A Difficult Road Awaits the U.S. Mexico Canada Trade Agreement in Congress

The U.S.-Mexico-Canada Agreement (USMCA) still has many obstacles to clear before the agreement can take effect. Congress hopes to approve the agreement under Trade Promotion Authority (TPA), which set deadlines and reporting requirements for the administration in exchange for expedited consideration in Congress. Without TPA fast track consideration, the deal would require 60 votes in the Senate and would open to amendments.

Due to notification and reporting requirements under TPA, the USMCA will not receive final approval from Congress until 2019. Who controls Congress after the 2018 midterm elections will play a key role in whether the agreement will receive expedited approval. If Republicans retain control of both chambers of Congress in the midterms, it’s likely they will approve the deal, but if Democrats take back either chamber, the fate of the agreement becomes unclear. 

The following are major steps still ahead of the deal under TPA procedures set in 2015.

• Signature: President Trump signed the deal on Aug. 31^st and USTR released the draft text of the agreement on Sept. 30^th.
• Law Changes: The president must provide Congress with a description of changes to existing laws necessary to implement the agreement within 60 days of signing it.
• ITC Report: The International Trade Commission has 105 days from when the agreement is signed to release a report on the economic impact. The ITC started the study on Oct. 12^th and is accepting comments through December. However, Congress can vote on the agreement before the report is released. If Republicans maintain control of Congress, they may look to move on the agreement as quickly as possible and not wait for the ITC report to come out. Expect calls by Democratic members in the media not to vote until the ITC releases the report.  
• Administrative Action & Final Agreement: TPA requires the president to send Congress a draft statement of administrative action, as well as the text of the final agreement, at least 30 days before submitting implementing legislation. The statement describes the administration’s interpretation of the agreement and the significant actions it will take to implement it. The administration has already released a draft of the agreement, but it has to undergo a “legal scrub” before it’s finalized.
• **Mock Markups: House and Senate committees, with the proper jurisdiction, may hold markups before they receive the implementing bill. This is an alternative way for Congress to provide modifications to the agreement. However, the markups are not required under TPA, and have no bearing on the implementing legislation sent from the president. It is a way for members to add their input outside of the ultimate up-or-down floor vote in Congress. If Democrats take back either chamber of Congress, they will likely use these mock markups as a way to voice criticism of the agreement or just delay the implementation.  
• Implementing Legislation: Next, the president sends draft implementing bill to Congress, along with a final statement of administrative action and a justification for the deal.
• House Consideration: Once sent to Congress, the House will probably take the lead in considering the bill since it affects tariffs, and revenue-related bills must originate in the House. The Ways and Means Committee will have 45 legislative days to report the bill or it will be discharged. A floor vote has to be held within 15 legislative days of when the bill is discharged or reported. Floor debate is limited to 20 hours, which is often shortened by the Rules Committee, and only a simple majority is required for passage. The bill can’t be amended by the committee or on the House floor.
• Senate Consideration: The Senate Finance Committee will have 15 session days to report the House-passed bill (or 45 session days to report its own bill). The Senate has 15 session days from that point to hold a vote, debate is limited to 20 hours, the bill can’t be amended, and only a simple majority is required for passage, rather than 60 votes or the two-thirds majority required for a treaty.
• Other Countries’ Compliance: At least 30 days before the agreement takes effect, the president has to attest that the Canada and Mexico have made any necessary changes to their laws.
• Final Steps: The president signs the bill into law and implements the agreement by proclamation. The legislatures of Canada and Mexico will also have to approve the agreement. 

There are three possible ways Congress could attempt to deny the implementing bill’s eligibility for expedited TPA consideration.

First a procedural disapproval resolution, which would withdraw TPA eligibility if members can show that the administration failed to meet TPA’s notification and consolation requirements. Both chambers must adopt the resolution within 60 days of each other. Second, a consultation and compliance resolution could be adopted by either chamber to withdraw TPA procedures only in that chamber. This would greatly complicate consideration in the other chamber and further delay approval of the deal. Lastly, either chamber could change their rules and override the TPA procedures.

The fate of President Trump’s heralded new trade agreement with Mexico and Canada still faces a long road to implementation. The distance of that road and obstacles the administration will face along the way, will depend on which party controls Congress after Nov. 6^th. If Congress does modify the legislation, it may force the administration back to the negotiating table.

As always, we will continue to monitor this and update you accordingly.