Trump's Trade Deal with Mexico Looks Like a Dud
The deal empowers "government bureaucrats rather than markets to determine the components in cars and other goods," says Sen. Ben Sasse.
Barely 24 hours after it was announced, President Donald Trump's trade deal with Mexico appears to be hitting the skids. Congressional Republicans are voicing widespread opposition to this bilateral NAFTA rewrite that leaves Canada out.
And even if they did like it, they probably couldn't pass it.
Cutting straight to the chase, outgoing senator (and frequent Trump critic) Bob Corker of Tennessee suggests to The Washington Post that the supposed deal "is more for optics and people feeling good about the future as it relates to the midterms than it is reality."
Meanwhile, Senate Finance Committee Chairman Orrin Hatch (R-Utah) says the deal is a step in the right direction but that it should include Canada. Other Republicans have raised concerns about the lack of specifics in the plan, which the White House intends to formally present to Congress on Friday.
The harshest criticism comes from Sen. Ben Sasse (R-Neb.), who criticizes the deal for "empowering government bureaucrats rather than markets to determine the components in cars and other goods."
He's likely referring to an increase in the percentage of a car—from 62.5 percent to 75 percent—that must be built within the U.S. or Mexico to qualify for duty-free trade. That detail, one of the few specifics released so far, has also raised concerns from industry groups, whose support will be crucial to getting any NAFTA replacement through Congress.
As with so many other items on the policy agenda, the Trump administration seems to have taken a "fuck it, do it live" approach to renegotiating NAFTA. With only days remaining before a critical September 1 deadline, officials seem ready to press ahead with a bilateral rewrite of the three-party trade deal with the vague hope that Canada either will jump aboard as the train leaves the station or can be shoehorned into the agreement at a later date.
"We will see whether or not we decide to put up Canada or just do a separate deal with Canada," Trump said Monday.
That slapdash effort might be literally impossible to push through Congress, even if Republicans were thrilled with it.
Under the terms of a Trade Promotion Authority (TPA) passed in 2017, Congress has agreed to let the administration negotiate trade deals and promises to subject the final version to a straight yes-or-no vote—essentially promising that individual members won't try to muck up the deal at the last minute. But the administration is limited in what it can do too. It must get permission from Congress, and must outline what deal will be subject to TPA.
When Robert Lighthizer, the U.S. Trade Representative, wrote to Congress last year seeking a TPA for a NAFTA renegotiation, he specifically requested permission "to initiate negotiations with Canada and Mexico." That permission can't be applied to a bilateral deal between the U.S. and Mexico any more than it could be applied to a bilateral deal between the U.S. and Brazil. Getting congressional permission for a bilateral agreement with Mexico would take as much as 180 days, according to CNBC. It would certainly push any possible dealmaking off until next year, when a new Mexican president—and potential shifts in Congress' balance of power—would change the dynamics.
Congress could derail Trump's deal with Mexico on policy grounds, or it could simply point to the TPA rules, shrug, and tell the president that there's nothing it can do because of the procedural rules. Either way the deal's prospects don't look good.