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Dittmer: Ratifying the new NAFTA deal

Free Market Reflections with Steve Dittmer

With all the hoopla over the U.S.-China negotiations, the ratification of the re-done NAFTA trade deal (USMCA-CUSMA) hasn’t been in the news much. But its passage is critical to all three nations involved.

The issue has shifted from the diplomats and negotiators to the politicians. That’s sad and bad. In the U.S., the treaty is caught up in “we don’t want to give Trump anything” Democratic politics first and then labour union and enviro-zealot demands next. The new agreement incorporates more labour and environmental provisions than any treaty the U.S. has ever signed — similar to those in the TPP agreement from which President Trump withdrew — but the Democrats are still complaining.

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I look at most of those provisions as busybody American activists telling other countries what they should be doing. Of course, for our Democrat left, condoning one country’s government meddling in another country’s business is just a short leap from their ideas of our government telling citizens what they can and can’t do.

Speaking of which, I understand the Green Party is winning some provincial seats in Canada, punching above their previous weight. The Liberals under Prime Minister Trudeau are struggling and the Conservatives re-gaining some favour. Movements can start at the local level, as demonstrated recently in Alberta’s elections.

As avid observers of our political chaos, you all know that the left’s fervour devoted to “getting Trump” has not abated much. Only the crash of the China negotiations gathered any attention. But the Trump hunting continues to suck much of the oxygen out of Washington, D.C. An Inspector General’s report — an internal investigation at the Department of Justice — is due in June. More fuel on the fire.

I’m gathering that neither Mexico nor Canada want to move on the agreement before the U.S. votes on it. The Mexican legislature has already passed new laws designed to meet the labour provisions in the new agreement. They are disinclined to revisit the subject again.

I’m told there are actually some U.S. House committees working on something other than nailing Trump to the barn door — they have actually subpoenaed financial records from his grandchildren — but it takes some looking.

The key House Ways and Means Committee chairman at last word was undecided. House Speaker Nancy Pelosi has called for changes in the agreement. Putting a trade deal in front of American members of Congress and telling them they can’t change it is like putting prime rib from Golf’s in Regina in front of me and saying I can’t touch it. You get a 10-second delay for photos and that’s it.

The House Ways and Means Committee chairman back in March said he didn’t foresee Congress voting on the agreement by summer. He had leaned towards not reopening the agreement but equivocated by saying he hadn’t seen the text.

The Senate Finance Committee chairman Chuck Grassley of Iowa is pushing for the treaty but sees some roadblocks. He said there “is no appetite in Congress for debating the agreement with the steel and aluminum tariffs in place.” Canada and Mexico have said the same. American pork producers would certainly like to get their Mexican markets back. Grassley points to the 12 million U.S. jobs dependent on trade with Canada and Mexico. His comments about free trade agreements are cogent:

“I have been involved in the passage of every U.S. free trade agreement, and it’s never easy,” Grassley said. “Reorganizing a massive economic relationship affects many constituencies, and that’s inevitably complicated.” Not getting the agreement ratified this year would also damage U.S. credibility in getting the China-U.S. deal done.*

He also said we should be dealing with the steel industry overcapacity by dealing with China, meaning, not with Canada.

Your Canadian Cattlemen’s Association has pointed out that Prime Minister Trudeau had said he didn’t want to present the agreement to Parliament until Congress is at least debating it. With Parliament rising in June and no sessions until after October’s elections (how do you all manage that sweet deal?), that likely puts Canada’s approval to the end of the year.

Note: After this column was written, news broke that Prime Minister Trudeau, President Trump and trade officials had agreed in a series of phone calls to lift America’s steel (25 per cent) and aluminum (10 per cent) tariffs on Canadian metals and Canada’s retaliatory tariffs almost immediately. Similar agreements have been executed with Mexico. This removes the key obstacle to Parliament’s ratification of the CUSMA-USMCA treaty. Canada had refused to accept steel quotas and the U.S. reportedly agreed to drop that demand. Both countries will monitor imports and work together, if necessary, to deal with unfairly subsidized, cheaper metal imports or transshipments to either country. The agreement will also help boost Congressional support for passage of the treaty.

*(“Trump’s Tariffs End or His Trade Deal Dies,” Wall Street Journal, 4/29/2019)

About the author

Contributor

Steve Dittmer is the CEO of Agribusiness Freedom Foundation, a non-profit group promoting free market principles throughout the food chain. He can be reached at [email protected]

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