Despite its efforts, Trump team won't finish new NAFTA in 2017

The Trump administration is off to the races in starting and completing the renegotiation of the North American Free Trade Agreement (NAFTA). After the administration announced earlier this year that it would seek to renegotiate NAFTA, it often stated that its goal is to complete the negotiations as soon as possible — possibly by the end of this year.

This is likely driven by the administration’s desire to quickly improve what the president considers to be a flawed and unfair agreement. Another reason is to complete the negotiations before the lead-up to Mexico’s presidential election in June of next year, when Mexico’s ability to negotiate will be limited. Nonetheless, it will be extremely difficult for the administration to complete the negotiations by the end of 2017, or even by the beginning of 2018.

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The scope of the substantive changes to NAFTA sought by the administration is certainly one reason why the negotiations will not be completed soon. The summary of negotiating objectives issued by the administration on July 17 show that the administration is not seeking mere tweaks to NAFTA.

 

Rather, the administration is seeking significant changes to NAFTA’s existing provisions and wants to add new provisions spanning from rules on digital trade and state-owned enterprises to disciplines on currency manipulation. The complexity of these issues, plus likely strong opposition from Canada and Mexico on some changes, does not portend well for a rapid negotiation.

Even if the administration’s negotiating ability enables it to swiftly move through these issues, there is another factor — TPA. The administration issued the summary of negotiation objectives to comply with the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, commonly referred to as TPA.

TPA requires the administration to meet certain congressional consultation and notification requirements regarding the negotiation of trade agreements, as well as to seek negotiating objectives described in TPA. If these requirements are met for a trade agreement, then any resulting implementing legislation needed to change U.S. law receives streamlined consideration by Congress.

So far, the Trump administration is seeking to meet the requirements of TPA for the renegotiation of NAFTA. TPA requires the posting of a summary of negotiating objectives no less than 30 days before negotiations begin, which the administration has sought to do. The administration also earlier sought to meet TPA’s requirement to notify Congress of its intent to begin the renegotiation of NAFTA no less than 90 days before negotiations begin when the administration sent its notification in May.

However, these are not the last of the timeline-based requirements in TPA. Before the administration can sign a renegotiated NAFTA, it must have met four more such requirements. First, the administration is required to notify Congress of whether there are potential changes to the U.S. trade remedy laws (the antidumping and countervailing duty laws) as a result of the renegotiated NAFTA 180 days before signature.

The administration must then later notify Congress of its intent to sign the agreement at least 90 days before signature and also publicly release the agreement text 60 days before signature. In addition, the administration is required to provide information on the agreement to the International Trade Commission no later than 90 days before signing.

These deadlines show that it is essentially impossible for the administration to conclude negotiations and sign a renegotiated NAFTA by the end of this year and comply with TPA. Even if the negotiations were concluded within a few months, the window to sign a renegotiated NAFTA during the first quarter of 2018 would still be extraordinarily tight.

The administration could reach an agreement in concept without signing, but this would be inconsistent with having an agreement completed before Mexico’s presidential election season.

Another option would be for the administration to decide to not have the implementing legislation for a renegotiated NAFTA subject to TPA and for it instead to be considered by Congress without any streamlined procedures. This is simply not realistic. Getting implementing legislation through Congress that has “NAFTA” in its title will be a significant political challenge even with the benefits of TPA.

Doing this without TPA, where the legislation can be amended, requiring the renegotiated NAFTA to be reopened and subject to regular procedural rules is virtually impossible.  

The bottom line is that it is not practical for the administration to try to complete the renegotiation of NAFTA on a tight schedule. A better approach would be to diligently renegotiate NAFTA, while complying with the above notification requirements of TPA, as well as TPA’s requirements to fully consult with Congress.

This would result in a better chance of Congress passing a renegotiated NAFTA under TPA. Indeed, if this means that the implementing legislation for a renegotiated NAFTA is not considered until after the 2018 congressional elections, potentially so much the better.

Stephen J. Claeys focuses on issues relating to international trade as a partner at Wiley Rein LLP, which represents clients in complex, high-stakes regulatory, litigation and transactional matters. Claeys previously handled international trade issues in the White House, the House of Representatives Committee on Ways & Means and the Department of Commerce.


The views expressed by contributors are their own and not the views of The Hill.