Whether the United States successfully renegotiates NAFTA with Canada inside the tent does not depend ultimately on whether the president can strike a bargain with Prime Minister Justin Trudeau. That’s important, of course, with non-negotiable deadlines facing the trading partners as well as Congress, and that’s where all the focus is now.
But this is not what will determine success or failure. What will determine the success or failure of the renegotiation of the North American Free Trade Agreement is whether the deal can be sold to the public, and that’s the one factor few are paying attention to.
I have a little history with NAFTA. When I founded Public Strategies Inc. in Texas in the late 1980s, the U.S. had just struck a bi-lateral trade deal with Canada and begun looking at bringing Mexico into the fold for what would become NAFTA.
That’s when the government of Mexico hired Public Strategies to persuade the American people that this was a good deal for them. We did, it passed and I’m convinced we were right.
Renegotiating NAFTA to be more favorable to U.S. workers is not a new or radical idea. In 2008, Hillary Clinton and Barack Obama, running for president, blamed NAFTA for the loss of domestic manufacturing jobs and wanted to renegotiate the trade pact to get better labor and environmental standards.
Donald Trump also called for overhauling NAFTA in his campaign and now, as president, no one should be surprised that he is following through on that. What is a surprise, to me at least, is contemplating going forward on NAFTA with only two thirds of North American countries.
It’s hard to imagine a NAFTA without Canada, the top trading partner of 35 U.S. states and the top export market for goods and services from the U.S. Additionally, Canada exports more electricity, oil, natural gas and uranium to the U.S. than any other country.
According to the U.S. Trade Representative’s Office, American exports of goods to Canada are up 181 percent since the year before Congress passed NAFTA. Over the same period, U.S. exports of services to Canada have gone up 243 percent. Trade with Canada is important for Texas, too. Canada imported $22.8 billion in goods and services from Texas in 2017. And 459,700 Texas jobs depend on overall trade and investment with Canada.
The immediate path forward on NAFTA 2.0 depends on meeting a series of deadlines. The White House recently notified Congress that it was renegotiating NAFTA under what are called “fast-track” rules. The notification started a 30-day clock to produce a full text of the new agreement and a 90-day clock to sign the treaty before then requiring congressional approval.
The administration started the clock now to complete negotiations before Mexican President Enrique Pena Nieto is replaced by Andres Manuel Lopez Obrador on Dec. 1.
This timeline means that the renegotiation of NAFTA would take place during U.S. election season, and any congressional vote would probably take place after a new Congress is seated in January.
That makes NAFTA an election issue, which puts the question about public support front and center. According to a new Axios/SurveyMonkey poll, prospects for maintaining public support would improve if Canada were part of the deal. Right now, Americans support renegotiating NAFTA, 50 percent to 45 percent, but if you take Canada out of the exchange the support goes underwater, at 46 percent to 49 percent.
It’s clear that support for going forward without Canada is concentrated among Republicans, 80 percent of whom think the president should do so without Canada if he can’t reach an agreement with his Northern neighbor.
But there are conflicts ahead with that pool of opposition: Interest groups that usually are on opposite sides of trade policy and partisan politics — business groups, farmers, organized labor — are united in supporting Canada’s inclusion in NAFTA 2.0. The midterm elections may provide some clarity, but selling this deal in Congress won’t get any easier unless all sides see that a NAFTA with three partners far outweighs the benefits of only two.