A Trade Secret: In Washington, Trade Deals Take Time
On the campaign trail during the 2016 election, then-candidate Donald Trump was a frequent critic of many of the trade agreements to which the United States was already a party or was in the process of negotiating. The Trans-Pacific Partnership (TPP)? “A continuing rape of our country.” The North American Free Trade Agreement (NAFTA)? “The worst trade deal maybe ever signed anywhere.”
While the president formally declared that the United States would exit the TPP shortly after he took office in January 2017, he’s since had something of a sudden change of heart:
And this week, to great fanfare, President Trump and outgoing Mexican President Enrique Peña Nieto announced that they had reached agreement in principle to begin the process of negotiating a deal that could reshape NAFTA, potentially replacing the trilateral pact with what President Trump dubbed the United States-Mexico Trade Agreement. Canadian officials weren’t involved in the negotiations (they’d been shut out for weeks), but are taking it seriously. Canada’s Minister of Foreign Affairs Chyrstia Freeland quickly cancelled a planned trip to the Ukraine and diverted to Washington, D.C. in an attempt to convince the White House to preserve NAFTA, or, at a minimum, to allow Canada to participate in whatever new deal might be negotiated.
Just how momentous is the breakthrough between the U.S. and Mexico announced earlier this week, and what is the likelihood that the Trump administration will be able to deliver on the president’s campaign pledge to renegotiate -- and ratify -- NAFTA? As it turns out, there’s still plenty of time for the whole framework to fall apart, to alter the agreement, to include Canada, or, really, to do just about anything else.
In fact, the process is so far from over that CBS News didn’t even call Monday’s breakthrough a “deal,” an “agreement,” or a “pact.” What happened Monday was more of a “trade understanding,” the network reported -- a less-than-technical description conveying that the pageantry surrounding the announcement didn’t quite match the substantive impact.
That’s about right. Under the U.S. Constitution -- that pesky foundational document that created three, co-equal branches of government -- Congress has a say here, even with so-called “fast track” trade rules that were first implemented in the 1970s to facilitate the negotiation of free trade agreements. Under fast track, the president and his administration negotiate trade agreements and, as long as the administration adheres to the rules for keeping Congress notified of intentions and developments, the president needs only a bare majority of Congress to approve the deals. Since fast track came into being in 1974, the United States has successfully entered into 14 free trade agreements with 20 countries.
Fast track rules were updated and approved by Congress in 2015. but getting a bilateral trade deal implemented is still tough work even in the most functional of times for our government.
It’s possible that President Trump won’t even finish this deal by the end of his first term in office, which ends in January 2021. In fact, the last three free trade agreements entered into by the United States took an average 58 months, a little less than five years, to implement after the date of signature. All three of those agreements were signed by former President George W. Bush, but weren’t voted on by Congress until 2014, during President Barack Obama’s second term.
Here’s what must happen, by law, before President Trump can claim a campaign promise fulfilled.
First, the president has to formally notify Congress that he intends to sign an agreement with Mexico. Monday was not that correspondence. Formal notification also cannot come in the form of a tweet—the administration must publish its intention in the Federal Register. Then, after the president notifies Congress, he’s required to wait 90 days to actually sign the deal. The current Congress likely will adjourn before that can happen.
Once the president’s signature has been secured, the White House has 60 days submit a description of changes to existing laws that would be needed to bring the U.S. into compliance with the agreement. The International Trade Commission, an independent federal agency that gathers and analyzes trade data and policy, also has about three and a half months to tell Congress how the agreement would impact the economy.
That’s not all: the White House also has to send Congress a copy of the final legal text of the agreement, a draft implementing bill, and a statement of any administrative action proposed to implement the agreement. And then there’s this stipulation: all of that information has to be sent when the House and Senate are both in session. Added to that fact is that there’s no deadline for this step—the president could transmit this information to legislators the day after he signs the deal or he could wait months, even years.
Why would the president wait? Because he’s got to have all his votes in a row. Once he sends implementing legislation to Capitol Hill, the clock for congressional approval starts. The House must vote on the trade agreement within 60 days of receiving the bill and the Senate must act no more than 15 days after the House.
Congress can’t amend the agreement and the Senate cannot filibuster it—that’s the fast track part—but lawmakers can vote it down. And, as written, they just might do that.
Lawmakers and advocacy organizations are, at best, skeptical of Monday’s “trade understanding.” One Senate Republican leader, John Cornyn of Texas, typically a supporter of the White House’s policy agenda, said any deal must include Canada. Organized labor groups, always highly influential when it comes to trade deals, also wouldn’t give their unqualified blessing, instead saying “the devil is in the details.”
Right now, the details are few and far between. The White House will have to fill them in—and more—before anything will happen in the House and Senate. And despite the president’s pronouncements to the contrary, there’s still quite a way to go before NAFTA will actually have been renegotiated.