• Follow us

Economy

What happens if U.S. Congress fails to pass the new NAFTA deal? - Macleans.ca

The White House is starting to refer to it as “Plan B.”

After 15 months of trilateral trade negations amid threats from President Trump that he’d terminate NAFTA—“the worst trade deal in the history of America,” as he’d say—three countries finally reached an agreement in late 2018 on the framework for a new deal. It had a new name: the United States-Mexico-Canada Agreement (USMCA), sometimes referred to as NAFTA 2.0. Or, as Canadian officials attempted to style it, CUSMA.

Then, not long after the three country’s leaders proudly announced the USMCA, U.S. Democrats won back a majority in the House of Representatives and Speaker Nancy Pelosi opposed bringing the trade deal before Congress for a vote until her party could force some changes to the deal.

Canada, though, refused to open up talks after the fact to appease Dems. The White House was equally set against the idea. So while the USMCA framework remains in place, its future is now very much limbo.

Here comes Plan B.

“Your real two Plan Bs are either NAFTA or withdraw from NAFTA,” said Mike Mulvaney, the White House’s acting chief of staff, at last week’s Milken Institute Global Conference in Beverly Hills, Calif.

The former option means the status quo—business as usual under the deal that so offended Trump. The latter, if Trump followed through on his withdrawal threats, would put immense pressure back on House Democrats to sign the updated deal or risk many of America’s businesses suffering from widespread uncertainty over cross-border trade.

RELATED: The new NAFTA is in danger of dying—from lack of interest in Washington

Unlike previous threats from Trump to withdraw from NAFTA, this time Canada would have little, if any, ability to influence the White House’s decision.

In any case, if the Democrats do opt to kill the USMCA—or let it die on the vine—much for Canada hangs on the way things play out from there. So what are the likely scenarios?

***

Throughout his presidency, and even before it, Trump has revealed a pattern when it comes to trade deals, says Gary Hufbauer, a non-resident senior fellow at the Washington D.C.-based Peterson Institute for International Economics. “He likes headlines. He likes surprise. And from what we know in the polls, taking a tough stance on trade doesn’t hurt him with his base.”

If Pelosi outright refuses to advance USMCA legislation, Hufbauer says, “Trump will be highly motivated and, more likely than not, will send a letter terminating NAFTA to Prime Minister Trudeau and President Andrés Manuel López Obrador.” He considers the letter a 70 per cent probability—but a letter, he notes, “is not the same as termination.”

The letter would start a six-month countdown required by NAFTA before the U.S. could officially withdraw from the deal—and it would almost certainly open litigation as to whether a president can unilaterally pull the country from any trade deal.

In the interim, with the letters delivered, Speaker Pelosi and her team will be on the clock, says Dan Ujczo, a trade lawyer specializing in Canada-U.S. relations. “The reason is, the president can then go on the campaign trail and say ‘I got you a new trade deal. This is the best we can get from Mexico and Canada. And it’s the Democrats who won’t help you voters out in Ohio, Pennsylvania, Michigan.’”

While termination of NAFTA would do a lot of economic harm to America, not to mention both Canada and Mexico, “the key issue is not the economic harm,” agrees Hufbauer. “It’s who takes the blame.”

If polls suggest Trump would take the blame for NAFTA’s demise, “then he would delay [NAFTA withdrawal],” Hufbauer says. “He could send the letter and when the date comes he’ll say ‘we’ll give the Democrats more time.’”

But if the Democrats are deemed by most Americans as the party at fault for trade uncertainty—“then it’s more likely NAFTA gets terminated without USMCA in place.”

RELATED: What a Democrat-controlled House means for the new NAFTA deal

In a still unpublished work, Hufbauer and a colleague analyzed 80 congressional districts that are heavily exposed to trade with Canada, and another 80 heavily exposed to trade with Mexico. What they found, he says, was “a good number” of the total 160 were Democratic districts. Some had economies tied to trade with both Canada and Mexico.

Any American who works in an export-oriented industry that relies on Mexico or Canada would quickly become aware of his or her job being at risk stake as the six-month NAFTA termination clock ticks, Hufbauer predicts. Based on electoral arithmetic—and Democrats not wanting to lose seats in Congress—he says it’s possible there would be enough Democratic congressmen to vote with Republicans in favour of the USMCA to get it passed.

But that assumes Speaker Pelosi brings USMCA to the floor for a vote, at all, which is increasingly in question.

***

The Democrats insist they aren’t opposed to free-trade deals. Pelosi maintains she wants negotiations to re-open on USMCA to address important issues regarding pharmaceuticals, workers’ rights, the environment, and to get stronger enforcement provisions in the deal.

But what the Speaker really wants, says Dan Ujczo, a trade lawyer specializing in Canada-U.S. relations, is to deprive Trump of the chance to trumpet delivery of a campaign promise before the 2020 U.S. presidential election: “This is about 2020 politics, not policy.”

Canada, of course, would be largely unable to exert influence on these events, experts say, other than continuing to stress to American politicians the importance of having a trade deal in place. But the effects would be felt all the same.

Should the Trump administration trigger the NAFTA withdrawal notice—even as a tactic to move the [USMCA] deal forward—”the consequences for Canada would be immediate and negative,” says Meredith Lilly, an associate professor and the Simon Reisman chair in international affairs at Carleton University. “While the trade deal would remain in effect for a minimum six-month period, the broader signals about Canada’s competitiveness and being an attractive destination to invest would take a serious hit.”

RELATED: The Nancy walking all over Trump

Thus, presumably, would begin rounds of litigation in the U.S. courts over the president’s executive authority on trade deals, creating still more risk for Canada. “While all this uncertainty continues, capital investment in Canada will not be made,” says Lawrence Herman, a Toronto-based international trade lawyer. “People will shy away from putting money into plants, equipment, offices, development of services—including software—and prefer to put their money in the United States.”

Trade will still continue between Canada and the U.S., he stresses, but it won’t be preferential: “The notion that Canada is a launching pad for access to the U.S. market will disappear.”

Between the politics, polling and court cases that would almost certainly wind up in the U.S. Supreme Court, Ujczo can’t see a scenario between now and the U.S. presidential election in November 2020 where neither NAFTA nor the USMCA is in effect.

“It’s just a question,” he says, “of how bumpy that ride will be.”

MORE ABOUT USMCA: Read More



Leave A Comment

More News

Economy – Macleans.ca

What $2-million will buy in five Canadian real 2019-05-10 14:10:31From a seaside dining room in PEI to 20 rooms and a private putting green just outside Montreal The post What $2-million will buy in five Canadian rea

What happens if U.S. Congress fails to pass 2019-05-10 12:30:23The consequences for Canada could be bad—very bad, say experts. But not every scenario is bleak. The post What happens if U.S. Congress fails to

How software company D2L revolutionized the way classrooms 2019-05-09 12:09:05When five twentysomethings founded D2L, technology was everywhere—except the classroom. So they decided to reboot the education system. The post

Carbon tax ruling is a modest win for 2019-05-03 18:46:48The Saskatchewan court decision puts the Liberals on better campaign footing at a time when they're visibly wobbling The post Carbon tax ruling is a

Bankrupt oil companies are saddling Alberta landowners with 2019-05-02 15:57:21The Orphan Well Association is tasked with cleaning up the environmental messes left behind, but it’s having trouble keeping up as oil companies

Why Canada isn’t fighting China over canola 2019-05-01 18:53:48This country is 'a flea on China's shoulder,' says one expert, and is best advised to ride the rough patch out The post Why Canada isn’t figh

Stephen Poloz on taming the housing market and 2019-05-01 17:51:00The Bank of Canada governor talks to Paul Wells about the state of the economy and how central bankers work in the age of Trump The post Stephen Poloz

What to study to land one of Canada’s 2019-04-30 12:31:34We crunched the data to find promising careers with big salaries. Here’s what to study to land something lucrative. The post What to study to la

Will legal slëepøvers at Ikea deter showroom squatters? 2019-04-25 14:05:40No drinking, no weapons, and no public displays of affection are allowed. How fun can that kind of slumber party really be? The post Will legal sl&eum

Jim Balsillie has emerged from retirement with a 2019-04-23 14:21:09He's launched a battle against Sidewalk Labs, troubled at the prospect of the world's largest data company having free reign over Toronto's waterfr

Real Estate: What $250,000 will buy in four 2019-04-22 16:09:50From a two-bedroom condo on the edges of Toronto to a sprawling "collector's item" in Moncton The post Real Estate: What $250,000 will buy in four

TORONTO STAR | BUSINESS

IMF urges Canada to stay course despite calls 2019-05-21 14:00:53

Canadian crude discount hits its widest this year 2019-05-21 13:05:00Western Canadian Select traded at $21.13 less per barrel than West Texas Intermediate on Tuesday, the widest discount since Dec. 31.

Minister Bains outlines digital charter with focus on 2019-05-21 13:03:27

Netflix and Coca-Cola partner for season 3 of 2019-05-21 12:25:58Netflix hasn’t accepted money from Coca-Cola, but the beverage company will feature some limited Stranger Things branding.

Countermeasures key to ending tariff stalemate with U.S., 2019-05-21 12:21:00‘One of the things that we saw very clearly, and the Americans learned, is that Canadians were going to stay firm’

Airbus extends ex-Bombardier jet’s range to challenge Boeing 2019-05-21 12:03:57Boosting the range of the A220 single-aisle jet will permit new services from Western Europe to the Middle East and between Southeast Asia and Austral

Materials and industrials weigh on TSX, U.S. stock 2019-05-21 11:22:00Canada's main stock index edges lower in late-morning trading due to losses in the key industrial and materials sectors

Norbord suspends production at northern Alberta mill due 2019-05-21 10:23:27

Rogers to launch new Internet of Things service 2019-05-21 10:05:00The company says the new wireless service will be best used for asset monitoring, industrial automation, utility meters and smart cities.

Shareholder activists may target pot stocks next 2019-05-21 09:59:56High valuations, unprofitable operations and insular ownership structures may prompt activists to get involved in the industry, according to analysts.

Fairfax Financial says chief financial officer David Bonham 2019-05-21 09:56:53

RBC green bonds may be used to finance 2019-05-21 09:37:56Royal Bank of Canada may make loans to oil and gas companies seeking to reduce their environmental impact under its recently created green bond progra

: Money

Here’s what happens if you die with too 2019-05-18 06:00:35Saving for retirement is important — but so is knowing how much to withdraw when you finally get there.

Scheer says Canada needs coast-to-coast corridor for pipeline 2019-05-16 14:38:29In a speech laying out his economic vision, the opposition leader says having one dedicated route would make it easier to approve major new energy pro

Walmart warns China tariffs will lead to higher 2019-05-16 13:17:02Walmart declined to comment on what type of price hikes shoppers could expect and which products would get the biggest increases.

Bank of Canada flags climate change as ‘vulnerability’ 2019-05-16 11:03:28The Bank of Canada is highlighting its growing concerns about the challenges of climate change for the economy and the financial system.

Air Canada in talks to purchase Air Transat 2019-05-16 08:49:46Transat AT Inc. is in exclusive talks with Air Canada, which is offering roughly $488 million to buy the travel company.

Controversial tanker ban Bill C-48 rejected by Senate 2019-05-15 20:53:17A senate committee has recommended not to proceed with the controversial Bill C-48 aimed at limiting tanker traffic along the northern B.C. coast.

Canadian home sales up 4.2% year-over-year, first increase 2019-05-15 09:54:01The national average price edged up 0.3 per cent in April compared to the same month in 2018.

Canada’s inflation up 2% in April, as carbon 2019-05-15 09:09:02Inflation is in line with the Bank of Canada's target, which lowers the chance of another interest rate move in the near term, economists said.

President Xi defends Chinese ‘civilization,’ slams isolationism as 2019-05-15 08:25:29No country could stand alone, Xi said, perhaps taking an indirect swipe at U.S. President Donald Trump's "America First" policy.

More millennials are signing prenups — and 2019-05-14 14:58:06"They really give that peace of mind, like car insurance."

Cancer patient was cut off from work disability 2019-05-11 06:00:39Phillip Fitzsimmons had group disability benefits, but two years into his battle with cancer, he found himself living on just $1,000 a month.

Enbridge aiming to boost Mainline throughput as Q1 2019-05-10 14:12:00Enbridge is working with shippers to optimize its Mainline pipeline system in a bid to boost throughput by 50,000 to 100,000 barrels per day.

Canada Business - The

Justin Trudeau Credits Immigration For Canada's High-Tech Success 2019-05-20 20:58:03TORONTO — Prime Minister Justin Trudeau says immigration is a significant reason why Canada’s technology sector has been thriving.The

Canada 300,000 Homes Short Because Students Ignored In 2019-05-20 12:52:36MONTREAL — If policymakers want to help solve Canada’s housing affordability crisis, they should start by building rental housing near col

Toronto's Billy Bishop Airport Ranked 9th Worst In 2019-05-19 17:06:46The Toronto Island Airport ranked poorly mainly because of its on-time performance, according to AirHelp, an air passenger rights website. The best ai

Mayochup Translates To 'S**tface' In Cree 2019-05-18 15:41:32A lot of people are celebrating the arrival of the famed ketchup-mayo blend — mayochup — to Canada. But people who speak Cree are laughing

Canada's Mortgage Rates Are Coming Down, With Record 2019-05-17 15:47:46MONTREAL — There’s a little bit of good news out there for Canada’s increasingly stressed-out homebuyers: The pressure from rising m

Bank Of Canada Lists Climate Change As Key 2019-05-16 12:13:30OTTAWA—The Bank of Canada is highlighting its expanding concerns about climate change and, for the first time, is listing it among the top weak

Beyond Meat Patties Coming To Tim Hortons 2019-05-15 16:24:38The popular restaurant chain is testing out Beyond Meat breakfast “sausages” at certain locations. If the items are successful, the plant-

Steven Mnuchin: U.S. Close To Scrapping Steel, Aluminum 2019-05-15 15:41:56OTTAWA — A top Trump administration cabinet member says the end of punishing steel and aluminium tariffs on Canada and Mexico is close at hand.&

Trudeau: Notre Dame Can Be Rebuilt With Canadian 2019-05-15 12:34:27PARIS —Canada is offering softwood lumber and steel to help with the reconstruction of Paris’s famed Notre Dame Cathedral, Prime Minister

Vancouver Housing Market Not Even Among The Top 2019-05-15 11:55:50Remember when Vancouver used to top the lists of the world’s hottest housing markets?Well, these days it’s pretty much the opposite.There

What Is Onex, WestJet's Potential New Owner? 2019-05-15 11:29:47Onex Corp. hasn’t sealed the deal yet in its quest to snap up Calgary-based airlines WestJet but it’s $5-billion offer is a start. 

U.S.-China Trade War Threatens To Shrink Canada's Economy 2019-05-14 15:16:00MONTREAL — The sudden escalation in the U.S.-China trade war could have serious consequences for Canada, according to economists at the Bank of

CBC | Business News

Canada a leader among G20 for plan to 2019-05-21 17:31:35Canada is among the leaders in the world when it comes to phasing out the use of coal for power generation, according to a recent report that shows th

Countermeasures were key to ending tariff stalemate with 2019-05-21 14:41:29Canada's retaliatory tariffs on American goods played a key role in restoring free access to the U.S. market for Canadian steel and aluminum, Prime M

IMF urges Canada not to change policy despite 2019-05-21 14:22:31The International Monetary Fund says household debt in Canada is still too high to pursue policy changes to encourage more activity in housing markets

Trudeau government to overhaul laws governing internet, digital 2019-05-21 13:46:25Prime Minister Justin Trudeau's government set the stage Tuesday for an overhaul of Canada's laws governing the internet and digital privacy.

Canada Pension Plan will invest $200M in specialty 2019-05-21 10:02:57The Canada Pension Plan Investment Board has signed a deal to invest roughly $200 million in specialty food company Premium Brands Holdings Corp.

China rejects Trump claim U.S. tariffs are making 2019-05-21 09:25:52Foreign investors remained enthusiastic about China, the foreign ministry said on Tuesday, following U.S. President Donald Trump's claim that his tar

Celebrity chef Jamie Oliver's U.K. restaurant chain collapses 2019-05-21 08:35:59Celebrity chef Jamie Oliver's British restaurant chain filed for bankruptcy protection on Tuesday, partly due to increased competition and escalating

U.S. temporarily eases restrictions on Huawei — but 2019-05-21 07:30:53The United States has temporarily eased trade restrictions on China's Huawei to minimize disruption for its customers, a move the founder of the worl

Small nuclear reactors could make Alberta's oilsands cleaner, 2019-05-21 07:30:00Alberta's oilsands have been labelled as dirty by environmental activists and some politicians, but the sector might be able to clean up that reputat

The disturbing question of why Canada's done so 2019-05-21 04:00:00Despite the latest flurry of money-laundering stories, it's not a new problem. Canada has long had a reputation as haven for illicit cash. Was it jus

Trudeau credits immigration for Canada's growing tech sector 2019-05-20 21:20:34Prime Minister Justin Trudeau told hundreds of attendees at a conference in Toronto on Monday that Canada's thriving technology sector is a result of

U.S. warns companies of data threat from Chinese-made 2019-05-20 18:01:04The U.S. Department of Homeland Security has warned U.S. firms of the risks to company data from Chinese-made drones, according to a notice reviewed b

Christian Science Monitor |

This Nebraska Republican says it’s time to think 2019-05-11 19:01:51President Trump is meeting with Democrats on infrastructure. Rural America says that, from roads to internet access, it needs to be part of any plan.

A doubly green deal? Clean energy jobs also 2019-05-11 19:01:51New analysis from the Brookings Institution suggests that transitioning to clean energy sources could open up a range of high-paying career paths.

NYC, largest fur market in country, considers ban 2019-05-11 19:01:51If passed, New York would become the third major American city to ban the sale of fur. Industry advocates argue the ban will trigger the loss of more

Taxpayers need help. So does the IRS. 2019-05-11 19:01:51The IRS budget has been cut 17% since 2010, even as the tax code has grown more complicated. Enforcement and customer service are strained.

Border crisis delays truckers hours, sometimes days 2019-05-11 19:01:51President Donald Trump has beefed up border security, but with inspectors assigned elsewhere, trucks crossing into the U.S. with goods from Mexico for

In debt or struggling to save? Artificial intelligence 2019-05-11 19:01:51With friendly names like “Charlie,” the latest financial apps use algorithms to analyze spending habits and give advice. But they’re

Why capitalism in America now needs its defenders 2019-05-11 19:01:51Capitalism or socialism? At a Monitor Breakfast Wednesday, Larry Kudlow defended capitalism as the best path to prosperity for all.

‘Too cozy.’ Boeing crashes raise doubts over FAA 2019-05-11 19:01:51The crash of Boeing 737 Max jetliners in Indonesia and Ethiopia have prompted reviews not just of the airplane but of regulators’ approval

Rural America faces housing cost hardship 2019-05-11 19:01:51Over the past decade, nearly a fourth of U.S. rural counties have seen a sharp increase in households spending half or more of their income on housing

Childless workers often lose out on tax credits. 2019-05-11 19:01:51A tax-refund initiative in Atlanta showcases a type of welfare program that can reduce poverty without discouraging work.

Legal pot: Why minorities say they’re being left 2019-05-11 19:01:51Black lawmakers from New York to Georgia threaten to block marijuana legalization unless there are concessions for drug-war scarred neighborhoods.

Trapped in tariffs, firms tied to lobster industry 2019-05-11 19:01:51From tariffs on lobsters to duties on the steel in lobster traps, here’s how one U.S. industry is affected by trade tension with China and Europ


Disclaimer and Notice:WorldProNews.com is not responsible of these news or any information published on this website.