POLITICS
12/12/2018 10:03 EST | Updated 12/12/2018 10:06 EST

Questions Swirl Around USMCA As Democrats Prep For 2020 Battle

The deal is not in the clear yet.

Getty Editorial
The USMCA still has to be ratified by the governments of Canada, Mexico and the U.S.

WASHINGTON — North of the border, Canada's hard-won free-trade deal with the United States and Mexico is considered a matter of existential importance, heavy with implications for workers, businesses and governments of all political stripes.

For Nancy Pelosi, it's a punchline.

The California Democrat has been riffing on the uncertainty around what to call the U.S.-Mexico-Canada Agreement, or USMCA — a moniker that reflects President Donald Trump's contempt for the original North American Free Trade Agreement. Ottawa now seems to prefer CUSMA, while others fall back on NAFTA 2.0, new NAFTA or, simply, NAFTA.

"Whatever they're calling it now, the trade agreement formerly known as Prince — no, I mean, formerly known as NAFTA — is a work in progress," Pelosi quipped to chuckles at a Capitol Hill news conference last month introducing newly elected members of her party in the House of Representatives.

But seriously, folks: its name notwithstanding, uncertainty, doubt and mixed feelings will only continue to shroud the agreement well into the new year, especially with an ambivalent Pelosi expected to emerge as leader of an emboldened Democratic majority in the House of Representatives.

With the 2020 election in their sights, Democrats are girding for pitched battles against their GOP rivals on a number of fronts, and will be disinclined to give Trump any legislative wins, despite all the post-midterms talk of bipartisan co-operation and reaching across the aisle.

The deal includes elements aimed at the centre-left folks in Congress, including environmental protections and a requirement that by 2023, 45 per cent of auto parts be made by workers being paid at least $16 an hour. Mexico must also pass a host of labour-law reforms that support and protect women, unions and migrant workers.

But the agreement lacks enforcement teeth — a deal-breaker, Pelosi and other Democrats say, if the forthcoming legislation to enact it doesn't provide some.

Whatever they're calling it now, the trade agreement formerly known as Prince — no, I mean, formerly known as NAFTA — is a work in progress.U.S. Democrat Nancy Pelosi

"The president needs to talk to Congress on this, and we can go back to the table with the Mexicans and the Canadians and do stronger labour standards," Ohio Sen. Sherrod Brown, widely touted as a likely challenger for the Democratic presidential nomination, told CNN.

"This doesn't live up to the promise the president said, that it would be a renegotiated NAFTA, helping workers and stopping outsourcing, because it doesn't do that yet. I'm hoping that it will."

Enter David MacNaughton, the genial Canadian ambassador whose outreach efforts were heralded as critical to the success of the USMCA talks. He'll again take the stage in the new year to convince Democrats — freshman and old-school free-trade foe alike —that the deal is the best medicine for all three countries.

The mission is the same — "to make sure that people in the United States understand the importance of the economic relationship with Canada — how big a market we are for them, how much our economies are integrated, and also all the other things we do together," MacNaughton said.

The Canadian Press
David MacNaughton, Canada's ambassador to the United States, scrums with media in Ottawa on Feb. 5, 2018.

"To the degree that we can make sure they understand the importance of the relationship, and some of the things that are in the agreement that are going to enhance the relationship from an economic point of view and help the United States, we're going to do that.

"The first priority, however, right now: get rid of the steel and aluminum tariffs. So that's No. 1."

Trump's so-called Section 232 tariffs, named for the clause in U.S. trade law that allows them on national security grounds, are no joke in Ottawa. They nearly scuttled last month's USMCA signing ceremony in Argentina, where Prime Minister Justin Trudeau refused to display his signed certificate for the cameras.

And with Canadians headed to the polls next October, 2019 will be a crushing disappointment to anyone hoping it would bring a reprieve from all the trade talk.

The new NAFTA has its detractors in Canada. The federal Conservatives and NDP say the governing Liberals gave too much market access to U.S. dairy farmers, caved on demands for longer protections for drug patents and blinked on the threat of tariffs on autos not built on American soil.

And in the U.S., last month's deep job and production cuts at General Motors — 14,000 jobs, including 8,000 salaried workers, and five idled plants, including one in Oshawa, Ont. — has some Rust Belt lawmakers on Capitol Hill feeling like they're being sold a bill of goods.

"If we're going to see more plants going to Mexico, I'm not going to support NAFTA 2.0," said Michigan Democrat Debbie Dingell.

But it's folly to blame the cuts on a trade deal that hasn't taken effect yet, said Flavio Volpe, president of Canada's Automotive Parts Manufacturer's Association.

"If USMCA was in effect today, with (Section) 232 tariffs, with tariffs on China, General Motors — from a business point of view — couldn't import more profitably than it could produce domestically. That's coming, but it's not here."

The only thing [Canadian voters] dislike more than having NAFTA is the thought of not having NAFTA.Policy expert Carlo Dade

It won't dominate American headlines, but in Canada, USMCA will surely be a campaign-trail fixture in 2019, said Carlo Dade, a policy expert and director of the Trade and Investment Centre at the Canada West Foundation.

Dade said he expects the bulk of Canadian voters will support the agreement in an election campaign that could echo the pitched battle of 1988, which hinged on the original Canada-U.S. free trade agreement.

"The only thing they dislike more than having NAFTA is the thought of not having NAFTA," Dade said.

"We saw this with the polling — Canadians for years were consistently complaining about NAFTA, then as soon as Trump said he was seriously thinking about withdrawing, the polls switched.

"I think that dynamic will emerge again."