House Ways and Means Chairman Kevin Brady was still cutting his political teeth in the Texas legislature in 1993 when Congress nearly tore itself apart over the vote to approve the North American Free Trade Agreement.
But two decades later, he’s on the front lines as President Donald Trump prepares to make good on his campaign promise to renegotiate the landmark agreement with Canada and Mexico — or pull the United States out of it.
Trump’s NAFTA push is a high-wire act that, as Brady sees things, could determine whether the White House succeeds in its pursuit of a series of bilateral trade agreements, as opposed to regional pacts such as the Trans-Pacific Partnership that the new president abandoned days after taking office. Asked if the pending renegotiation was an important “test case” for the administration, Brady’s expression showed his agreement even before the question was finished being posed.
“Oh I think so,” Brady told POLITICO in an interview in his Capitol Hill office. “Clearly, the trade world will be micro-examining every comment related to NAFTA.”
Few Republicans in Congress agree with Trump that NAFTA was one of the worst deals in trade history. After all, it was negotiated under a Republican president, George H.W. Bush, and approved by Congress with strong Republican support.
But since Trump has walked away from TPP — which included Mexico and Canada as well as Japan and eight other countries — it makes sense for the GOP to push the White House toward modernizing NAFTA rather than killing its second major regional pact.
“I think NAFTA has been extremely beneficial to the United States, in many ways, but there’s no question after 23 years it needs to be updated, to say the least,” Brady said.
For the Texas Republican, that means finding new ways to expand agriculture, manufacturing and services trade between the three countries, as well as addressing a number of newer issues, such as digital trade and state-owned enterprises, which weren’t on any trade negotiator’s agenda in the early 1990s.
Trump clearly has a different approach to trade than previous Republican presidents, but Brady praised Commerce Secretary Wilbur Ross and White House National Trade Council Director Peter Navarro for aggressively seeking advice from Congress and other interested parties on three key questions as they prepare for talks with Canada and Mexico.
“What’s working for America in NAFTA today? What’s not? And what should be included in a 21st century trade agreement?” Brady said. “Those are exactly the right questions.”
So far, the Trump administration has laid out only a bare-bones sketch of its priorities for trade agreements. But Brady said he believed Trump could use NAFTA renegotiation to make good on his promise to bring manufacturing jobs to the U.S. “We have a new economy, much different than 23 years ago, and the potential for greater cross-border trade I think is really kind of exciting,” Brady said.
Still, since NAFTA eliminated most duties on trade between Mexico, Canada and the U.S., the Trump administration might be challenged as it tries to make improvements that will generate lots of additional manufacturing jobs.
If the final deal is submitted to Congress for a vote, the U.S. International Trade Commission will be required to do an economic analysis. When the ITC looked at the 12-nation TPP pact, it projected the agreement would boost U.S. employment by just 128,000 full-time job equivalents by 2032, including gains from reforms made by Canada and Mexico.
Brady said he continues to think a regional approach, like TPP, would be more effective than negotiating a series of bilateral deals, but adds that he’s willing to give the White House a chance to show what it can do.
“I think the Trump administration feels comfortable that each agreement will build upon the next,” Brady said, outlining a process that he sees beginning with a revamped NAFTA and continuing with bilateral deals with Asia-Pacific countries, and potentially a deal with the European Union and, later, the United Kingdom, after it completes its exit from the European bloc.
He downplayed the possibility that other countries would be wary to enter into talks with the U.S. because of Trump’s harsh rhetoric, noting that it’s still early days. “We wouldn’t expect any administration to have their legs under them at this point. So they deserve a chance to begin to put that strategy in place,” Brady said.
The veteran lawmaker emphasized he would be pushing the administration to pursue deals with former TPP countries. “We must move aggressively in Asia-Pacific because our competitors like China are moving very swiftly to tie down a regional trade agreement that leaves … our farmers and our workers and our businesses out,” Brady said.
On another question related to NAFTA renegotiation, Brady said he’s still not certain a revised package would need a congressional vote, even though the Trump administration is following congressionally mandated procedures to set the stage for that.
“You know, the answer is that’s not clear yet,” Brady said. “While we have explored some of that, the vast majority of our time has been working with the Trump administration on how to make NAFTA an even better trade agreement.”
But the White House, for its part, seems determined to do whatever it can now to make sure it has the necessary support if and when they submit a revised deal to Congress for an up-or-down vote, Brady said.
“What I sense from Secretary Ross is that they’re willing to spend the time upfront listening to Congress about what should be in this updated NAFTA agreement because they want to negotiate a good one and have strong bipartisan support when it’s ready,” he said.