Congressional lawmakers, government officials and trade experts say that an updated North American Free Trade Agreement (NAFTA) can be completed this year even though a slew of challenges remain.
Negotiators from the United States, Canada and Mexico have been working nearly nonstop to reach a deal, but the long-standing trading partners have yet to finalize an updated pact after nine months of talks.
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Still, there is optimism about reaching an agreement despite a series of obstacles.
Kirsten Hillman, Canada’s deputy ambassador to the United States, said she thinks a deal can be reached by year’s end.
“I think that the runway toward getting a deal that is going to be able to pass through Congress in the United States is getting shorter, that’s for sure,” she said at an event hosted by The Hill entitled “NAFTA and North American Competitiveness: A U.S.-Canada Conversation.”
Yet there is momentum to complete an update of the 24-year-old NAFTA deal, she said.
“We have a very strong sense of common goal in terms of getting the deal completed as soon as possible,” she said.
The U.S. and Canada comprise a $1 trillion trading zone and have the largest trading relationship in the world, involving millions of jobs that depend on the continued partnership.
“Our responsibility as governments is not only to do no harm, but to create an environment in North America that is competitive, that is world-class in terms of its ability to compete with other jurisdictions, with other regions of this world, because they’re not going to wait for us,” Hillman said.
Speaker Paul Ryan (R-Wis.) said recently that he would need a NAFTA deal by Thursday if the Trump administration wants Congress to pass an agreement this year.
Fast-track rules require any new trade agreement to go through a specific set of procedures that would take months to complete.
But in recent days it had become clear that the three countries were going to miss Ryan’s deadline.
Rep. Erik Paulsen (R-Minn.), a member of the House Ways and Means Committee, said with the timeline that is out there the best scenario is that NAFTA is concluded in the next few days and can be ratified this Congress.
“But the next best scenario is we have a successful, negotiated, modernized NAFTA that it is finished and completed soon, but that it gets signed into law by the next Congress,” Paulsen said.
“Those are the two best scenarios that we should be emphasizing and pushing for.”
Paulsen acknowledged that it’s going to be tough to get a deal though Congress.
“Trade deals, if you’ve looked at every vote we’ve ever had on any of them, have always been fairly tight, fairly close,” he said.
“And that’s the component of, I think, the political nature of those deals. And that’s negotiation that goes on that every member would have to sell individually to their district.”
Rep. Suzan DelBene (D-Wash.), a member of the Ways and Means Committee, said that if there isn’t an agreement soon this Congress won’t have a chance to vote on a revised deal.
“But I’m really uncertain about that,” she said.
“Frankly, the fact that there isn’t an agreement right now probably doesn’t bode well for it being done before the end of this Congress,” she said.
“And I actually think the substance should drive the conversation, not just a timeline.”
DelBene said the New Democrat Coalition was meeting with U.S. Trade Representative Robert Lighthizer on Wednesday to learn more about where the deal stands.
Amid the progress on the NAFTA deal, there are a handful of obstacles remaining before the trading partners can ink a new agreement.
Most of the panelists expressed concern about the U.S. suggestion to add a five-year sunset clause to the agreement, a major sticking point for NAFTA supporters.
Paulsen and DelBene said Lighthizer’s push for a five-year sunset clause in the deal isn’t a good idea.
“Well, I think people need certainty and stability going forward,” DelBene said.
“Five years isn’t very long when you look at not only a business cycle but even for our farmers who are planning out,” she said.
“So I think it’s concerning that there would be a five-year sunset right away, because the second you’d get started people would wonder if the agreement is going to last beyond that and I think that would impact a lot of business and undermine a lot of the work that would happen.”
Rufus Yerxa, president of the National Foreign Trade Council, said that “despite a lot of the happy talk about the optimism of getting it done, there’s these sort of four or five key issues that are still major points.”
Yerxa highlighted auto rules of origin, the investor-state dispute settlement process, the binational panels on anti-dumping and countervailing duties and the proposed sunset clause.
“This notion that you would have the agreement terminate after five years unless it was being extended, which from just about everybody’s point of view — business and the other two governments — is really an unacceptable provision,” he said.
He defined the stances as “hard-line” positions taken by the United States that aren’t “really supported by the vast majority of U.S. businesses, but we hope we can get those behind us.”
Yerxa said that it is critical for the Trump administration to get NAFTA done.
“If you really want to strengthen trade investment, strengthen the overall North American economy,” he said.
President Trump has repeatedly said he would withdraw from the deal if it didn’t produce the desired benefits for the United States.
Sherman Robinson, a nonresident senior fellow at the Peterson Institute for International Economics, said that getting agreements on the challenging parts of the deal will bolster optimism.
“There’s no reason there couldn’t be a deal,” he said.
“I think in that sense, you could be optimistic if you can break these log jams on the progress that has been made,” he said.