Jerry Pacheco

Jerry Pacheco / International Business Accelerator

Oh, the drama behind the ratification of the United States-Mexico-Canada Agreement, or USMCA. 

Negotiators from all three countries spent a considerable amount of time renegotiating the North American Free Trade Agreement, and ratification or rejection of the new USMCA agreement should be coming soon. Mexico ratified the agreement on June 19 when it was passed by the Mexican Senate. 

There continue to be concerns in Mexico about the country’s indigenous and most vulnerable populations not benefitting from the agreement. There are also concerns about the influence of U.S. and Canadian multinational corporations and their effect on Mexico’s economy and environment. However, these concerns pale in comparison to the need for Mexico to have a strong trade relationship with its two North American partners. 

In Canada, Justin Trudeau won reelection, and it appears that his government will continue down the road to ratification. Canada has been taking the approach that it will parallel U.S. progress on ratification. So until the U.S. House of Representatives begins debate and eventually opens up the agreement for a vote, it appears that Canada will continue observing the developments in the U.S. This puts the U.S. in the driver’s seat to move the agreement forward.

The USMCA was negotiated using Trade Promotion Authority, or TPA, which lays out how the executive branch and Congress work together to negotiate and ratify agreements. 

Under TPA, the president is allowed to negotiate an agreement such as the USMCA, while consulting with Congress during the process. The agreement is then finalized and sent to Congress for review and a vote. TPA assures foreign governments that they will not have to negotiate with the executive branch and the more than 500 members of Congress separately. 

The USMCA is a trade agreement, not a treaty, which would have to be passed by two-thirds of the Senate. Rather, the House first votes on the agreement as mandated by the U.S. Constitution. If passed, the agreement goes to the Senate for final approval. 

A simple majority in each chamber is needed for passage. So support in the House will either make or break the USMCA, and its passage will depend heavily on the support of Speaker Nancy Pelosi. 

There are major concerns among some Democratic House members about certain parts of the USMCA, including labor, environmental, enforcement mechanisms and the favoring of large pharmaceutical companies over the best interest of their customers. To address these concerns, Pelosi has formed House committees to study these areas. 

If the concerns are not adequately addressed and put to rest, there is a danger that some House Democrats will want the negotiations reopened. This will cause the USMCA to go back to the drawing board because it faces an up or down vote and cannot be amended once it is on the floor of the House. 

Mexico and Canada have already stated that they are strongly against sending the agreement back for renegotiation. In Mexico’s case, it has already ratified the agreement as written.

Despite the vitriol within Congress and the executive branch, passage of the USMCA could, ironically, provide an opportunity for Democrats and Republicans to work together on an issue of national importance. 

Both Democrats and Republicans represent huge agricultural concerns that need the USMCA ratified. Mexico is a major importer of U.S. crops such as corn and soybeans. Both parties also represent large and small corporations that drive exports to our North American neighbors.

The North American Free Trade Agreement was initially created by Republican President George Bush, and then implemented by Democratic President Bill Clinton, not exactly political friends or allies. NAFTA was passed because it keeps North America competitive with the rest of the world. It has fostered symbiotic relationships and the integration of our three North American economies. Trade among the three NAFTA partners has quadrupled since its inception in 1994. 

Not ratifying the renegotiated NAFTA is a threat that can disrupt our economies, decrease productivity and make us less competitive in the global market. Its smooth ratification in the U.S. Congress can demonstrate to Americans and to the world that our lawmakers can still put aside deep-rooted differences and come together for the good of our nation and our neighbors.

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