Skip to main content
editorial

After the drama of the renegotiation of the North American free-trade agreement last year, and all the energy Canada, Mexico and the United States expended on it, it isn’t unreasonable to want its replacement deal to quickly become the law of the continent.

But as it stands now, the likelihood of the United-States-Mexico-Canada Agreement being ratified and brought into speedy effect has been reduced to a 50-50 proposition.

It is a virtual certainty that ratification won’t happen this year. And 2020 looks like a long shot, too. There is even a possibility that USMCA will never see the light of day, and that NAFTA will continue on as if nothing ever happened.

The main obstacle to USMCA’s adoption is the same thing that brought it into being in the first place: U.S. politics.

The Trump White House has yet to draft a final version of the text and the necessary enabling legislation. Those must be sent to Congress, where the Democrat-controlled House of Representatives is already demanding changes without having seen the details, particularly around enforcement.

There is little chance Congress will vote on ratification until next year. And in the run-up to the next election, Democrats will have little desire to give Mr. Trump and the Republicans the opportunity to campaign on the successful renegotiation of NAFTA’s replacement.

There is also a chance the House Speaker, Nancy Pelosi, will refuse to introduce the ratification bill if she and her party don’t get the things they want, effectively sending the process into eternal limbo.

In other words, Washington’s ratification of USMCA is unlikely until after the U.S. general election of 2020. That likely delay of at least 18 months has given the other two signatories every incentive to put their own ratification on hold.

In Canada, Parliament is running out of time to introduce the necessary legislation and get it adopted between now and June 21, when it will rise for the summer. The Commons won’t come back until after the October general election.

In any event, Prime Minister Justin Trudeau has no reason to ratify the USMCA until he sees Congress do it first. He has his own election campaign to worry about and doesn’t want to appear too co-operative with a U.S. administration that imposed unjustified tariffs on Canadian steel and aluminum as a pressure tactic during the NAFTA renegotiations.

Mexico, meanwhile, has begun the ratification process but still has a long way to go. And every time Mr. Trump threatens to close the U.S.-Mexico border in his battle against illegal immigration, he dampens the Mexican government’s enthusiasm for quick ratification of the USMCA.

The uncertainty about the fate of the USMCA is not good for the many businesses that rely on the interconnected supply chains that operate between the North American partners. They are having to make provisions for its adoption while also preparing to stay the course.

Not that the U.S. President cares, or that Canada and Mexico can do anything about it. Mr. Trump still holds a trump card, which means anything can happen.

It’s important to remember where the USMCA came from. The agreement was the outcome of an election promise by Mr. Trump to tear up NAFTA, “the worst trade deal in the world,” unless Canada and Mexico agreed to renegotiate and reach new terms. Mr. Trump’s attack on NAFTA was political theatre of the kind at which he excels: the reality television version of politics, featuring fictitious plot lines and dramatic cliff-hangers, designed to leave voters cheering him on, or loathing him more than ever.

What matters to Mr. Trump is casting himself as the character around which the spectacle revolves. And therein lies a danger, because Mr. Trump can start a whole new USMCA plot line at any moment, simply by giving Canada and Mexico six-months’ notice that the United States is pulling out NAFTA and leaping into a trade-deal void.

He likely wouldn’t dare do so before the November 2020 election, as the economic chaos that would ensue would undermine his re-election chances.

But if he’s returned to office, he will have more power and leverage than ever. Canadian and Mexican officials have to be prepared for the possibility that he will play his most attention-grabbing hand, at the first chance he gets.

The free-trade uncertainty caused by Mr. Trump is not over. Not by a long shot.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe