Bernstein and Eatedali Analyze North America’s Path Forward for USMCA Trade Deal

June 19, 2019

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In a June 18 opinion piece for Market Watch, McGuireWoods Consulting senior vice president, Ryan Bernstein, and research associate, Mariam Eatedali, reviewed the current state of the new USMCA trade agreement between the United States, Mexico and Canada, and what is needed for ratification in these countries.

In Mexico, the Senate has the exclusive power to approve treaties made by the president with foreign countries. The trade deal can pass in Mexico with a majority vote, and all state laws must conform to the new treaty.

“While the Mexican Constitution sets out an easy ratification process, politically Mexico had to make legislative changes to its labor laws to help address concerns voiced by Democrats in the United States and labor concerns at home,” Bernstein and Eatedali said.

Canada began its ratification process on May 29, and the legislation (C-100) includes amendments needed to conform to the new trade agreement.

“If C-100 does not pass by the end of June, either session can be extended or called back during the summer. The more likely hard deadline is the middle of September when the writ drops and Canada transitions into election mode for October,” Bernstein and Eatedali noted. “If it is not passed by the middle of September, it will “die on the order paper” and will have to be reintroduced in the next Parliament, which might be a different government.”

In the U.S., House Speaker Nancy Pelosi has the ultimate control on the timing and passage of USMCA. The implementing bill, which is considered a revenue bill that the House must pass first, must be passed by the House within 15 session days to keep its protection from amendment and filibuster, and must be passed by both chambers within 90 session days of the bill’s introduction.

“Changes made to address Democrats’ concerns could be solved with side letters, yet Pelosi requested that enforcement provisions be included within the implementing bill instead of as side legislation,” the authors said.  “At the same time, the New Democrat Coalition is using the current momentum, and the president’s need for their support, to bring attention to infrastructure- and workforce-related legislation, including a push to increase the federal minimum wage.”

Ratification of the USMCA must happen this year in the U.S., or wait until after the 2020 election.

“Until all three counties ratify the new agreement, the original NAFTA continues to govern North American trade,” said Bernstein and Eatedali. “If Congress were to amend their ratification legislation, treaty negotiators among all three countries would then need to determine whether Mexico and Canada would be willing to accept the amended legislation and amend any ratification legislation they might have already passed.”