Mulvaney Raises Possibility of Nafta Surviving If New Deal Nixed

(Bloomberg) -- White House acting Chief of Staff Mick Mulvaney raised the possibility that the existing Nafta trade agreement could remain in effect if Democrats reject a replacement that the Trump administration negotiated with Canada and Mexico.

“You could stay status quo," Mulvaney said Tuesday at the Milken Institute's conference in Los Angeles. “You could withdraw from Nafta, which the president has talked about many, many times. Or you could go all the way back to the beginning and renegotiate from scratch with the Canadians and the Mexicans. I can assure you -- I think it's fair to say that last thing is unlikely to happen.”

“Your real two Plan Bs are either Nafta or withdraw from Nafta,” he said.

The U.S., Canada and Mexico signed the successor to the North American Free Trade Agreement in November, after a year of negotiations to rewrite the 25-year-old pact. The president, however, has said for months that the existing Nafta will be killed, either by Congress passing his USMCA deal or because Trump will withdraw the U.S. from the old agreement if Congress fails to approve the new deal.

House Speaker Nancy Pelosi has stressed that putting lawmakers in such a bind is “not a good idea.”

The White House hasn't submitted legislation to Congress yet to implement the USMCA. The Democrat-controlled House would have to approve such legislation, and Pelosi and her caucus have signaled that multiple roadblocks -- including labor enforcement as well as drug pricing provisions -- need to be addressed within the deal before the administration can send the bill up for a vote.

Lawmakers in Canada and Mexico also still need to ratify the pact.

During a meeting at the White House on infrastructure on Tuesday, President Donald Trump and his staff repeatedly pressed Democratic leaders on passage of the USMCA and asked what they need to support it, said Senate Minority Leader Chuck Schumer.

“We talked about -- we need much more adequate enforcement and labor protections,” Schumer said. “We brought up the pharmaceutical provision and we brought up environmental protections. But they were very eager to figure out what we need to pass it."