Policy

Congress Awaits Details as Canada Looms Over NAFTA Deadline

Democrats and Republicans want northern neighbor included

Kushner enters USTR headquarters Aug. 29, 2018. (Ellyn Ferguson/CQ Roll Call)

With just a day before the Trump administration is expected to notify Congress that it plans to sign an agreement in principle with Mexico to update the NAFTA trade pact, lawmakers continue to seek more details and push for a final outcome that includes the third NAFTA partner — Canada.

“We have no exact details. Other than what’s been written in newspapers, we have no idea what’s in it,” Sen. Bob Corker, R-Tenn., said of the agreement in principle announced Monday by Mexico and the United States to update the North American Free Trade Agreement.  Corker said Senate Republicans were told Tuesday that they could soon receive what he called talking points on the agreement.

“We don’t have all the fine print yet,” said Sen. Roy Blunt, R-Mo. “I’d like for Canada to be part of whatever agreement we reach here. I think a unified North American marketplace and a unified North American economy is good for all three countries.″

The sentiment was echoed by Democrats. “Canada is our number one trading partner so we need to have them at the table at some time,” Sen. Jon Tester, D-Mont., said Tuesday.

Canadian Foreign Minister Chrystia Freeland met with U.S. Trade Representative Robert Lighthizer on Wednesday in Washington. Freeland said she was “extremely optimistic about the progress we can make this week,” describing a flurry of activity since Monday, including around-the-clock work by lower level negotiators, a bilateral talk with Mexico’s top negotiators and phone calls and talks with Lighthizer. She declined to discuss any unresolved issues, adding that she and Lighthizer had agreed to stay quiet on specific disagreements as they negotiate.

President Donald Trump’s son-in-law and senior adviser Jared Kushner appeared to have joined the NAFTA talks Wednesday. Kushner was part of the team that hammered out the agreement in principle with Mexico.

Trump said Wednesday that ongoing trade talks with Canadian officials are going “very well,” adding he senses America’s northern neighbor wants to find a way to sign onto the preliminary U.S.-Mexico pact.

It is unclear how much information lawmakers and staffers will be able to glean from Lighthizer’s notice to Congress announcing the Trump administration’s plans to either sign an agreement with Mexico or an agreement with both Mexico and Canada. Lighthizer has said he will send the notice Friday, pressuring Canada to join the agreement in principle before then or be left on the sidelines.

Earlier in the week, Sen. Patrick J. Toomey, R-Penn., said Canada must be a part of the agreement if the Trump administration wants any deal to be given expedited treatment under Trade Promotion Authority (PL 114-26), which gives Congress the power to approve or reject the agreement but not to change it.

Toomey said the administration’s notification to Congress in May 2017 that it would renegotiate the tri-party NAFTA under TPA means that whatever is agreed upon involves the U.S., Canada and Mexico.

“It’s my understanding that this has to be a tri-party agreement,” Toomey said.

The process

Friday’s expected notification will start a 90-day clock for Trump to sign whatever updated NAFTA emerges. Within 60 days, Lighthizer’s office will have to nail down details and finalize language in whatever agreement, which will have to be posted publicly.

Freeland said Canada had reached a “high-level” agreement on one of the tougher issues in the spring with the United States, a compromise to increase U.S. and Canada content in autos and auto parts made in either country for cars intended for export.

She did not say if the agreement is the same as outlined by Lighthizer and Mexico Secretary of Economy Ildefonso Guajardo Villarreal on Monday that would raise the NAFTA regional auto content threshold from the current 62.5 percent to 75 percent to qualify for duty free market access.

Depending on the make of the car, up to 45 percent of that content would have to be produced in factories where workers earn at least $16 an hour. The higher wage level would generally mean those products would be produced in the United States.  

The Trump administration touted the content rule of origin as something that would reduce incentives for U.S. automakers to send their less lucrative car lines to Mexico for production and increase or at least maintain U.S. auto and steel jobs.

The provisions have won an initial nod of approval from AFL-CIO President Richard Trumka, who said the preliminary agreement as outlined would end employer-run unions that don’t allow workers to organize and push for higher wages and better working conditions.

“The Mexicans have a low-wage model and they aid that by having employer-dominated unions,″ Trumka said in a Wednesday interview on National Public Radio. “This agreement so far will help eliminate these employer-dominated unions. It will help us enforce this agreement on a regular, quick basis so wages can rise in Mexico, Canada and the U.S. and everybody ultimately wins.” 

“It is important to get this right. We’re working at it and hopefully get to see the whole agreement and go with it,” Trumka said.

Rep. Sander M. Levin, a senior Democrat on the House Ways and Means Committee, is wary. Levin, who met this week with workers in Mexico from two tire plants, said he does not think the preliminary U.S.-Mexico agreement adequately addresses labor issues in Mexico. Levin of Michigan said the Trade Representative’s Office has not consulted enough lawmakers or the primary congressional trade committees on labor issues.

“The Administration has not consulted effectively with Congress or shared the existing text,” Levin said in a statement Tuesday. “Based on earlier discussions and information available today, there is no such assurance that this core issue will be adequately addressed.”

Levin said improving labor conditions in Mexico would be a sticking point for many Democrats, adding, “I do not believe that there will [be] any significant Democratic support for the revised NAFTA, most likely necessary for its passage.”

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