There has been a lot of discussion on how stagnant politics in North America has been in the past few years. While political bickering and grandstanding is par for the course in the USA, Canada, and in some parts, Mexico, it’s been frustrating for logistics companies to see very little movement on enacting the United States Canada Mexico Agreement (or USCMA). This leads us to the question of today’s article – how close are we to enacting the USCMA?
Unfortunately, this is not a simple question to answer.
In fact, enacting the USMCA (not to be confused with NAFTA) involves multiple layers or hurdles that must be completed to make it ‘legal’.
In October we discussed when we could potentially expect to see the USMCA enacted. Today, we will revisit the current status of the USMCA.
What Is Required to Ratify the USCMA?
Before we start to point fingers at the root sources of delay, let’s begin by outlining some of the facts.
First, the USCMA is an agreement in principle. It is similar to any other ‘deal’ in how it outlines the basic terms that leaders of the respective countries have agreed upon. However, each country requires specific steps to be followed by each of its legislative branches.
In the US, the USCMA is a congressional resolution, that must be passed by the US Congress first. Once it passes in the House of Representatives, it is then sent to the Senate. In the Senate, terms and fine details are slightly amended and finally voted upon.
If it passes, the new resolution is sent to the Executive Branch to be finally signed into law.
In Canada, the process is rather similar, but instead of two separate Legislative houses having to approve, it must simply pass in the Parliament. The same applies to Mexico.
What is the Political Status of the USMCA?
If it were up to Mexico, the USCMA would be active. And as of October 2019, the USCMA has been ratified in Mexico. It has been the complete opposite in both the US and Canada.
The southern-most nation within this three-country trade agreement has already ratified the terms of the USCMA into law. The hurdles exist north of their border, as political turmoil and posturing is causing no forward momentum.
In the USA, House of Representative Democrats have pledged to stall the momentum of trade-related progress. That is, until they have exhausted efforts investigating alleged political impropriety within the Executive branch. This infighting between the US House and Republican-led US Senate will likely continue well into 2020 and the general elections held in November 2020.
Issues in Canada just became much more complicated, as well.
As of October 22nd, 2019, the results of the Canadian elections indicated that current Prime Minister Justin Trudeau will keep his position. However, his Liberal party did not maintain a large enough majority in Parliament. As a result, control gets turned over to the Conservative Party. A party that has been widely skeptical and fairly vocal about the terms of the agreement from the onset.
Needless to say, efforts for enacting the USMCA are relatively stalled at the moment.
How Can Logistics Businesses Handle Uncertainty?
As with nearly all industries, political uncertainty tends to negatively impact their ability to plan or even make decisions. Such is the case with enacting the USCMA.
While several political forecasters agree that among the agenda for the US President and Canadian Prime Minister, the USCMA is the one that has the best chances of approval. However, in today’s political climate, it’s hard to predict when it will occur.
One exceptional resource to help you navigate the uncertainty of political changes with trade regulations is an experienced 3PL like Redwood Logistics.