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Lawrence Herman

Lawrence Herman


In Washington, no one person is running the NAFTA show Add to ...

Who’s in charge here, anyway?

When it comes to re-negotiating the North American free-trade agreement with the Americans, that’s one of Canada’s challenges. You might think it’s the President but, as in all things in Washington, it’s much more complicated than that.

Under U.S. legislation, it’s the U.S. Trade Representative (USTR) in the Executive Branch who’s supposed to have lead responsibility in trade talks. But earlier, Donald Trump named Wilbur Ross, the Commerce Secretary, to lead the NAFTA re-negotiations, unleashing a turf war between the Commerce Department and the Trade Representative’s office.

Added to the mix is the role of the National Trade Council, created by Mr. Trump as a new White House agency to advise on trade policy, headed by Peter Navarro. He will also want to make sure his office’s influence is maintained as the talks unfold.

Another problem is that Mr. Trump’s choice for USTR, Robert Lighthizer, has yet to be confirmed by the Senate. There’s a fight going on between the Republicans and Democrats in the Finance Committee as to when his confirmation hearing is to be scheduled.

Without the USTR confirmed and while this jockeying is going on, key senior positions in the USTR and Commerce remain unfilled, leading to a vacuum on the top tiers of these agencies.

So, the assumption that Mr. Trump and his team are co-ordinated in running the NAFTA show is not entirely justified given the bubbling cauldron of Washington politics.

Added to this is the role of Congress. The American Constitution is all about checks and balances, designed to ensure no one branch of government can dominate. Thus, the Congress has been given equal authority with the President in international-trade matters.

Mr. Trump can bluster and complain about NAFTA all he wants, but he can’t get to first base on trade talks without the approval of Congress and its key committees.

By the same token, as I explain, this dispersion of power plays to Canada’s advantage as we head to the negotiating table.

To even get NAFTA talks started, Mr. Trump needs congressional approval. That comes under what’s called Trade Promotion Authority or “fast track,” a requirement that applies to all U.S. trade-negotiating efforts.

Fast track actually isn’t fast at all. It’s really quite slow. It involves a multitude of complex steps, all of which are designed to maintain congressional power and oversight and ensure that key committees have an undiminished role in all U.S. trade negotiations.

The first step in the fast-track process, as we know, is for the President to get approval to negotiate. For this, he has to give 90-days advance notice to Congress before negotiations can start, setting out the administration’s objectives.

There was a flurry of comment last week when a draft of that notice was leaked. While only a draft, it gave a pretty clear indication of the tough position the Trump administration will be taking when the talks get under way. Virtually everything will be on the table.

Because of Congress’s power, however, backroom manoeuvres are under way to massage that draft to make sure it will be well-received when formally submitted. As of Monday, there is no firm indication when that will be done.

The point about the 90-day notice is that it sets up markers against which progress will be judged by key congressional committees, both the Ways & Means Committee of the House and the Senate Finance Committee.

While fast track gives the President negotiating authority, it is also a set of marching orders that requires the executive to regularly consult with both these committees plus the Congressional Oversight Group to make sure he discharges those orders.

What this means is that Congress will be involved, one way or another, throughout the NAFTA talks. While the Canadian government will be formally negotiating with the executive, the Canadian team will have to pay heed to the views in key congressional committees as well.

That poses a huge challenge but, as I said above, it gives Canada some real advantages. There are many powerful Republicans in the Congress that don’t share Mr. Trump’s protectionist policies and will exercise a moderating influence and dampen retrograde protectionist positions advanced by the executive.

Second, Canada has a vast network of connections in the Senate and the House and beyond the Congress in the state governments and in influential members of the U.S. business community, an impressive array of political and business contacts who support NAFTA and understand the benefits it has brought to the United States over the past three decades.

The federal government has done an excellent job in astutely using these contacts to spread the Canadian message and make the case for avoiding disruptive elements in the trading relationship. All of that will help to ensure that as Congress monitors the negotiations, it will curb the Executive’s protectionist tendencies.

For decades, no country has shown a firmer grasp of the complexities of the U.S. political system than Canada. The Trudeau government’s ability to put that knowledge to positive effect will be tested in the days ahead.

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