WD | North Amer ica
USMCA Countdown Amid Tariffs and Looming Elections, Ratification of New NAFTA Is Ever-Moving Target BY JASON OVERDORF
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he logic of politics can be anything but logical. In 2016, when then-presidential candidate Donald Trump vowed to pull the United States out of the North American Free Trade Agreement (NAFTA) and negotiate a better deal, his Democratic critics dismissed the idea as populist madness. Three years later, with a new pact on the table in the form of the United States-Mexico-Canada Agreement (USMCA), it is the Democrats insisting that a still better deal can be achieved — with House Speaker Nancy Pelosi and others calling for clearer measures to enforce its environmental regulations and labor provisions. And last month, President Trump himself seemed to bury an axe in his own agreement with the threat of escalating tariffs against Mexico if President Andrés Manuel López Obrador did not immediately stop the flow of migrants across the U.S. border. Then, just as suddenly, the president backed off his threat, saying that because Mexico had agreed to take “strong measures” to curb migration, the U.S. would not be slapping tariffs on its neighbor to the south — for now. Trump’s latest trade gambit threw yet another wrench in the effort to replace NAFTA. Last October, after over a year of negotiations, the U.S., Canada and Mexico agreed to overhaul the 1994 agreement responsible for $1.2 trillion in annual trade among the three nations. But NAFTA’s replacement must still be approved by a bitterly divided Congress. Democrats have been circumspect in questioning Mexico’s sincerity about labor reforms designed to empower workers’ unions. Meanwhile, even though the USMCA is a priority for his administration, there’s always the chance Trump could sabotage his own trade deal given his frequent attacks on Mexico, especially as he begins campaigning for re-election. Those attacks ramped up as a flood of Central American
CREDIT: OFFICIAL WHITE HOUSE PHOTO BY STEPHANIE CHASEZ
President Donald Trump, joined by legislators and senior White House officials, announces the completion of the United States-Mexico-Canada Agreement (USMCA) on Oct. 1, 2018, during a press conference in the Rose Garden. The replacement for NAFTA still has to be ratified by the legislatures of Canada and the U.S.
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Judging by the merits themselves on trade, the USMCA will be passed. However, politics are getting in the way.
migrants inundated the U.S. border. In response, Trump characteristically tweeted that “Mexico is an ‘abuser’ of the United States, taking but never giving.” But many Mexicans feel they have been the ones abused by a U.S. president who has labeled them rapists and placed the onus on them to stem the current tide of migrants, despite their own limited resources. Nevertheless, the Mexican government — aware of its economic dependence on the U.S. — has adopted a conciliatory waitand-see approach to the president’s bombast. Former Mexican President Enrique Peña Nieto agreed to concessions in the USMCA that would, among
8 | THE WASHINGTON DIPLOMAT | JULY 2019
ALEJANDRO GÓMEZ-STROZZI partner at Foley & Lardner LLP
other things, boost the minimum wage of auto workers, putting Mexican workers at a disadvantage. Similarly, Peña Nieto’s successor, López Obrador, has tread carefully with Trump, emphasizing cooperation over confrontation while reforming Mexican labor laws to address Democratic concerns about the USMCA. But Trump’s latest tariff brinkmanship has shaken confidence that Congress will ratify the USMCA this year, let alone before the summer recess, said Alejandro Gómez-Strozzi, a partner at international law firm Foley & Lardner LLP who focuses on international trade compliance and Mexican administrative law.
“This is still politics in the U.S.,” Gómez-Strozzi said, pointing out that the tariff threats were intended to influence border control measures, not trade. “Judging by the merits themselves on trade, the USMCA will be passed. However, politics are getting in the way.” Exactly what those politics are may be difficult to parse. Was the president resorting to reverse psychology, raising the specter of a second trade war to spur Congress into ratifying the pact? Does he really believe tariffs imposed to stop immigration (and drug trafficking) can remain separate from the broader trade relationship? Is he setting up Congress as an obstructionist foe, the way anti-immigra-
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tion, populist leaders across the Atlantic have demonized the European Union? Was the threat of economically crippling tariffs actually a ploy designed to prod the Federal Reserve into lowering interest rates, as the president has long demanded? Or did he simply sense that the world’s attention had momentarily drifted from the ratings-topping Trump Show?
BORDER BREAKDOWN
Whatever Trump’s intentions, there is no doubt that the president is facing a growing border crisis. In May, U.S. authorities made nearly 145,000 arrests at the border with Mexico — a 13-year