The fate of NAFTA 2.0 is in Pelosi's hands — and there is little Trudeau can do about it

The moment on Thursday that was most revealing about the chances of the U.S. ratifying the new North American trade deal anytime soon didn't come during Prime Minister Justin Trudeau's Oval Office meeting with President Donald Trump.

It occurred earlier in the day, during House Speaker Nancy Pelosi's weekly news conference. The Speaker took questions about Iran, about the Democratic presidential race, and basketball. (Pelosi's hometown Golden State Warriors lost the NBA championship to the Toronto Raptors, so she owed Trudeau some California wine.)

It was only after Pelosi left the podium and was steps from the door that a reporter asked:

"What's your message on USMCA to Justin Trudeau?"

It's hard to make out all of what Pelosi said of the agreement, as she was no longer in front of the microphone. But she smiled and said she was optimistic, and added: "We want to be on a path to yes."

Not "We're on a path to ratifying." Just that finding a way to get there would be good. Some day. Maybe. Gotta run.

As Speaker of the House, Pelosi controls the timeline for when the U.S. government might ratify the deal. It has to pass both chambers of Congress before becoming law. The Republican-controlled Senate shouldn't be an obstacle, but it's up to Pelosi to decide when, or if, the House takes it up.

Given the combination of serious policy concerns that some Democrats have with the deal and major political calculations to be made with the 2020 elections approaching, Pelosi may decide to delay ratification, perhaps indefinitely.

And no amount of face time with Trudeau is likely to influence her decision.

"At the end of the day, this is a conversation with Pelosi and her caucus," said Todd Tucker, a political scientist at the Roosevelt Institute think-tank who specializes in trade. "There's very little Trudeau could offer the Democrats that would materially affect the outcome."

Trudeau's dilemma

Many Democratic members of Congress have concerns about the agreement.

Some worry, for example, that timelines for when certain drugs become eligible for generic versions could raise pharmaceutical costs in the U.S.

Others are concerned about how the agreement will be enforced, particularly when it comes to labour standards in Mexico and environmental rules.

These outstanding points of contention could be addressed with side agreements, which is how the Trump administration wants to handle them, or by reopening the whole agreement and heading back to the negotiating table.

That uncertainty creates a dilemma for Trudeau: Should Canada's parliamentarians vote on the agreement as it is now, or wait to see what changes may come? Trudeau could bring members back in the summer to vote on the deal.

Negotiations between the Democrats and the White House are ongoing. In hearings on Capitol Hill this week, Trump's top trade negotiator, Robert Lighthizer, said Pelosi has been fair and above board.

"I believe we are on track. I think we are making progress," Lighthizer told the Senate finance committee.

As real as the Democrats' concerns may be, the bigger holdup to ratification is likely pure politics.

"The question is: Is this going to help the president? And that's the calculation Pelosi's trying to make," said Edward Alden, a senior fellow at the Council on Foreign Relations, a think-tank with headquarters in New York City.

Not only would ratifying the agreement give Trump a win, it's one that could potentially impress voters whose support he needs to keep his job in 2020.

Trump campaigned in 2016 on getting rid of NAFTA, the original trade deal between the U.S., Canada and Mexico, often calling it the worst agreement ever made. Successfully replacing NAFTA with a new agreement would be "a promise kept" — a refrain that would become as familiar at Trump rallies as Lee Greenwood's country ballad God Bless the USA.

'It could potentially backfire'

Meanwhile, there are real differences of opinion about trade policy among Democratic House members that Pelosi has to handle carefully. Forcing a vote could expose those divisions at a time when Pelosi wants her team unified as they prepare to fight to keep control of the House in 2020.

"Like a lot of the issues the Democrats are facing with Trump, it's a complicated caucus calculation about how to hold everyone together," Tucker said. "And it seems like, really, the easiest course of action is to stall and not move forward, because it could potentially backfire."

Trudeau called his meeting with Pelosi on Thursday frank and positive, insisting that Canada has no intention of getting involved in the ratification process in the U.S. However, he did hint at what he may have told the Speaker behind closed doors — that Canada is worried about reopening the agreement.

"We are concerned any reopening of NAFTA could lead not just to lengthy future negotiations, which we all were quite pleased were behind us, but also may lead to worse outcomes for Canadians," Trudeau said.

It was probably important for the Speaker to hear that. It's something to consider as she contemplates getting to the path that might lead to yes — on her timeline.