Can the U.S.-Mexico Trade Agreement Replace NAFTA?
By Scott M. Flicker, Charles A. Patrizia & Talya R. Hutchison
Well over a year ago, President Trump notified Congress that he intended to begin negotiations to amend the North American Free Trade Agreement (“NAFTA”). This notification was not simply a courtesy. As he seeks to conclude a new trade deal with Mexico—with or without Canada—the President could find that his authority is severely curtailed by something called “trade promotion authority” or “TPA.” Unless the negotiation and the approval process follows the strict procedures established under TPA, the resulting agreement could be held up or even defeated by Congress. This puts additional pressure on the White House to conclude negotiations quickly and bring an agreement to Capitol Hill for a vote before a new Congress is seated following the 2018 midterm elections.
TPA, also known as fast-track authority, provides an expedited procedure by which Congress can consider certain international trade agreements. The current authority was established under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (“Trade Act of 2015”).
In recognition that Congress is ceding power to the President to negotiate trade agreements, the scope of authority granted under TPA is carefully circumscribed. In other words, details matter. Although President Trump notified Congress of his intent to renegotiate NAFTA, he did not notify Congress of his intent to supplant NAFTA with a bilateral trade agreement concluded with Mexico alone. This possible defect in notification might run afoul of TPA, which might cost the President the ability to have a bilateral agreement receive a “fast track” vote in the current Republican-controlled Congress. The power to determine whether or not the President complied with TPA lies with Congress, and current Congressional leadership has declined to make an initial call on the application of TPA until the details of the bilateral trade agreement with Mexico are released. President Trump, for his part, has asserted that Congress should not “interfere” with the negotiations, and he has threatened in that case simply to unilaterally withdraw from NAFTA.
The Trade Promotion Authority – How it Works
Article I of the U.S. Constitution confers on Congress the authority to “regulate commerce with foreign nations.”
TPA has been renewed four times after its initial appearance in the Trade Act of 1974.
To take advantage of fast-track authority, the President must comply with specific notification and consultation procedures.
If the President complies with the notification and consultation requirements, then Congress must adhere to certain expedited procedures for consideration of legislation to approve and implement the agreement, including mandatory presentation of legislation in both houses of Congress, automatic discharge from the respective House and Senate committees, limited floor debate, and no opportunity for amendment. These procedures effectively prohibit filibustering and provide for a clear, concise path from committee to the floor for a full vote.
However, if either chamber of Congress determines that the negotiated trade agreement does not comport to the requirements of the Trade Act of 2015, the fast-track procedures can be derailed by several means. First, the Trade Act of 2015 provides for a “procedural disapproval resolution” (“PDR”), which can be adopted by either house upon determination that the President has not complied with the requisite notification or consultation procedures or the agreement fails to make progress towards the negotiation objectives provided at the outset.
In addition, either house may unilaterally decide that the bill does not qualify for fast-track procedures and, through the use of a “Consultation and Compliance Resolution” (“CCR”), render it ineligible for expedited consideration.
NAFTA Negotiations: What Comes Next?
After President Trump notified Congress that he intended to renegotiate NAFTA, the U.S. Trade Representative (“USTR”) received public comments and held hearings throughout June 2017. Those hearings were billed as pertaining to the “upcoming negotiations of the North American Free Trade Agreement.”
Three-way negotiations continued for months. However, in June of this year, the United States began negotiating bilaterally with Mexico, and the two countries reached an agreement on August 27 that did not include Canada. In the ensuing days, the United States and Canada began negotiations to attempt to finalize the terms of a three-way deal by August 31, 2018. TPA played a key role in that target date: On December 1, 2018, a new president takes office in Mexico. Under TPA, the Trump Administration needed to give Congress 90 days’ notice of the intent to sign the agreement with Mexico’s outgoing president before he left office. So far, talks with Canada have failed to yield an agreement.
The tactic of seeking to conclude a bilateral agreement with Mexico in order to, in the words of Debra Steger, “bring Canada along”
For his part, USTR Lighthizer (a recognized technical trade law expert) has asserted that the agreement reached with Mexico will qualify for TPA procedures. However, if either house of Congress disagrees, then any consideration or approval of that agreement on the Hill might be significantly delayed, certainly beyond the term of the current Mexican president. And the next president of Mexico might not be willing to sign a deal negotiated by his predecessor.
Trade promotion authority is extraordinary—it gives the President a pathway to negotiate an international trade agreement without substantive input from Congress or the risk that the resulting deal will be held up by legislative machination. If either house determines that President Trump failed to comply with the procedural notification requirements of TPA in connection with the U.S.-Mexico Trade Agreement, he could lose the ability to consummate a deal at all, much less on the expedited timeline he seeks.
(2012 & Supp. III 2015).