Andrei Sulzenko is a former Canadian trade negotiator and is currently an Executive Fellow at the School of Public Policy, University of Calgary.
All policy focus in the United States is now on tax reform, as congressional Republicans and President Donald Trump seek a big legislative win in 2017. This came closer to reality last week as the Senate passed a bill that now goes forward to bicameral reconciliation with the version passed by the House of Representatives.
Tax reform puts the North American free-trade agreement on the back burner in terms of political focus, and that's a good thing, allowing all three partners to take stock of desired outcomes, strategy and tactics.
Should tax reform become a reality, it would actually help the NAFTA file in a number of ways, at least from a Canadian perspective.
First, successful tax legislation would provide Mr. Trump with the optics of a big win, taking credit no doubt for an initiative that he has largely been cheer-leading. But then, it's another tick mark on campaign promises.
Second, it would provide Republican members of the House and Senate a substantive platform with which to wage a tough mid-term electoral contest that will start in earnest in the new year, while making relatively less important in 2018 other initiatives, such as recalibrating trade agreements.
Third, once the President's signature is on the tax-reform bill, it will embolden a greater number of – heretofore reluctant – Republicans to speak and act against his perceived wrongheadedness or excesses on other important files, including NAFTA.
After all, the Republican Party has a tradition of favouring liberalized trade, consistent with other free-market policy positions such as supporting low taxes and light regulation.
So how might the post-tax-reform scenario play out?
Let's assume that a tax bill gets signed into law over the next few weeks. In the immediate aftermath, euphoria will reign in Republican circles and in the White House, especially if the bill also helps to gut Obamacare, another high-priority Republican objective.
As part of this, the stock market will enjoy a steroid-injected "Santa Claus Rally" for which the President will, no doubt, take credit.
There will also be subsequent musings about tackling regulation in banking and other sectors, especially since new spending initiatives will be curtailed by the massive prospective budget deficit resulting from tax cuts.
All this feel-good hoopla will, however, turn into a post-New Year's hangover as reality sets in on other problematic issues such as the investigation by special counsel Robert Mueller, the continuing spat with North Korea or some other unforeseen, but likely, flare-up.
The basic point is that the political visibility of the NAFTA negotiations will be buried under the onslaught of other good- and bad-news events.
At the same time, the Trump administration's negotiating leverage with Canada and Mexico will have been reduced by a Congress in full mid-term election mode (all House members and about a third of the Senate), with heavy lobbying by pro-NAFTA forces in more than 30 states heavily dependent on trade with Canada or Mexico or both.
This is not rocket science. The U.S. team knows that their best shot at dictating the terms of a deal has already come and gone (ergo the initial tight timetable) and they will either need to compromise on previous extreme positions or grind the process down into drawn-out trench warfare.
The alternative, although now less likely, scenario is that tax reform, like health care, ultimately fails, leaving the President and Republican members of Congress with no legislative wins in 2017.
In these circumstances, smelling blood, Democrats in Congress will move to thwart other initiatives, such as a budget bill and dealing with the federal debt ceiling.
Under either tax-reform scenario (but more likely the second), there is always the possibility of a desperate tactic involving abrogation of NAFTA, playing to the President's electoral base; but the almost certain response will be a massive counterattack by those in Congress seeking re-election next November.
The bottom line is, either way, the outcome of efforts to pass tax legislation in the United States will probably have a net positive effect for Canada in the continuing NAFTA negotiations.
Success will diminish the need for a big administration win on trade, while emboldening Republicans in Congress against future Presidential excesses.
Failure will further diminish the administration's ability to make good on its agenda, branding the President as a loser with whom co-operation is perceived to lead only to Congressional unelectability.
That's a win-win for Canada.