The U.S. Ratification of USMCA: Reading the Tea Leaves

As we fast approach the end of 2019, the contentious North American Free Trade Agreement (NAFTA)/ United States-Mexico-Canada Agreement (USMCA) debate in Washington continues with no end in sight. The Negotiations which began in 2017 and were finalized in November 2018, gave birth to an updated trade agreement between the three countries. However, despite intensive efforts, only Mexico has ratified the agreement (it did so in June 2019). Canada went through their legislative process, but with a new Parliament following the October 2019 elections they will have to reintroduce the bill once the 43rd Parliament begins its session.

The situation in the U.S., on the other hand, is getting more complicated as we approach the 2020 Presidential election. Despite a push from the Trump Administration for a speedy approval this past summer, various concerns raised by the Democrats have kept the agreement in limbo. At an event held by the American Council for Capital Formation (ACCF) in June 2019, the chairman of the House Ways and Means Trade Subcommittee, Earl Blumenauer, was firm when asked a question on the possibility of a vote be- fore the August recess, stating it was “Not going to happen” And it didn’t. Thanksgiving, another unofficial deadline for a 2019 approval, has also passed without action.

There is no question about the importance of the North American trade pact to the economies of the three parties, as outlined by a recent ACCF report. Unfortunately, the pact’s economic merits have not been enough to motivate a speedy ratification by the U.S. This short report looks at the issues raised by the Democrats as a stumbling block for ratification and other concerns about the future of USMCA emerging due to the uncertainty created by Chinese trade war.

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Pınar Cebi Wilber’s research interests are diversified and include energy policy, tax policy, international trade and finance, and general government policy. Recently, Pınar has researched issues related to climate change legislation including the impact of such legislation on the U.S. economy. She has also done extensive research on the effect of government policies on retirement saving as well as the use of annuities in retirement.