Though the USMCA has been ratified by Mexico, the trade agreement still faces a vote in Canada and, perhaps more concerning, the US. Under the Trade Promotion Authority (“TPA”), both houses of US Congress must vote in favor of the implementing bill, which is expected to be submitted to Congress after September 1. Submission of the implementing legislation operates to start the 90-day clock for Congressional approval. Accordingly and assuming the implementing bill is submitted as anticipated, passage of the USMCA by the US this calendar year remains an attainable goal.
There are, however, a number of complicating factors. Although USTR Lighthizer has been working closely with House Democrats for months, a number of Democrats have been quite vocal in opposition to certain provisions of the USMCA—particularly those relating to labor, environmental concerns, prescription drug pricing and the exclusivity period for biologics, and dispute resolution and enforcement. Whether Congress will press for resolution of these issues in the USMCA text or settle for side agreements with Canada and Mexico on these issues remains to be seen. However, Rep. Buddy Carter (R-Ga) has suggested solutions to these disputed issues may not necessarily need to be contained in the agreement itself; although whether this reflects the opinion of a majority of Congress is uncertain (and likely doubtful). Moreover, Mexico has already passed labor reform legislation and indicated an unwillingness to reopen negotiations of the agreement’s text. Accordingly, Congressional pressure for a renegotiation may spell the end of the USMCA—at least for now.
Notwithstanding the uncertainty in Congress, there has been an outpouring of support for the USMCA by numerous businesses and trade organizations. Though House Democrats have been vocal in opposition to certain provisions of the agreement, there does appear to be some consensus that NAFTA has become outdated and in need of replacement or revision. As is typical, however, the devil is proving to be in the details.
In the event the USMCA cannot obtain Congressional approval this year, it may very well find itself a casualty of the upcoming US presidential election. Pushing a vote into 2020 could further delay ratification of the agreement or, depending on the outcome of the election, kill it entirely. If the Democrats carry the 2020 presidential election, the USMCA might very well find itself labeled a “Trump deal” and be relegated to the legislative dustbin. Conversely, if President Trump is reelected, the USMCA will still need to find its way through the Congressional approval process of the TPA.