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Report on Business Road ahead remains unclear as Ottawa launches process to ratify USMCA

Minister of Foreign Affairs of Canada Chrystia Freeland, seen here, said the removal of U.S. tariffs on steel and aluminum open the door to ratification in Canada.

Melissa Tait/The Globe and Mail

The federal government has taken a first crucial step toward implementing its renegotiated trade deal with the U.S. and Mexico.

The government tabled a ways and mean motion Monday, signalling its intent to push ahead with ratification of the United States-Mexico-Canada Agreement – or USMCA.

But the road ahead for the updated version of the North American free-trade agreement remains unclear – particularly in the United States, where the Democratic-held House of Representatives is demanding key changes, including on enforcement of labour rules.

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Foreign Affairs Minister Chrystia Freeland said the removal of U.S. tariffs on steel and aluminum open the door to ratification in Canada. But she acknowledged the potential pitfalls, particularly passage in the deeply divided U.S. Congress.

“The entry into force of this agreement does not depend solely on Canada,” Ms. Freeland told reporters in Ottawa. “The new agreement can enter into force only upon ratification in each of the three NAFTA countries, and that is why we are working in very close collaboration with our NAFTA partners.”

Time is running out for Ottawa, with Parliament slated to break for the summer in less than four weeks and the October federal election looming.

Speaking to reporters on Monday, Ms. Freeland declined to talk about the timing of passage, but insisted she’s “confident” it can be done.

Ms. Freeland explained in a recent Globe and Mail interview that the government would "move in tandem with the U.S. towards ratification.”

The ways and means motion lays out what the federal government must do to bring its laws and regulations into line with USMCA. These include changes to the Customs Tariff, the Copyright Act and the Investment Canada Act.

The move comes just days before a planned visit to Ottawa by U.S. Vice-President Mike Pence, part of a push by the Trump administration for swift passage of the deal. Ms. Freeland said she talked to U.S. Trade Representative Robert Lighthizer in recent days to discuss the U.S. ratification process.

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Negotiations on the new NAFTA concluded last fall, but none of the three countries has so far adopted legislation to enact the deal. The agreement would replace the existing NAFTA, which U.S. President Donald Trump has at various times threatened to abandon.

It makes some sense to move before the U.S. because it shows that Ottawa is serious about implementing the agreement, said John Weekes, Canada’s chief negotiator on the original NAFTA deal.

“This certainly shows our good intentions,” said Mr. Weekes, now a senior adviser at law firm Bennett Jones in Ottawa. “It makes it much more difficult for Trump to pull the plug on NAFTA, saying the other countries aren’t moving to implement this properly.”

The dilemma for Canada is that the deal’s ratification by the U.S. Congress remains highly uncertain. So moving in “tandem” with the U.S. may be difficult.

Matthew Kronby, a former top Canadian trade official, said the federal government may be keeping its options open in case it needs to move quickly this summer if there is a breakthrough in Congress. But Mr. Kronby, now a partner at law firm Borden Ladner Gervais, said he doesn’t expect the government to quickly pass it, given that it may have to redraft its implementing legislation later if the three countries agree to reopen part of the trade agreement.

The Trump administration needs the support of House Speaker Nancy Pelosi and Democrats to get the deal through. But the Democrats are in no mood to hand U.S. President Donald Trump an easy win on trade, or anything else.

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Ms. Pelosi has said she wants to add tougher enforcement of labour rules. Both Canada and Mexico have said they are not interested in restarting negotiations.

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