Trade negotiations with Mexico have reached a critical juncture.
A trade deal will need to be announced this week or will likely have to wait until next year, according to Trump administration officials.
Under U.S. rules governing trade deals, President Donald Trump is required to give Congress 90 days notice of its intent to sign a trade agreement. Both Mexican and U.S. officials hope to sign a new agreement before December 1, 2018, when Mexico’s new president, Andrés Manuel López Obrador, takes office.
“That effectively makes next week the drop-dead point,” one person familiar with the thinking inside the Trump administration said.
Obrador has told Trump that he would like the deal completed before he takes office. Any deal that would be signed after Obrador takes office is likely to involve renegotiating certain provisions to reflect the new president’s populist mandate.
“If it doesn’t get done, it isn’t a disaster. We could still get a deal done in the next administration but everyone wants this done this year, before December first,” the person said.
It still is unclear if the Trump administration may strike a side deal with Mexico or attempt to get Canada to sign onto changes with NAFTA, according to people briefed on the matter. The U.S. may try to force Canada to go along with changes to NAFTA by presenting the deal with Mexico as a done deal, threatening to exit NAFTA if Canada doesn’t go along with the deal.
“Canada’s worst fear is a bilateral deal between the U.S. and Mexico that leaves our northern neighbors out in the cold,” a former U.S. trade official said. That, however, is not without risk. Canada may react to any perceived coercion by hardening its stance against U.S. demands. Canadian Prime Minister Justin Trudeau faces domestic political pressure to stand up to Trump.
But even if Canada balks, that might not be so bad. The U.S. could strike a bilateral deal with Mexico more quickly than it could revise NAFTA. And the NAFTA likely would require a vote by Congress that wouldn’t take place until at least next year, when the new Congress is seated.