Republicans Push for Vote on New Nafta This Year If Democrats Win House

(Bloomberg) -- Senior Republicans in U.S. Congress are pushing to approve a revised trade deal with Canada and Mexico this year if the party loses its majority in the House of Representatives.

Trade experts have been expecting a congressional vote on the Nafta successor to be delayed until next year, once the next Congress has started. Midterm elections will take place Nov. 6, and polls suggest Democrats are favored to take control of the House -- a scenario that will make it harder for President Donald Trump to win support for the accord, which he has rebranded the U.S.-Mexico-Canada Agreement.

“If the Democrats take the House, the vote will be in the lame duck" session in December, Republican Senator Chuck Grassley of Iowa said Tuesday in an interview. Grassley, chairman of the Senate Judiciary Committee, is seen as a front-runner to chair the Senate Finance Committee when Orrin Hatch retires next year. The Finance committee is the main Senate panel responsible for trade.

Hatch said the Senate "ought to move on Nafta as soon as we can."

Not all Republicans are sure that a vote will happen this year, given that trade is such a volatile issue in the U.S. and that Nafta has faced widespread criticism.

“I know people are still going through the details, but it’s not a foregone conclusion that it will get confirmation by the Senate,” Senate Majority Whip John Cornyn of Texas, whose job is to round up votes for the deal, told reporters.

Congress will be busy in the December lame-duck period trying to avoid a government shutdown. Trump has said he may refuse to sign any more spending bills unless he gets funds for his southern border wall. The current stopgap funding bill runs out Dec. 7. 

Under so-called trade promotion authority, a trade deal can pass the Senate with 50 Republican votes. But in exchange, the administration must clear a series of procedural hoops, including the completion of a report on the economic impact, a step that typically takes more than three months. Congress is allowed to vote without the International Trade Commission report being completed, but Democrats have warned that doing so would risk blindly approving a deal that costs jobs.

U.S. and Canadian negotiators worked around the clock this weekend to secure an agreement just before a Sunday midnight deadline, allowing leaders from those nations and Mexico to sign the accord by late November. The 24-year-old Nafta will now be superseded by the U.S.-Mexico-Canada Agreement, or USMCA, covering a region that trades more than $1 trillion annually.

“You know 95 percent of what we will be voting on is the same as Nafta," Grassley said.

The new deal tightens rules for car content in North America, provides more access for U.S. farmers to Canada’s dairy market, and updates intellectual-property rules for the digital era, among other things.

Trump had threatened repeatedly to pull out of Nafta, a scenario that business leaders warned would wreak havoc on their supply chains. In force since 1994, the pact eliminated tariffs on most goods. But Trump argued the U.S. had lost jobs to Mexico and had seen a trade deficit swell with its southern neighbor.

Grassley said that Trump hasn’t brought up withdrawing from Nafta lately, but he could do so as a threat to induce Congress to act quickly to ratify the deal.

Democrats are already making demands in exchange for their support of the deal. On Monday, Michigan Representative Sander Levin said Mexico would need to revise its labor laws to boost wages before Congress votes on the new deal. Senate Finance Committee top Democrat Ron Wyden suggested changes may be needed to dispute-settlement procedures that act as an enforcement mechanism in the deal.

“The last thing that is needed right now, at a time of great public frustration with what’s going on with Washington, is ramming this through,” said Wyden of Oregon.

GOP Senator Pat Toomey of Pennsylvania said in a statement he is concerned about flaws in the new deal, including its 16-year sunset date, failure to remove steel tariffs and wage requirements connected to auto imports.

"I also plan to work closely with my colleagues to explore how we may correct some of the agreement’s flaws through the required implementing legislation," he said.

©2018 Bloomberg L.P.