Will North American Free Trade Agreement negotiations meet the deadline or crash on the trade runway tarmac?
As the clock ticks down to the congressional deadline of May 17, ahead of electioneering in Mexico and the United States, optimism about a 2018 deal is turning soft. And with it the markets could be preparing for hard adjustment.
U.S. President Donald Trump’s administration has put the deal on a path for success, even if sometimes it doesn’t appear so.
If we think back to trade deals of the recent past, take for instance the original Trans-Pacific Partnership, then President Barack Obama used a legislative tool to hurry the process.
Obama invoked what they call trade promotion authority. It adds some legislative grease to the building of a trade deal, at least on the American side of the bargain, allowing an administration to get rather quick nay or yea votes from Congress.
That deal died with the changing of the electoral guard in the U.S. two years ago, but last fall Trump put that rule into play again, and trade promotion authority is in force for the NAFTA negotiations.
The tool comes with its own hooks, though, and will need time to ensure it can result in a completed vote ahead of the early November American election.
That is likely why the May 17 deadline to update Congress was put in place, so it can make the administration jump through the remaining hoops to approve a new NAFTA.
The U.S. Senate will want to get involved, and its finance and other major committees will wade in with minor amendments.
The House of Representatives will also want time to put it through an express version of debates and adjustments.
The process requires that 90 days notice be given to Congress by the administration that it plans to complete a deal. After it is signed, the government’s trade commission will take another 100 or so days to make its report — remember, this is the fast track.
A Republican loss of Congress control, which is expected in November, could put the deal on ice for some time as left and right battle it out over the last two years of the administration’s tenure.
And markets won’t like that.