Amanpour Toomey
Republican Senator takes on President Trump
16:30 - Source: CNN
CNN  — 

President Donald Trump needs to sell Democrats on his replacement for the North American Free Trade Agreement, but a government report on the potential economic effects of the new deal could make that task more difficult.

The International Trade Commission is due to submit its review of the economic impacts of Trump’s US-Mexico-Canada Agreement to Congress by Friday. It will examine the deal’s effects sector-by-sector, as well as its impacts on gross domestic product, exports and imports, employment, and American consumers.

Three GOP Hill staffers with knowledge of the situation told CNN they were expecting the report to be submitted to Congress on Thursday afternoon, requesting anonymity because they were not authorized to speak publicly about the report and its timing.

Inside US Trade first reported the analysis would be delivered Thursday.

A negative or lackluster analysis could play a key role in cementing congressional opinion against the deal. Trump needs Democratic lawmakers in the House to ratify his rebranded USMCA, which he has touted as “probably the largest trade deal ever made.”

Democrats have been dissatisfied with Trump’s deal, arguing it does not go far enough to enforce new labor and environmental protections. House Speaker Nancy Pelosi and some of her colleagues have even pushed Trump’s trade team to reopen the negotiations, which lasted more than a year and nearly collapsed on several occasions, in order to make substantive changes related to enforcement and drug pricing.

If it’s anything like an International Monetary Fund study released last month, the ITC report won’t make Trump’s sales job any easier. That study found the USMCA’s impact on real GDP would be trivial and could even be a net loss for the United States if Trump’s tariffs on steel and aluminum remain in place. Canada and Mexico, along with US lawmakers from both parties, have called for Trump to end the tariffs before the trilateral deal is ratified.

The IMF economists also indicated auto companies could consider Trump’s new auto manufacturing and minimum wage rules too costly to comply with, leading them to relocate outside of NAFTA and simply pay America’s flat tariff of 2.5% on auto imports instead.

Congressional staff will receive a briefing from the ITC about the report after its release.

ITC reports have been uninspiring in the past — the commission projected only modest gains from former President Barack Obama’s Trans Pacific Partnership, which didn’t help in his quest to win over allies in Congress. Trump scrapped America’s involvement in the deal upon entering office.

Proponents of Trump’s USMCA, such as Senate Finance Committee Chairman Chuck Grassley, argue the ITC review won’t be able to adequately take into account qualitative changes to policy, such as new digital trade and intellectual property rules or the deal’s vastly scaled-down investor state dispute settlement system.

John Murphy, senior vice president for international policy at the US Chamber of Commerce, wrote on Tuesday that lawmakers should keep that dynamic in mind when considering the ITC report. He said that unlike newer trade agreements, Trump’s USMCA is a renegotiated version of the 25-year old NAFTA, which already implemented sweeping tariff reductions.

“Historically, the economic effects of tariff elimination have been central to these ITC reports. In this case, the USMCA eliminates some remaining Canadian barriers facing US dairy and poultry exports, but the bottom line is that there just aren’t many tariffs left to cut,” Murphy wrote.

“However, members of Congress reviewing the ITC report and considering their vote on the USMCA should look at the big picture. Liberalized trade with Canada and Mexico has been tremendously important to the US economy,” he added.

Officials in Canada and Mexico have pushed back on the idea of reopening the agreement, which was signed in November. “Reopening it is as good as killing it,” said Jesús Seade, Mexican foreign affairs undersecretary for North America, earlier this month in response to Pelosi, according to Roll Call.

Other Democrats have held back on announcing a position one way or the other, waiting to read the ITC report.