Chairman's Desk

U.S. midterm elections put USMCA in jeopardy

Another day, another bump in the road for the Canada-U. S. relationship.

Spare a moment for Minister of Foreign Affairs Chrystia Freeland.

After years of arduous negotiations over a renewed North American trade agreement with a temperamental and fickle President Donald Trump, she had finally come to ground on what the government believed was an acceptable agreement.

The US-Mexico-Canada Agreement (USMCA) may not have won friends among certain sectors of Canada’s economy but, by and large, Canadians were more than a little relieved to have escaped the renegotiation with just a few bruises and scrapes.

In the name of an assured and dependable trade relationship and the economic benefits that come with that, the country was willing to accept a deal that may not have been perfect.

But just weeks after the three countries declared victory, that fragile achievement may have been shattered.

The midterm results, delivered on Tuesday, bring with them the likelihood of disruption to American political life.

Despite the chaos that surrounds the president himself, the last two years have been a relatively predictable politically due to the Republicans holding both the House of Representatives and the Senate. Pitched partisan policy battles were more or less confined to the media, rather than to the process itself.

That changed on Tuesday.

While the Republicans actually gained ground in the Senate, the House of Representatives fell to the Democrats.

The result? Nancy Pelosi is likely to assume the speaker’s chair. Pelosi is a particularly formidable partisan foe; indeed, she is one of the few Democrats whose steely approach and steady nerves have won her Trump’s respect.

But even if the speaker’s gavel goes to someone else, the flipping of the House will cause major headaches for the president — and by extension, to his legacy projects, including USMCA.

The Democrats feel they have been given a mandate to fight the president tooth and nail on his agenda. They are diametrically opposed to his ideas almost across the board and have publicly indicated their intention to do everything they can to prevent the implementation of his agenda.

However, one of the only places the president and the Democrats seem to find some common ground is around their suspicion of free-trade agreements.

The Democrats have long eyed such agreements warily, seeing them as a way to undermine sovereignty, empower corporations and surreptitiously attack workers’ rights. While that wariness faded somewhat during the mid-’90s, it has not dissipated entirely. And it is a particular hobby-horse of the left-wing of the Democratic party, which finds itself in the ascendancy after this week’s results.

Add to that the fact it is no secret to anyone that Trump thinks little of the North American trading relationships as they currently stand.

This means that in an environment where the House of Representatives and the president strongly disagree on virtually every issue, trade agreements may be the one area of agreement that can be used to advance other agenda items.

Indeed, the presumptive chair of the House Committee on Ways and Means, Richard Neal, has publicly pooh-poohed USMCA. He has suggested that in order to garner the support of Democrats (a necessity for the agreement to come into force) there would need to be several additional assurances and he has also implied it may require changes.

Enter a pained Minister Freeland.

It will be up to the minister, who has spent months trekking back and forth to Washington coaxing the president’s team into the deal, to now sell the deal to an equally sceptical audience for wholly different reasons.

The chances that USMCA becomes a casualty of domestic policies are high — so Minister Freeland will need to work quickly to build a coalition of moderate Democrats and Republicans in the House who would be willing to advance the agreement quickly.

The minister, and her team, have been proven capable of doing that many times before — but it will take another level of adeptness to usher through a controversial deal in an environment as fraught and raucous as this.

But, just as before, her government’s fate depends on their success — and a collapse of the agreement just months before a federal election would almost certainly be a harbinger of more negative news to come.

Jaime Watt is the executive chairman of Navigator Ltd. and a Conservative strategist. He is a freelance contributor for the Star. Follow him on Twitter: @jaimewatt

This article first appeared in the Toronto Star on November 11, 2018.

Read More