Feature

For Trump, Renegotiating NAFTA Is Just Half The Battle

(October 2, 2018, 6:44 PM EDT) -- President Donald Trump has delivered on his campaign promise to rewrite the North American Free Trade Agreement and will now face the challenge of getting Congress to approve the deal, a tough task that could prove even more daunting if Democrats take back even partial control of the legislative branch.

The Capitol Hill axiom is that votes on trade are always close, as lawmakers must decide whether and to what degree a massive and complex trade agreement with varying implications for a slew of industries and consumers is politically palatable for them.

Add to that delicate paradigm a mercurial and often combative president that Democrats have opposed at every turn for nearly two years, and the path forward for what is now known as the U.S.-Mexico-Canada Agreement is far from certain.

"You've got this dynamic of the Dems wanting to confront, stop and slow walk whatever Trump does, and then you've got the fact that this is clearly going to be Trump's signature thing that he wants to get done and done quickly," Miller & Chevalier Chtd. trade adviser Welles Orr told Law360. "It'll be a battle royale. It's going to be ugly."

Trump himself seemed to acknowledge that reality during an address at the White House on Monday, raising the notion that his political opponents would fight the deal sight unseen.

"Anything you submit to Congress is trouble," he said. "No matter what. If it's the single greatest agreement ever signed, they'll say, 'Well, you know, Trump likes it, therefore we're not going to approve it because that would be good for the Republicans. So therefore we can't approve it.'"

Most projections have the Democrats retaking at least a slim majority in the House of Representatives, with a slim chance of also flipping the Senate, teeing up a potentially explosive showdown over what is Trump's most significant trade accomplishment to date.

Though the partisan pushback against Trump has been forceful, Senate Minority Leader Chuck Schumer, D-N.Y., was mostly upbeat upon receiving the deal.

"If a final agreement is signed by all three countries, I also look forward to working with my colleagues in Congress to write 'implementing legislation' to ensure the deal actually achieves these goals," he said in a statement.

The Trade Promotion Authority law that governs the negotiation and passage of all U.S. trade deals all but assures that a vote will not take place until next year. But all that time allows for the deal's critics and supporters to craft a political strategy.

On paper, there are elements of the new agreement that both Republicans and Democrats should be able to support. Free trade backers can nod to the loosening of Canada's dairy market and new rules covering digital trade while unions and conservation groups can mobilize behind a beefing up of the agreement's labor and environmental rules.

It remains to be seen whether the latter group will fall into line. The AFL-CIO and other union groups have criticized past trade deals for writing rules that appear strong at face value but are not fully enforced once the deal is put into place.

Still, Squire Patton Boggs LLP partner and former House Ways and Means Committee trade counsel Frank Samolis said it would be tough to envision a scenario where Trump's political opponents could argue that the USMCA is worse than the NAFTA deal that is already on the books.

"It's hard for the Democrats to walk away from this agreement saying, 'We're not even going to consider it,' because there are improvements," Samolis said. "It's not a massive recreation, it's not quite going to live to the hype the administration has made, but there are improvements being made there."

Still, passing the deal will require both sides to play nice over the course of several months, which has been something of a rarity in Washington during the Trump administration's first two years.

"Trump probably does everything in his blustery way to create an environment where the Democrats don't want to be helpful, despite the fact that the agreement might be a decent agreement," Orr said.

While the TPA process will shield the USMCA from amendments once it makes it to the congressional floor, Samolis said there are avenues for lawmakers with concerns about the deal to smooth them out ahead of final passage.

The trade agreement itself is not open for amendments on the floor, but lawmakers can insert language into the deal's implementing legislation or lobby for changes to the official Statement of Administrative Action to clarify or finesse any areas of the agreement they are uncomfortable with, Samolis explained.

Samolis added that even if Republicans hold both chambers in November, the administration will still have to "do its homework" to make sure all the votes are there.

There is precedent for an opposition Congress to let a president's trade deals die on the vine, as Democrats did in 2007 with President George W. Bush's pacts with South Korea, Panama and Colombia. The deals were eventually passed years later under the Obama administration.

"There will be some strange bedfellows in this, like there is with any trade agreement when it comes together," Orr said. "But I think, in the end, I think we're looking at an agreement that probably has a runway to approval. It's going to be ugly at first, but there's enough in this for Dems and Republicans to agree on."

--Editing by Kelly Duncan and Aaron Pelc.

For a reprint of this article, please contact reprints@law360.com.

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