Trudeau and Pelosi Talk Trade Deal
Author: Greg Valliere
September 4, 2019
EVERYONE, IT SEEMS, WANTS A DEAL to replace NAFTA with the USMCA — especially Justin Trudeau, who could ride this issue to a second term in Ottawa.
SO TRUDEAU AND NANCY PELOSI, whose Democrats mostly want a deal, talked by phone yesterday about where things stand. Our guess is that ratification is still several more weeks away — perhaps just in time for the Canadian election in late October. Trudeau, it can be safely assumed, will claim some credit if the treaty is signed.
THERE ARE STILL ISSUES, including the establishment of an enforcement mechanism, tough labor standards, environmental provisions, etc. And there are protectionist Democrats like Senate Minority Leader Chuck Schumer, who don’t want to give Donald Trump any victories, period.
BUT OUR SENSE IS THAT THE VOTES ARE SUFFICIENT to pass the deal in both houses; Republicans overwhelmingly favor the new pact, as do U.S. businesses and a surprisingly large number of Democrats. Tom Donohue, president of the U.S. Chamber of Commerce, said yesterday that there are enough votes in both houses to pass the treaty, and we agree.
FOR PELOSI, IT’S ALL A MATTER of what she can get in return — probably some deals as appropriations bills are marked up this fall. Despite her contempt for Trump, Pelosi will deal when necessary, as she showed this summer when she led the effort to hike the debt ceiling (her price was a huge increase in domestic spending).
THE OUTLOOK IS NOT AS BULLISH for trade talks with China, as Trump is now backed into a corner — the U.S. manufacturing sector is slumping but he won’t relent in this increasingly bitter trade war. Neither side is likely to blink any time soon, and huge differences persist on several issues, which makes passing the USMCA even more important.
PASSAGE OF THE USMCA and perhaps some deal-making on Brexit might persuade markets that a degree of sanity is returning to global trade. Boris Johnson has overplayed a weak hand, and a ruinous economic meltdown in the U.K. now seems less likely. That’s a positive development for Europe, just as progress on the USMCA is a positive development for North America.
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