Treasury Secretary Steven Mnuchin said Monday that the White House is open to a “skinny” deal on the North American Free Trade Agreement — a modest agreement to update the 1993 deal among the U.S., Canada and Mexico in the few areas that the countries have agreed to, while continuing the talks to reach a more comprehensive deal.
One advantage of a “skinny deal” is that it likely wouldn’t require congressional approval because it wouldn’t require a full rewrite of NAFTA. Mnuchin said the White House’s “priority” is still a comprehensive update, but he indicated that the administration is open to taking what it can get.
“I think for right now we are still focused on a new NAFTA that could go through Congress. But we can easily look at the ‘skinny deal’ as an alternative, and that’s something that the president can consider,” Mnuchin said on CNBC.
The White House tried to reach a deal by the end of last week, but a breakthrough didn’t happen. “Very significant issues” remain unresolved, Mnuchin said. The White House has been pushing for an ambitious overhaul of NAFTA including allowing countries to opt out of the investor-state dispute settlement system, rewriting the rules of origin for determining when products can be labeled “made in America,” and requiring Mexico to increase pay for its factory workers, which would eliminate the country’s competitive advantage on labor costs, among other changes. Both Canada and Mexico have resisted such ideas.
Friday was widely seen as the last day that a deal could be submitted to Congress under Trade Promotion Authority, the law covering congressional approval of such deals. TPA says the president must give Congress and the International Trade Commission notice 90 calendar days prior to signing an agreement. It also must give the ITC 105 days to produce an assessment of the deal. That put the deadline at about May 18, according to most estimates, because that is 195 days from when the Congress is scheduled to conclude. However, the text of TPA is ambiguous and open to interpretation. House Speaker Paul Ryan, R-Wis., said Thursday “there’s probably some wiggle room.”
However, a deal would need to be reached fairly quickly for Congress to vote on it this year. Mnuchin said that there was a “desire on the part of all three trading partners” to continue the talks. “We’ll see where we get over the next several weeks,” he said.
Further complicating the talks is that Mexico’s presidential election is July 1. Opposition party candidate Andres Orbrador, a leftist and critic of NAFTA, is expected to win. He has moderated his tone on NAFTA, which is broadly popular in Mexico, in the lead-up to the election.
