May 19, 2017 | By Alexander Hitch

A Quick Roadmap for NAFTA Renegotiation


Robert Lighthizer gestures before a Senate Finance Committee confirmation hearing on his nomination to be US trade representative on Capitol Hill in Washington, March 14, 2017. REUTERS/Yuri Gripas

Following Monday’s confirmation of the new United States Trade Representative, Robert Lighthizer, the administration officially announced on Thursday that it plans to renegotiate NAFTA, hopefully by the end of the year.

Why the haste? Surely, the White House wants to keep the President’s promise of rewriting the agreement. But extending the renegotiation into 2018 also runs into the US midterm election cycle, imperiling any high-profile trade vote. Mexico is hoping to conclude the renegotiation by the end of 2017, as well, to avoid politicizing NAFTA in its 2018 presidential and legislative elections.

Finalizing the renegotiation by the end of year is more or less impossible. Based on the powers afforded to the President and Executive Branch through Trade Promotion Authority, specific steps must be followed in the negotiation (or renegotiation) of trade agreements. So, what does a (more) reasonable timeline look like? It’s helpful to compartmentalize the process. 

Outlining Objectives

The first phase involves consultation on negotiating objectives by both Congress and the administration. Lighthizer was required to meet with House and Senate committees and advisory panels to discuss the goals of the renegotiation prior to sending Thursday’s notice to begin talks with both Mexico and Canada in 90 days’ time.

As the notice was sent on May 18, Lighthizer is able to begin talks on August 16. 

Negotiations with Canada and Mexico

The second phase encompasses the official negotiations with Canada and Mexico. This is not likely to be easy negotiating. The list of preliminary objectives provided by the administration is somewhat unclear, already engendering the ire of some members of Congress, and may not align with the negotiating aims and political pressures of the other countries.

In any event, normal negotiations tend to take years, not months. A report by the Peterson Institute for International Economics found the average negotiating period for a US bilateral trade agreement was about a year and a half. And while some agreements take less than twelve months, most drag into years.

However, let us assume that the negotiation period is seamless, the three parties conclude the process in a breakneck six months – the quickest timeline possible, given the mandatory Congressional notifications – and the agreement is signed in February 2018.

Assessments and Reports

The third phase, after the fanfare of the official signing of the agreement, allows for the United States International Trade Commission (USITC) to conduct and finalize its report to assess the impact of the agreement, alongside other legal, environmental, and labor impact reviews. Although there are several deadlines associated with this period, the quickest this phase can be completed is roughly five months, meaning the final push in Congress would begin by July 2018, at the earliest.

Congressional Approval

In the final phase, Congress reviews the agreement and puts it to a vote within 90 legislative days.

Legislative days is an important distinction. Since this accelerated timeline already runs into the summer of 2018, the 90-day window runs into the next seated Congress, based on the example of the current House calendar. Of course, the present Congress could move quickly, trying to finalize the agreement before the November 2018 elections. But by this time, the agenda could be filled with delayed legislation such as tax reform, non-legislative matters emanating from the White House, and most especially, midterm election scheduling pressures. And the exigency would not only be with the US Congress. The Mexican Congress and Canadian Parliament would also need to ratify the renegotiated agreement.

At best, the “massive” renegotiation of NAFTA that President Trump is proposing will run deep into 2018, and be subject to the whims of Congress on a fast-approaching deadline. Any domestic hiccup, much less a potentially obstinate Mexican Government, could force the renegotiation out even further, making it unlikely to reach Congress with any time to spare. 

About

Phil Levy is senior fellow on the global economy at The Chicago Council on Global Affairs. Previously he was associate professor of business administration at the University of Virginia’s Darden School of Business. He was formerly a resident scholar at the American Enterprise Institute and taught at Columbia University’s School of International and Public Affairs. From 2003 to 2006, he served first as senior economist for trade for President Bush’s Council of Economic Advisers and then as a member of Secretary of State Rice’s Policy Planning Staff, covering international economic matters. Before working in government, he was a faculty member of Yale University’s Department of Economics for nine years and spent one of those as academic director of Yale’s Center for the Study of Globalization.

His academic writings have appeared in such outlets as The American Economic Review, Economic Journal, and theJournal of International Economics. He is a regular contributor to Foreign Policy magazine’s online Shadow Government section and writes on topics including trade policy, economic relations with China, and the European economic crisis. Dr. Levy has testified before the House Committee on Foreign Affairs, the Joint Economic Committee, the House Committee on Ways and Mean, and the US-China Economic and Security Review Commission. He received his PhD in Economics from Stanford University in 1994 and his AB in Economics from the University of Michigan in Ann Arbor in 1988.

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