose Secretary Ross is right in his optimism and the three NAFTA countries agree on all substantive points at the beginning of the third week of May. To be specific, let’s assume May 15. That would not be the signing date. Under Trade Promotion Authority (TPA), the administration must first give Congress 90 days’ notice of its intent to sign. Sixty days before signing, on June 14, the countries would have to release the legal text of the agreement. The signing ceremony itself could then take place on August 13.
Pitfall #1: Although all sides have been expressing optimism about the progress of talks, there seem to be significant gaps remaining. This hypothetical timeline assumes that all such gaps are closed quickly. Any delays would make matters worse.
Pitfall #2: Mexico holds its election on July 1. Mexican negotiators argued last summer that it would be problematic to continue negotiations past the start of this year. Although they have pushed past that deadline, a NAFTA conclusion that immediately precedes the election, followed by a signing in the lame duck period by the outgoing president could prove controversial.
Pitfall #3: The 90-day notice applies if the agreement does not do anything to practices governing antidumping and countervailing duty measures (known as “trade remedies”). If trade remedies are affected, TPA requires 180 days notice.
Pitfall #4: The signing would take place within two months of the U.S. midterm elections. The experience of 2016 with the failed push for the Trans-Pacific Partnership (TPP) seemed to show the dangers of taking up a trade deal in the midst of a campaign.
After the August 13 signing, TPA allows 105 days for the U.S. International Trade Commission to analyze what effect the new NAFTA deal will have on the United States. That would take until November 26. In theory, the USITC could move faster, but it declined to do so when pressed by the Obama administration on the Trans-Pacific Partnership.
Then, the administration could issue the required “statement of administrative action” (SAA) which must precede the actual implementing legislation by at least 30 days. Could the administration cut corners by submitting the SAA earlier? Perhaps, but some of what the administration must provide is a description of “how the agreement serves the interests of United States commerce.” That is supposed to be what the USITC is analyzing, so it would be odd to proceed without that analysis.
This timeline, in which all goes well, would then result in the Trump administration presenting Congress with NAFTA implementing legislation on December 26.
As a bill that affects tariffs (and therefore revenue), the implementing legislation is supposed to be considered first in the House, which is then allowed 60 legislative days to work on it. Here we encounter a major problem, since the House calendar for 2018 calls for adjournment on December 13. The Senate is supposed to have 30 legislative days to consider the bill, but its calendar calls for adjournment on December 14.
In theory, Congress could stay in session and rush the implementing legislation through at year’s end. But that assumes that the negotiated agreement is popular with a majority of each house. In practice, legislators have been sharply critical of the Trump administration’s negotiating stances. There could also be serious pushback from both members of Congress and the public to the idea of an outgoing Congress spending the week between Christmas and New Year’s Day rushing through a trade deal with virtually no hearings or debate.
Even if the NAFTA talks concluded this week, there would be nothing like the time for congressional deliberation envisaged in the TPA legislation. Despite the public optimism about the talks, the practical deadline for concluding negotiations and passing a new NAFTA under this Congress seems already to have come and gone.
