[CTC] Ryan: USTR must deliver NAFTA text by May 17 for a vote this year

Thu May 10 12:45:13 PDT 2018

INSIDE US TRADE

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Ryan: USTR must deliver NAFTA text by May 17 for a vote this year
May 10, 2018
House Speaker Paul Ryan (R-WI) has laid down May 17 as the deadline for NAFTA negotiators to reach a final deal – with finished text – or the current Congress will be unable to vote on the deal due to time lines laid out in the Trade Promotion Authority law.

“As the author of TPA, I can tell you, we have to have the paper, not just an agreement, we have to have the paper from USTR by May 17 for us to vote on it this year, in December, in the lame duck,” Ryan said at a May 9 event <https://www.youtube.com/watch?v=zvDBi_e70L8> hosted by the Ripon Society.

“There are a handful of unresolved issues,” he added. “So I'm just not – I don't want to make news, but we'll see if they can get this done by May 17 and get us the paper to Congress. Which then we could have this vote by December. If we can't, then we won’t.”

Private-sector sources, however, called Ryan's time line ambitious given the outstanding issues the three countries still have to address. One source put odds of reaching an agreement in principle by the May 17 deadline at 40 percent.

Touching on two hot-button issues in the negotiations and also among lawmakers, Ryan said “ISDS is in our interest,” and “dairy is a big deal with Canada.” Ryan discussed NAFTA with Canadian Foreign Minister Chrystia Freeland <https://twitter.com/cafreeland/status/994632299768623104> on Thursday morning, according to Freeland’s office.

Ministers from the NAFTA countries are meeting in Washington, DC, this week to try to bridge gaps on a variety of issues in a sprint to the finish. U.S. Trade Representative Robert Lighthizer last week said if a deal was not reached within roughly two weeks, NAFTA would “be on thin ice <https://insidetrade.com/node/162886>.” He added that a putting a renegotiated NAFTA up for a vote in the next Congress could endanger its prospects because the deal would have been worked out with the prior Congress' priorities in mind.

Freeland, Lighthizer and Mexican Economy Minster Ildefonso Guajardo have a number of outstanding issues to sort through if they want to conclude all negotiations by May 17, sources said. Among them are auto rules of origin, the U.S. push for a sunset clause, intellectual property rules and investor-state dispute settlement.

One stakeholder said USTR was only prioritizing autos, the sunset clause, and the ISDS opt-out clause, meaning all other outstanding issues could be traded off during the last days of the negotiations.
Mexico this week forwarded a counterproposal to a previous U.S. suggestion <https://insidetrade.com/node/162879> that included a 75 percent North American content requirement and a mandate that 40 percent or 45 percent of autos, depending on the type, be made by workers who make at least $16 an hour.

An auto industry source told Inside U.S. Trade that the Mexican counterproposal offered a 70 percent North American content requirement for all vehicles that would be phased in over 10 years, as well as a 30 percent requirement for steel and aluminum. The source said the Mexican counteroffer does not mention a wage threshold, but added that the Mexican side had not rejected the idea out of hand.

The source predicted that where the talks might ultimately break down is over where the wage threshold is set, as the 40 percent level the U.S. is seeking would effectively prevent Mexico from shipping finished vehicles to the U.S., which he said was USTR's goal.

Guajardo said earlier this week that he hoped the ministers could reach a “complete” deal rather than a partial one, and added that they would continue to negotiate “as long as is necessary.” On May 10, he added that the next two days of talks would be crucial.

Sources told Inside U.S. Trade that Ryan’s stance is that USTR must have a complete, finished NAFTA text by May 17 if the agreement is to be voted on by the current Congress.

“I think we will be finding out through the day and tomorrow ... if we really have what it takes to be able to land these things in the short run. We are finding out that possibility,” Guajardo said.
Freeland on Thursday told reporters “We are definitely getting closer to the final objective <https://www.reuters.com/article/trade-nafta-freeland/canadas-freeland-says-getting-closer-to-nafta-deal-idUSE1N1MM01X>,” according to Reuters.

The need to strike a deal by mid-May is rooted in a series of TPA requirements. The law requires that Lighthizer notify Congress 90 days ahead of the administration’s intent to sign an agreement; 60 days ahead of the signing, USTR must publish the text of the agreement. After the agreement is signed, USTR must submit within 60 days a list of changes in law that the agreement would require.

Within 105 days of the agreement signing, the U.S. International Trade Commission must submit a report on the economic effects of the deal. The administration must also release the final text of the implementing legislation and a draft statement of administrative action 30 days before the introduction of the act.

Some sources say the ITC is unlikely to finish its analysis early, although others believe it could beat the 105-day deadline by recycling parts of the work it did for its report on the Trans-Pacific Partnership.
If the ITC takes all 105 days to complete its report, the quickest the administration could submit the final implementing bill is within 195 days of its announcement that it intends to sign the deal. If that notification is sent in mid-May, that would put the earliest possible date for a vote in late November or early December, which would give a lame-duck Congress roughly a month to vote on President Trump’s new NAFTA.

Democrats have warned the administration <https://insidetrade.com/node/162962%5d> against sending the NAFTA implementing bill to Congress while also initiating a withdrawal from the deal, a risky tactic some observers suspect the administration may employ in a bid to create leverage with lawmakers. Capitol Hill aides and former staffers have said that strategy could backfire if Democrats opt to try to pin the economic turmoil that would follow a NAFTA withdrawal – including a shock to the stock market – on Trump and his team. – Jack Caporal (jcaporal at iwpnews.com <mailto:jcaporal at iwpnews.com>) with Brett Fortnam(bfortnam at iwpnews.com <mailto:bfortnam at iwpnews.com>) and Anshu Siripurapu (anshus at iwpnews.com <mailto:anshus at iwpnews.com>)

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