Donald Trump and Republicans fear revamped Nafta will be stalled

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Donald Trump’s administration and its Republican allies in Congress are becoming increasingly anxious that USMCA, the revision of Nafta signed by the US president with Canada and Mexico, could fail to gain congressional approval, amid rising tensions on Capitol Hill over the trade deal’s ratification.

Chuck Grassley, the Iowa senator and chairman of the Senate finance committee, said on the floor of the upper chamber on Wednesday that he had a “growing worry” about the prospects for one of Mr Trump’s top legislative goals, and attacked Democrats for using “stalling tactics” to stop the deal.

“House Democrats seem to have no sense of urgency,” Mr Grassley said. “The new Congress has been seated for more than 10 months now. How long is it going to take?” he asked, adding that Democrats would “pay a price” at the ballot box in 2020 if the agreement faltered on Capitol Hill.

Mr Grassley’s admonition highlighted the high stakes for Mr Trump in securing congressional passage of USMCA, which would allow him to claim one significant accomplishment in trade policy heading into his re-election campaign since bluster and tariffs against China and the EU have yielded few concrete results beyond economic disruption and uncertainty.

The delay over USMCA has also unnerved officials in Ottawa and Mexico City, who spent months negotiating the deal with Mr Trump before it was finally signed on the sidelines of the G20 summit in November last year.

On Wednesday, Robert Lighthizer, the US trade representative, was on Capitol Hill for a meeting with Richard Neal, the Massachusetts Democrat who chairs the House of Representatives ways and means committee and is in charge of the negotiations regarding USMCA. Democrats have been seeking changes to the agreement in areas ranging from labour and environment standards to enforcement, but a deal has so far been elusive.

While business groups and Republicans have been aiming for a vote on the deal by the Thanksgiving holiday at the end of November, supporters fear that timeline is in jeopardy, as the available legislative days are dwindling and passing trade deals during presidential election years is notoriously difficult.

“This is going to be a real turkey if Nancy blows this. And I — I worry about that,” Peter Navarro, the White House manufacturing and trade adviser, told Fox Business Network television, referring to Nancy Pelosi, the House Democratic speaker.

Mr Neal and Mr Lighthizer appear to have a good working relationship and claimed progress in their talks. One person familiar with the discussions also said Wednesday’s meeting went well. Mr Neal said he was “not discouraged” by the state of the talks in remarks reported by Politico.

But the fear is that the tense atmosphere on Capitol Hill due to the impeachment inquiry against Mr Trump, and the approaching presidential election, with leading Democratic candidate Elizabeth Warren attacking USMCA, could make it harder for both sides to compromise in the final stretch.

Top Democrats certainly did not seem ready to bring up USMCA for a vote in short order this week. Ron Wyden, the senator from Oregon and top Democrat on the Senate finance committee, said he had “real concerns” with the implementation of what he called “Nafta 2.0”. “American workers and farmers have already been hurt by the president’s impulses. More will get hurt if Trump’s threats and chaos cause the Congress to accept a bad deal on Nafta,” he said.

Labour unions — an important constituency for Democrats — have been less adamantly opposed to USMCA compared with previous trade deals, but have still resisted giving the agreement their blessing. Richard Trumka, the president of the AFL- CIO trade union federation, told The Washington Post this month that it would be a “colossal mistake” for the deal to be voted on before Thanksgiving, arguing it would be “defeated” if so, but he has not entirely shut the door on the deal either.

Corporate America is watching the developments on Capitol Hill with trepidation, and using its lobbying power to try to nudge the two sides towards a deal. Most business groups were lukewarm on the substance of the deal, which updates the terms of trade in North America by adding a key digital chapter but also risks restricting trade in the car sector by setting stringent rule-of-origin and wage requirements.

However, there is widespread concern that if the deal were blocked in Congress, Mr Trump could resort to the hugely destabilising step of attempting — or at least threatening — to withdraw the US entirely from the current Nafta, a 1994 pact he heavily criticised during his 2016 election campaign.

Heidi Heitkamp, the former Democratic senator from North Dakota and co-chair of the Trade Works For America coalition, remained optimistic, seeing a “real desire” and “pressure” on both sides for a deal to come together. “I think Bob Lighthizer is a rational guy who can rise above politics and come to some accommodation,” Ms Heitkamp said. “I’m encouraged every time Speaker Pelosi says she wants to get it done — and I think she means it.”

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