The US-Mexico-Canada Agreement or USMCA is not law, at least not yet. NAFTA is still law. The USMCA is President Trump’s proposed replacement for NAFTA. Mexico already ratified the USMCA and Canada is on the verge of ratifying it. President Trump cannot just sign the USMCA into law. Congress must formally pass it, but the Democrats control the House of Representatives and they have a number of problems with the USMCA, probably the biggest problem is that President Trump is its author and primary advocate. Democrats are reluctant to give President Trump such a landmark victory, especially with elections are just a year away. The Democrats and some Republicans also complain about USMCA’s provisions related to labor, the environment, and patent protection for drugs.
The USMCA requires Mexico to revamp its labor laws within four years of ratification. For the US Congress to pass the USMCA, Mexico must first prove that it will foster unions and allow Mexican workers to bargain freely. US companies moved manufacturing operations to Mexico because they could pay Mexican worker less than US workers. The USMCA seeks to raise the wages and benefits of Mexican workers which, from President Trump’s perspective, will make the US worker relatively more attractive, perhaps even causing manufacturing jobs to come back to the US. The irony is that even as the Trump Administration promotes labor rights and benefits for Mexican workers, it opposes worker rights and benefits domestically. House Democrats thus far do not seem convinced that Mexico will or can actually become a workers’ paradise within four years.
President Trump is trying to entice House Democrats. For example, he rescinded tariffs on Mexican and Canadian aluminum and steel imports. That gambit did not work.
President Trump threatens to fast-track and force a vote after the summer recess by submitting the treaty to Congress. While there is no formal deadline for the President to submit the USMCA to Congress, once he submits the USMCA, both chambers of Congress would have ninety days to ratify it. But trying to force Nancy Pelosi, the Speaker of the House, to do anything is a fraught strategy. Speaker Pelosi held off President Bush for five years when he tried to fast-track a free-trade deal with Colombia.
President Trump also threatens to pull out of NAFTA altogether. Under Article 22 of NAFTA, any party to the treaty may withdraw from the agreement with a six-month notice. If Trump nullifies NAFTA, Congress will have no choice but to pass the USMCA. At least that is what the President thinks will happen, but if that option were real and sincere, why wait? Perhaps the resulting economic and legal chaos that surely will take place is making him hesitate. The U.S. has never withdrawn from a trade deal and it is unclear whether the President needs Congressional approval to withdraw from NAFTA. It is even more uncertain if Congress would approve the treaty under a forced vote. Of course, if his trade war with China teaches us anything, President Trump does not mind disrupting trade relations.