WASHINGTON — President Donald Trump, who has struggled to strong-arm a newly divided Congress into funding his proposed border wall, could be in for a similar fight over his new North American trade agreement.
That's because the December-January partial government shutdown — caused by the impasse over wall funding — compressed the timeline for Congress to consider the proposed rewrite to NAFTA, complicating difficult odds for approval and weakening Trump's negotiating hand, according to trade experts.
With the 2020 presidential campaign poised to heat up in the fall, time is limited for the White House to win support of lawmakers, many of whom wonder whether the United States- Mexico-Canada Agreement sufficiently levels the rules and generates the manufacturing jobs Trump claims.
Businesses are displeased about increased costs from USMCA changes, but prefer them to restrictions in a non-NAFTA world.
"The core of the problem is [White House officials] did not build broad-based support in Congress or among traders before launching negotiations and did not sustain support during negotiations," said Scott Miller, a senior trade adviser at the Center for Strategic and International Studies. "They got an agreement that nobody is in love with, except the president," and lining up votes at this late stage will be difficult.
The administration has tried to get back on schedule. It submitted to Congress the list of changes to U.S. law needed for USMCA to take effect, but with many procedural hurdles remaining, the window to pass an implementing bill is narrowing. U.S. Trade Representative Robert Lighthizer must still draft the bill's text and a statement of administrative action so Congress can make informal suggestions before a final copy can be submitted and then formally filed in each chamber.
Meanwhile, Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Congress can't consider the free-trade agreement until the International Trade Commission finishes its economic impact report, now pushed to mid-April because of the 35-day partial government shutdown.
Assessing how lower tariffs benefit the economy is relatively straightforward for the agency, but analysts there are finding it difficult to quantify the reduction in nontariff barriers, such as regulatory cooperation or commitments to modernize customs processes.
There are also problems measuring the impact of new rules of origin for automobiles and components, including a minimum-wage provision, that companies must meet to qualify for zero tariffs on imports, said Vanessa Sciarra, vice president for trade and investment policy at the National Foreign Trade Council.
One former trade practitioner at a large multinational firm predicted the ITC report would show little improvement over NAFTA, especially after factoring in higher expenses and lower productivity for the auto sector. The findings could color how some lawmakers perceive the deal, he said.
"I don't think the report necessarily is going to change hearts and minds on the Hill," Sciarra said.
Democrats question whether USMCA includes enforceable provisions for Mexico to introduce more protections for workers and the environment, but they haven't staked out a formal position yet as deliberations within their caucus continue.
The higher standards are intended to raise the cost of doing business in Mexico and make U.S. companies think twice about moving production there.