ADVERTISEMENT

Here's Why Trump Is Looking to Seal a New Nafta Deal Soon

Here's Why Trump Is Looking to Seal a New Nafta Deal Soon

(Bloomberg) -- Trade negotiators meet their target dates about as often as meteorologists accurately predict the weather. But the Trump administration will soon bump against a deadline that will determine the fate of its Nafta plans.

When he started negotiations on a new North American Free Trade Agreement last year, President Donald Trump invoked a legislative process called trade-promotion authority, a measure to ease the passage of trade deals by Congress. It allows him to seek a simple yes-or-no vote by lawmakers on an updated pact with Mexico and Canada. In exchange, the administration must clear a series of steps designed to build support among politicians.

It’s a complicated process that could easily take six months. But with mid-term elections on Nov. 6, the administration doesn’t have much time if it wants to get a revised Nafta approved under this Congress, when Trump’s Republican party controls both the Senate and the House. Democrats have a good chance of winning the House in November, a shift that would change the political dynamics for a Nafta vote.

House Speaker Paul Ryan has said he needs the administration to give notice of its plans for a deal by May 17 if it wants the current Congress to vote on the agreement. Trade experts and insiders say the administration might have until as long as June. But there’s no question the clock is ticking.

Here are some steps that must be taken for Congress to approve a trade deal under fast-track authority:

  • The administration must give Congress 90 days’ notification that it plans to sign a deal
  • Once the deal is signed, the U.S. International Trade Commission has 105 days to produce a report on the economic impact
  • The Senate Finance and House Ways and Means committees will likely hold hearings and suggest tweaks, known as “markups”
  • After an implementing bill is introduced in the Senate and House, both chambers can take up to 90 days to debate it

Talk of putting a new Nafta to a vote in Congress assumes the three countries can even reach an agreement, which is by no means a given. In recent weeks, the three sides have been aiming for a “deal-in-principle.” None of the countries have clarified what that means, but trade experts speculate it would entail a consensus on the most contentious issues, such as rules for how to count the origin of car parts that qualify for duty-free treatment. Such a deal would be a long way from a formal text that lawmakers can vote on.

The wild card is Trump’s threat to withdraw from the original Nafta. Under the pact, any of the three countries can pull out on six-months’ notice. If the president wants to light a fire under Congress, he could sign a withdrawal notice after negotiating an update he likes. That would give legislators a hard six-moth deadline to agree to the updated trade pact.

In other words, lawmakers would have to accept Trump’s Nafta, or none at all.

To contact the reporters on this story: Andrew Mayeda in Washington at amayeda@bloomberg.net, Jenny Leonard in New York at jleonard67@bloomberg.net.

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Randall Woods, Sarah McGregor

©2018 Bloomberg L.P.