Tariff rows leave new Nafta deal ‘in trouble’

Tariff rows leave new Nafta deal ‘in trouble’

More than six months after the United States, Mexico and Canada agreed a new deal to govern more than $1tn in regional trade, the chances of the countries ratifying the pact this year are receding.

The three countries struck the United States-Mexico-Canada agreement (USMCA) on September 30, ending a year of difficult negotiations after US President Donald Trump demanded the preceding trade pact be renegotiated or scrapped.

But the deal has not ended trade tensions in North America. If ratification is delayed much longer, it could become hostage to electoral politics.

The United States has its next presidential contest in 2020, and Canada holds a federal election in October.

The delay means businesses are uncertain about the framework that will govern future investments in the region.

“The USMCA is in trouble,” said Andres Rozental, a former Mexican deputy foreign minister for North America.

Though he believed the deal would ultimately be approved, Mr Rozental said opposition from US Democrats and unions to labour provisions in the deal, as well as bickering over tariffs, made its passage in the next few months highly unlikely. Canada’s Parliament must also ratify the treaty and officials say the timetable is very tight.

Mr Trump, a Republican, has shown frustration with the Democratic-led US House of Representatives for failing to sign off on the USMCA. He has threatened to pull out of the old pact, the North American Free Trade Agreement (Nafta), if Congress does not hurry up.

If that happens, the three nations would revert to rules that were in place before 1994.

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