May 28, 2019
When I have written about the United States-Canada-Mexico Trade Agreement (USMCA if you are American, CUSMA if you are Canadian, MUSCA if you are Mexican, U-SMACKA if you want to make a bad pun), I have expressed optimism about its chances in Congress but have pointed out four land mines: Democratic overreach, U.S. Trade Representative Lighthizer failing to respond adequately to Democrat’s demands, President Trump personalizing the debate, and President Trump torpedoing the agreement either by submitting the bill too soon or withdrawing from the North American Free Trade Agreement (NAFTA). While I remain optimistic, there are now signs some of those land mines might detonate. Let’s look at them one at a time.
The Democrats’ strategy has been to attack the agreement as inadequate and demand changes. If and when those are made, Democrats can say they are responsible for improving the agreement, and a sufficient number of them will vote for it to get it through. That is a sound, conventional strategy, which can work if they keep their demands within the realm of the possible. Speaker of the House Nancy Pelosi gave that approach a big boost when she said that the debate would be limited to the details of the agreement—in other words, no extra, non-trade related price to be paid.
Lately, however, there are signs Democrats are getting wrapped up in a battle of form over substance by insisting that the agreement be reopened and renegotiated. This is cart before the horse. The first step should be to decide what they want—in specifics, not generalities—and then figure out if reopening the agreement is the only way to get it. It might be. Changing the period of biologic drug data exclusivity, for example, from 10 years to something else would probably require that. Beefing up enforcement might or might not, depending on what specifically they want to do. Part of an effective enforcement strategy involves deciding what the United States will do unilaterally when it discovers non-compliance. That does not automatically require renegotiating the agreement. As they get down to specifics, which appears to be happening, they should settle on what they want first and let the issue of form take care of itself.
Ambassador Lighthizer has gotten many points for his willingness to engage the members of both parties on the details and to work with them to come up with satisfactory solutions. (Indeed, the best thing the president could do is stop talking and let Ambassador Lighthizer manage the process.) He has insisted, however, that he will not reopen the agreement. That is exactly what he should say at this point, but he should also be prepared for the possibility that reopening might be the best way to move forward. Again, form should not prevail over substance.
On the Trump front, the past week suggests he is beginning to personalize the debate by saying he won’t work on legislation with Congress as long as they’re investigating him. Nobody believes he means that, but every time I’ve bet on him being rational, I’ve lost money. More seriously, if he makes the debate about him, then he forces Democrats to oppose the USMCA even if they would like to vote for it. If he heads down that road, it will be very difficult to walk back from it.
Last, he has again begun to make noises about submitting the bill to force Congress to act—something Ambassador Lighthizer has said he will not do—and I fear it’s only a matter of time before he resurrects, again, the threat of withdrawing from NAFTA. Under trade promotion authority procedures, once the bill is formally submitted, it cannot be changed, so sending it up prematurely will stop the ongoing negotiations in their tracks and prevent resolution of the problems Democrats have identified. That will force them to vote “no,” which, in turn, allows the president to blame them for the agreement’s failure. More likely, it will force Speaker Pelosi to do exactly what she did when President George W. Bush submitted the Colombia agreement prematurely: change the rules of the House and block further action on the implementing bill.
The same is true of NAFTA withdrawal. The president may think that will force Congress to vote for the USMCA because he has taken away the status quo (NAFTA) and left them with a choice between the new agreement or nothing, betting that “nothing” is the worst option of all, and none of them will want to be blamed for that. Six months ago, I thought that might work, but now I think it is far more likely that such a move would force the speaker to pull the plug.
None of this new, I've said it before, but the new development is the increasing possibility of some of these land mines blowing up. The point Democrats and the president need to understand is they can have a policy success or a political issue but not both. Given the relative popularity of the USMCA (compared to the Trans-Pacific Partnership, for one) and the uncertainty its failure would cause, the wiser course is to go for the policy success and let both sides take credit for it. That will be hard for the president, who only thinks he is winning if somebody else is losing, and hard for Democrats who can’t bring themselves to vote for anything President Trump supports. But both sides need to remember that if they detonate the land mines, they will blow up in their faces.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
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