Congress Uneasy as Trump Moves to Revise Nafta Without Canada

https://www.nytimes.com/2018/09/27/us/politics/nafta-congress.html

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WASHINGTON — The Trump administration and Congress are on a collision course over the fate of the North American Free Trade Agreement as the White House prepares to release text of a trade deal with Mexico that does not include Canada.

Steven Mnuchin, the Treasury secretary, said on Thursday that while the administration still hopes to strike a deal with Canada, he is confident that lawmakers would greenlight a revised Nafta that includes only Mexico.

“If for whatever reason we don’t reach an agreement with Canada, we’ll have an agreement with Mexico, a great agreement,” Mr. Mnuchin said at an event sponsored by the newspaper The Hill. “I’m confident that Congress will pass that.”

Lawmakers, however, have expressed deep reservations about any deal that does not include Canada, suggesting it would not have the votes to pass.

Mr. Mnuchin’s comments came a day after President Trump lashed out at Canada, saying it mistreated the United States on trade, and threatened to impose tariffs on Canadian automobiles if a deal is not reached. Mr. Trump, speaking at a news conference, claimed that he had rebuffed a request from the Canadian prime minister, Justin Trudeau, for a meeting and criticized Canada’s trade negotiator, Chrystia Freeland, the foreign affairs minister. “We don’t like their representative very much,” Mr. Trump said.

Mr. Mnuchin struck a more diplomatic tone, noting the importance of the trade relationship with Canada and expressing optimism that the few remaining “open items” could be settled.

“We reached a deal with Mexico,” he said. “Why shouldn’t we be able to reach a deal with Canada?”

The sputtering Nafta negotiations have rattled the nerves of members of Congress whose constituents depend on trade relationships with both Canada and Mexico.

Still, the White House is expected to release text of the deal it struck with Mexico as early as Friday, a development that suggests the White House is not going to wait for Canada to sign on to the deal.

Robert E. Lighthizer, the United States trade representative, met with key lawmakers on Thursday to deliver what senators said was a pessimistic assessment of the state of negotiations with Canada. But he left several questions unanswered, including whether Mr. Trump was prepared to pull out of Nafta if Canada did not sign a new agreement — and what rules would presumably govern trade with Canada in the event that Congress passed a Mexico-only agreement.

Senator John Thune, Republican of South Dakota, told reporters that Mr. Lighthizer had told lawmakers that the United States and Canada remained far apart on negotiations. “I’m not at all optimistic at the moment,” Mr. Thune said.

Senator Debbie Stabenow, Democrat of Michigan, said that it was possible for Canada to join the agreement with Mexico by November, even if the administration submits bilateral text to Congress this week. But any agreement, she said, “needs to be North America, to be the most effective.”

Congressional staff members cautioned that the administration would find little support on Capitol Hill for a deal that excluded Canada entirely, and that there was little appetite for pulling out of Nafta without a trilateral agreement to replace it. They also said that the agreement with Mexico alone would be unlikely to move to a vote in the House if Democrats win control of the chamber in November’s elections.

Senator John Cornyn, Republican of Texas, said that an agreement that excluded Canada would be much harder to pass in the Senate because it might not qualify for the trade protection authority provisions that would allow such a measure to be ratified with just 51 votes.

While some Senate Democrats agree with some of Mr. Trump’s goals on revising Nafta, they made clear on Thursday that they would punish him politically for excluding Canada.

“It would be a monumental mistake to do this without Canada,” said Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee. “It’s basically surrendering on fixing Nafta.”

Representative Lloyd Doggett, Democrat of Texas, said that Mr. Lighthizer had told him that he would be releasing text of the agreement with Mexico this weekend and that he was hopeful that Canada would come on board after its provincial elections in early October. Mr. Doggett said he was not ready to say if he would reject an agreement with just Mexico, but said he had urged Mr. Lighthizer to keep working on the Canadians.

“Those supply chains are very important, and it’s important that this not devolve into a bilateral agreement,” Mr. Doggett said.

One staff member said Mr. Lighthizer had raised the possibility of imposing additional tariffs on Canada similar to the ones Mr. Trump has placed on China in the event that the Canadians cannot come to an agreement with the United States. The United States has so far put tariffs on $250 billion worth of Chinese goods like machinery, electronics and fish.

Canada is already incensed over the administration’s steel and aluminum tariffs, which Mr. Trump put into effect earlier this year. Mr. Trump, meanwhile, is angry about Canada’s dairy tariffs and has threatened to tax Canadian-made cars if they do not allow American dairy farmers greater access.

Mr. Trudeau was undeterred on Thursday, saying Canada would not bend to the United States demands, including elimination of a dispute settlement mechanism that allows Nafta countries to challenge each other outside the nations’ official court systems.

“The Americans are finding that the negotiations are tough because Canadians are tough negotiators, as we should be,” Mr. Trudeau said in Ottawa. “But a good, fair deal is still very possible.”