Prep Notes | USMCA Webinar

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On Wednesday, May 15, Caracal Global Founder Marc A. Ross joined a RANE Network webinar to discuss the challenges for ratification of USMCA and the implications for the US, Canada, and Mexico.

Below are his prep notes for the webinar.

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Prep Notes | USMCA Webinar

May 15, 2019

Status

More than six months have passed since a triumphant Trump stood in the White House Rose Garden and announced that, after 13 months of negotiations, the United States had struck a new trade deal with Mexico and Canada.

Trump has to come to terms with Nancy Pelosi - that’s the negotiation that matters right now

Should Trump and Pelosi not come to an agreement, there would be two possible outcome

  1. Either NAFTA would continue to be the governing deal

  2. Trump could pull the US out entirely and rely on the World Trade Organization

CNBC is reporting USTR Lighthizer plans to float proposal today in meeting with Canada's Freeland that would chart path forward on USMCA that would include process for removing steel and aluminum tariffs, which Canada and Mexico have said is necessary to move deal forward - senior official

Deal Obstacles

US Democrats have said that the deal without changes won’t have their vote, nor will they allow a vote in Congress until Mexico changes its labor laws

Canada will not sign the deal so long as the US-imposed steel and aluminum tariffs are in place.

"There is no appetite in Congress to debate USMCA with these tariffs in place." -- Sen. Chuck Grassley

WH Action

Pence as the pitchman for USMCA

Recent visits to Michigan and Minnesota

An upcoming visit to Jacksonville, Florida next Monday - May 20

Trade peace in North America may be just the signal the president wants to send as trade war looms with China

My guess

If the issue isn’t resolved in the US by August, it won’t get ratified until at least 2020 because of the US presidential election

Sings to watch 2020

Biden = May 18 (Saturday) - Philadelphia, PA

Trump = May 20 (Monday) - Montoursville, PA

Dem Party debates = June + July

Canada

Canadian Foreign Minister Chrystia Freeland will meet with USTR Robert Lighthizer today in Washington DC as part of a renewed push to lift the tariffs on Canadian steel and aluminum.

CNBC is reporting USTR Lighthizer plans to float proposal today in meeting with Canada's Freeland that would chart path forward on USMCA that would include process for removing steel and aluminum tariffs, which Canada and Mexico have said is necessary to move deal forward

In the last week Prime Minister Justin Trudeau has had conversations with President Trump and Vice President Trump by phone

Tariffs: Canadian officials have made clear Canada will not sign the deal so long as the US-imposed steel and aluminum tariffs are in place - The path for USMCA passage is currently blocked by 232 tariffs

Freeland, Trudeau and others in Canadian government have derided the tariffs as absurd, illegal and insulting.

The 2019 Canadian federal election is for October 21, 2019

Election: The US-imposed steel and aluminum tariffs are set to become a Canadian election issue if they’re still in place by the time the federal election campaign gets underway - Part of any election campaign will ask who is best to deal with the United States of America, get things done, and who can stand up to the Americans

Election: The US-imposed steel and aluminum tariffs are set to become a Canadian election issue if they’re still in place by the time the federal election campaign gets underway

Timing: Canadian Parliament only sits for a few more weeks until a probable June 14 - 21 departure - this will be the last time Parliament is active before the October election will be called - Canada's ambassador to the United States David MacNaughton recently said that it is “unlikely” that Prime Minister Justin Trudeau would recall Parliament after it rises in June to ratify the new NAFTA deal before the next election, should Canada be in a position to do so

Mexico

Mexican government passed legislation in April that changed labor contracts. The labor reform package is designed to make it easier for workers in Mexico to unionize and make union members more powerful by allowing members to elect their own union leaders and vote for the approval of contracts by secret ballot. Currently, unions in Mexico are often managed by companies where the executives pick the union leaders and negotiate contracts without member approval — a practice that is seen as corrupt from the US perspective.

On Monday - Mexican Ambassador Martha Barcena met with Michigan Sen. Gary Peters and Michiagn Gov. Gretchen Whitmer at a World Affairs Council of Western Michigan event in Grand Rapids on passing USMCA - Barcena plans to meet with executives from Ford Motor Co., General Motors Co., FCA US LCC, and many others

Trends

Earlier this year USTR Robert Lighthizer told the House Ways and Means Committee that failing to pass USMCA this year would damage the credibility of America’s global trade agenda, particularly the efforts to secure a deal with China.

US International Trade Commission report: The commission predicted modest economic growth in the US as a result of the agreement -- a 0.35 percent increase in gross domestic product and 176,000 new jobs, an increase of just 0.12 percent.

The White House is starting to refer to it as “Plan B.” - “Your real two Plan Bs are either NAFTA or withdraw from NAFTA,” said Mike Mulvaney, the White House’s acting chief of staff, at last week’s Milken Institute Global Conference.

Departure as a means to pressure back on House Democrats to sign the updated deal or risk many of America’s businesses suffering from widespread uncertainty over cross-border trade - In the interim, with the letters delivered, Speaker Pelosi and her team will be on the clock - Trump can then go on the campaign trail and say "I got you a new trade deal. This is the best we can get from Mexico and Canada. And it’s the Democrats who won’t help you voters out in Ohio, Pennsylvania, Michigan.’”

Mexican Foreign Minister Marcelo Ebrard will likely visit Washington next week, a Mexican source told Morning Trade. But it’s unclear whether Ebrard will meet with Lighthizer to tackle the tariffs. Another Mexican official confirmed that Jesús Seade, Mexico’s undersecretary for North America, remains highly engaged on the issue.

Trump

NAFTA—“the worst trade deal in the history of America”

Trump = He likes headlines. He likes a surprise. And from what we know in the polls, taking a tough stance on trade doesn’t hurt him with his base

Trump aims to quickly ratify the North American deal, dubbed the USMCA, but House Democrats have reservations about it

Should the Trump administration trigger the NAFTA withdrawal notice—even as a tactic to move USMCA deal forward many in Ottawa believe thee would be broader signals about Canada’s competitiveness and being an attractive destination to invest would take a serious hit - The notion that Canada is a launching pad for access to the US market may disappear

Between the politics, polling and court cases that would almost certainly wind up in the US Supreme Court -  can’t see a scenario between now and the US presidential election in November 2020 where neither NAFTA nor the USMCA is in effect

Trump has changed Republican and its trade agenda - frankly Trump has stolen an issue from the Democrats

Time is running out because most lawmakers and analysts agree that, if the deal doesn’t win approval this year, there’s little hope of getting it through Congress in 2020, a presidential election year.

Trump’s tariffs will invite damaging retaliation to farm states, but there’s no plan to stop, or even threaten, the president’s tariff regime — just the latest example of Trump imposing his protectionist will on a party that once celebrated free trade

Jonathan Swan: Trump's long trade war:

Senior administration officials tell Axios that a trade deal with China isn't close and that the US could be in for a long trade war

Trump’s mindset on the Chinese is simple: They only respond to shows of brute force

Does Trump actually believe that China pays the tariffs? The consensus is "yes": That's what he actually believes - his belief in tariffs is "like theology."

President Donald Trump is expected to delay a decision by up to six months to impose auto tariffs later this week to avoid blowing up negotiations with the EU and Japan and further antagonize allies as he ramps up his trade war with China, according to people close to the discussions

Groups

Trade Works for America -  planning to spend as much as $20 million targeting districts + co-chairman is Heidi Heitkamp

USMCA Coalition - backed by the Pharmaceutical Research and Manufacturers of America, the U.S. Dairy Export Council

Pass USMCA

USMCA Honorary Co-Chairman Gary Locke

USMCA Honorary Co-Chairman Joe Crowley

Rick Dearborn, executive director of the Pass USMCA Coalition - former White House Deputy Chief of Staff

30-second ad has been viewed 598 times on YouTube....

Automakers, retailers and oil drillers are among the hundreds of companies that rebelled against  Trump’s tariffs and threats to walk away from long-standing trade agreements, but they’re rallying behind his latest pact with Canada and Mexico that faces steep hurdles in Congress

Fox News Channel as guide

WSJ as guide NAFTA and USMCA

We are all used to Nafta, the North American Free Trade Agreement (and not NAFTA, in our style, since it is a pronounceable acronym of five letters or more). But now that the new U.S. trade pact with Canada and Mexico includes a rebranding as the U.S.-Mexico-Canada Agreement, will that name and the abbreviation USMCA become household phrases, too? Well, they aren’t yet, so for now we are using phrases such as the new North American trade deal on first reference and the North American pact on subsequent references. But articles should, however, somewhere include a mention of the new full name U.S.-Mexico-Canada Agreement.

We are staying away from the USMCA abbreviation unless someone says it in a quote. If USMCA catches on, you will see it used more often, and unfortunately in all caps since it doesn’t seem to have a pronunciation.

Capitol Hill

House Ways and Means trade subcommittee chairman Earl Blumenauer has announced a May 22 hearing on enforcement of the USMCA

Congressional Democrats and some labor groups are demanding other changes before the agreement can be approved. They want a mechanism in place to enforce the new labor rules Mexico is required to adopt under the new trade deal as a way to protect workers’ rights

But if the Democrats are deemed by most Americans as the party at fault for trade uncertainty—“then it’s more likely NAFTA gets terminated without USMCA in place.”

Trump will be highly motivated and will send a letter terminating NAFTA to Prime Minister Trudeau and President Andrés Manuel López Obrador. The letter would start a six-month countdown required by NAFTA before the US could officially withdraw from the deal—and it would almost certainly open litigation as to whether a president can unilaterally pull the country from any trade deal.

NAFTA—“the worst trade deal in the history of America”

Senate Finance Chairman Chuck Grassley said on Tuesday that a vote on the free trade agreement could be delayed for a year or more

PDF Version (May 15, 2019)

















Marc Ross

Based in Washington, DC, I specialize in thought leader communications and global public policy for public affairs professionals working at the intersection of globalization, disruption, and politics.

Clients hire me to ghostwrite, engage influencer networks, manage media relations, produce events, audit their communications infrastructure, consult on hiring, provide issue briefs and news generating talking points, as well as manage end to end communications projects where I assume a role of project leader and general contractor.

I work independently but provided access to a substantial global network of collaborators with expertise in websites, graphic design, audio, video, polling, data analytics, and research.

Using the latest tactics of an American political campaign with expertise shaped by being a practitioner of global business communications, I help clients tell their story and build trusted relationships with all necessary stakeholders.

Successful communications are all about STOCK = strategy, tactics, organization, consistency, and know-how.

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