With the signing of the Protocol of Amendment to the United States-Mexico-Canada Agreement (USMCA) on December 10, 2019, the battle over USMCA now moves to the Congress. Throughout the two-and-a-half year negotiating process, a threat by President Trump to withdraw from USMCA’s predecessor, the North America Free Trade Agreement (NAFTA), has hung over the negotiations, with significant legal uncertainty over whether the president has the authority to do so absent action by Congress.
Congress now has the chance to clear up that ambiguity and to reassert its constitutional authority over trade policy. But to do so, it will have to act fast. It is likely that the Office of the United States Trade Representative (USTR) will bypass the traditional process of holding a “mock markup” that would allow the Congress to propose amendments to both the legislation implementing the USMCA and the accompanying Statement of Administrative Action (SAA), which outlines executive branch commitments on how the provisions of the USMCA will be implemented. Rather than follow the usual order, USTR is expected to introduce a final, non-amendable bill next week, along with a (presumably amended) SAA, for quick consideration by the House Ways and Means Committee before it is sent to the House floor for final passage. Given the indications from Senate Majority Leader McConnell that the Senate will not take up the USMCA until after the impeachment trial ends early next year, it is not clear why all of the procedural steps in the fast track process must be waived.
Before it is too late, Congress should insist on including a number of items in the implementing legislation or on essential changes to the May 30, 2019, draft Statement of Administrative Action (SAA). Indeed, U.S. Trade Representative Robert Lighthizer’s transmittal letter for the SAA emphasized that the submission “is just that –a draft. It does not in any way prejudice the content of the final implementation package, i.e., the final SAA, final implementation legislation, and the final, binding text.” Now is the time for Congress to hold Ambassador Lighthizer to his word and insist on changes to the implementing bill and the SAA in the following areas:
1. Withdrawal from USMCA
The language of the USMCA mirrors that of the NAFTA: any party may withdraw from USMCA by providing written notice of withdrawal to the other parties, with the withdrawal taking effect six months after notice is given. USMCA Article 34.6. What the text of the NAFTA and the USMCA do not say is who gets to decide to submit the withdrawal notice, under what authority, and pursuant to what procedures. Congress should fill in those blanks by insisting on language, preferably in the implementing bill itself but if not, in the SAA, that spells out a process and clear role for Congress before any withdrawal notice can be sent. If it takes an act of Congress under the well defined Trade Promotion Authority procedures, input from stakeholders and advisory committees, and a formal economic evaluation from the United States International Trade Commission (USITC) to enter into the USMCA, surely it ought to take at least some process and congressional input to withdraw.
The May 30 draft SAA is completely silent on how the Trump administration intends to implement the withdrawal provision. Congress should insist that either the implementing legislation itself or the SAA include a commitment to a transparent process, including public hearings, input from the trade advisory committees, a USITC economic evaluation of the costs and benefits of withdrawal, and a fast-tracked Congressional vote before a notice of withdrawal can be sent to the USMCA parties.
2. Six-Year Joint Reviews
Article 34.7 of USMCA calls for a meeting of the Free Trade Commission (consisting of trade ministers of the United States, Canada, and Mexico) at least every six years. The purpose of the meeting is to conduct a joint review of the USMCA’s operations, to consider any recommendations for action submitted by one of the USMCA parties, and to confirm each party’s desire to extend the USMCA for a sixteen-year period.
Here too the May 30 draft SAA is silent on how the Trump administration intends to approach these six-year reviews. Congress should insist that either the implementing legislation or the SAA include a clear role for Congress in developing recommendations to be presented on behalf of the United States at the joint review sessions, and, as noted below, in determining whether to confirm continued U.S. participation in the UMSCA.
3. Decision to Invoke the Sixteen-Year Sunset Clause
Article 34.7(1) states that the USMCA shall terminate sixteen years after it enters into force unless each of the three parties affirmatively confirms its desire to continue the agreement for a new sixteen-year period. That confirmation must be made in writing at the six-year joint review meetings.
Congress should treat the decision to allow the USMCA to terminate at the end of the sixteen-year period the same as a notice of withdrawal. A decision not to confirm the United States’ continued participation in the USMCA ultimately has the same legal effect as withdrawal. It should be done only following a full process that includes input from all stakeholders and trade advisory committees, a USITC economic evaluation, and a vote of Congress.
The uncertainty created by the manner in which U.S. trade policy has been conducted over the past three years has led to numerous calls for Congress to reassert the power expressly given to it by the Constitution to establish tariffs and regulate foreign commerce. The problem has been the limited opportunities for Congress to do so. The USMCA presents just such a chance. On the essential issue of whether to enter into and whether to exit as important a trade agreement as the one with our two largest trading partners—Canada and Mexico—Congress should insist on playing a central role. It should make it clear that the president does not have the authority to act without the express authorization of Congress.