Members of the private sector anticipate the renegotiated NAFTA will pass Congress even as political factors could change.
Private sector members last week expressed optimism that the U.S.-Mexico-Canada Agreement (USMCA) will pass Congress, even if party composition significantly changes.
“Come January 3, 2019, in the U.S., there’ll be a newly elected Congress, so potentially, a whole different group of lawmakers will be tasked with voting on the USMCA,” said KPMG U.S. National Practice Leader for Trade and Customs Andrew Siciliano during a webinar conducted by his firm Oct. 16. “But all indications are it should pass.”
American Automotive Policy Council President Matt Blunt during a Washington International Trade Association (WITA) panel discussion on Oct. 18 expressed a similar sentiment.
“If party control changes in one of the chambers, that does make it more difficult for the [Trump] administration to win approval of USMCA, but it’s still, in my opinion, highly doable,” Blunt said. “I think all of industry, [including] agriculture, will all be united with an argument that it’s really USMCA or no NAFTA. And we’ll push aggressively on all fronts to encourage Congress to pass the requisite legislation.”
During the WITA event, International Food Policy Research Institute senior research fellow Joe Glauber said if USMCA’s alternative is no NAFTA, “there will be a long, strong push to get it through with the members” of Congress.
But NAFTA will likely remain in effect through 2019, Siciliano said during the webinar.
Trade Promotion Authority (TPA) legislation established several procedural timelines that must conclude before a trade agreement negotiated by the U.S. can enter into force.
One of those procedures is an International Trade Commission (ITC) submission to Congress of a report on the likely economic effects of the trade agreement.
TPA requires the ITC to submit this report to Congress no later than 105 days after the president enters into the agreement, which could happen as early as Nov. 29, according to timelines laid out in the enacted legislation. That would give the ITC until March 14 to submit the report to Congress. The commission on Tuesday announced that it has started the required review.
The executive branch must provide Congress with the final legal text of the trade agreement and an accompanying statement of administrative action to implement the USMCA 30 days before it submits the implementing bill to Congress.
Once Congress receives the implementing legislation, TPA provides a total of 90 days for Congress to put implementing legislation through relevant committee processes and to pass the legislation before the President signs it into law.
Mexico and Canada also must funnel USMCA through their parliamentary approval processes. According to USMCA text, each government must notify other parties in writing after completing their respective domestic approval procedures. USMCA will enter into force on the first day of the third month following the last notification, according to the text.
Only if the president, U.S. Congress and Canadian and Mexican legislatures follow the above timelines aggressively could USMCA could enter into force as early as late summer/fall 2019.
Congressional Republicans have largely expressed favor for the renegotiated NAFTA, and key Democrats haven’t written it off.
“I think, in a nutshell, the likelihood of full implementation is probably not until sometime in early 2020,” Siciliano said. “That means if you weren’t using NAFTA or are using it today and want to switch over, you have about one year to prepare and get ready for the USMCA.”
Gisele Belotto, a managing director in KPMG’s Trade and Customs Practice, agreed with Siciliano on the general timeline, noting entry into force will take “at least a year.”
Outlook rosy for USMCA’s prospects in Congress
