Analysis: Does Donald Trump actually have the authority to kill NAFTA?
A Canadian official says there’s “a pretty good chance” Trump can kill the trade deal unilaterally. Some experts say only Congress has that power.
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WASHINGTON—U.S. President Donald Trump talks about terminating NAFTA as if that would be as easy for him to do as firing off a tweet or ordering a second scoop of ice cream.
Some experts agree with him. But a bunch don’t.
These experts say it is only Congress, not the president, that has the authority to kill the North American trade pact. If Trump tried, in other words, they believe he could be blocked by pro-NAFTA legislators.
The vigorous debate is taking place in corporate boardrooms, legal offices and think tanks across the continent. Once a matter of mere academic interest, it may now have huge stakes for Canada. And everybody involved agrees on just one thing: it will probably be decided by judges.
“I think the only certainty is that if Trump were to go ahead and withdraw, or purport to withdraw, there would be lawsuits immediately. And probably injunctions. And this thing will be tied up in courts for a while,” said Matthew Kronby, a Toronto trade lawyer with Bennett Jones and former director general of Canada’s Trade Law Bureau.
“I have spoken as recently as yesterday with a lawyer at a prominent U.S. law firm where one lawyer has looked at it and had a particular view — he thought the president did have the authority to do so unilaterally — but he acknowledged that there were several other people in his firm that came to the opposite conclusion,” Kronby said.
The question is especially important because of the vast gulf between the views of Trump and many of his Republican colleagues on the subject. As Trump has derided NAFTA as the worst trade deal in world history, several senior Republicans have been outspokenly supportive of the agreement.
Prime Minister Justin Trudeau and his ministers have courted American legislators, but they say they aren’t counting on Congress to save the day. The government’s read of the situation, an official said on condition of anonymity, is that Trump could probably dump the deal with a stroke of his pen.
“That is obviously just completely uncharted legal territory. So it’s difficult to know what would exactly happen … But for our purposes, we do kind of believe there’s a pretty good chance that he could just do this,” the Canadian official said.
There is yet more disagreement on a related subject: what would happen next if the agreement were indeed terminated in one way or another.
The official said the Canadian government has concluded that the old Canada-U.S. Free Trade Agreement, which contained many of the same provisions as NAFTA, would snap back into force if NAFTA went away. They point out that the Canada-U.S. agreement was merely suspended with an exchange of diplomatic notes, rather than deleted, when NAFTA was created.
Jon Johnson, a C.D. Howe Institute senior fellow who worked for Canada on both agreements, agreed that the old deal would snap back automatically if NAFTA vanished — but he said “it would be a mess” requiring further action, since some important provisions, such as those on auto manufacturing, are different. Kronby, meanwhile, said he was not convinced the snap-back would be automatic; Trump, he said, might have to issue some sort of executive order to make it happen.
And then there’s a third possibility.
“Obviously, I guess (Trump) could theoretically withdraw from both at the same time,” the Canadian official said.
The unresolved questions have taken on increasing urgency as NAFTA talks have faltered on account of Trump demands the Canadian and Mexican governments consider unreasonable. Canada and the U.S. traded public criticism at the end of the fourth round in Washington last week.
Trump has consistently promised to terminate the agreement if he cannot secure a new deal. In a television interview on Sunday, he sounded slightly less enthused than usual about the possibility of termination, saying: “It will probably be renegotiated. But if it’s not successfully renegotiated so it’s fair for the United States, it will be terminated.”
Trump regularly makes dramatic threats he does not plan to carry out. But he has repeatedly demonstrated a willingness to make sharp breaks with existing international agreements. In his first nine months, he has abandoned the Trans-Pacific Partnership and the Paris climate accord while taking steps to weaken the Iran nuclear deal.
The confusion over his threat to kill NAFTA is a product of the uniqueness of the situation. No court has ruled on the powers involved in terminating trade deals because the first and only time the U.S. terminated a deal was in 1866, the year before Canada came into existence.
The issue is so complicated because it involves the U.S. Constitution and multiple ambiguous laws.
NAFTA itself says “a party” can withdraw from the agreement after giving the other countries six months of notice. But it does not say whether the president himself counts as the U.S. “party” or whether he needs the endorsement of Congress.
The U.S. Constitution gives Congress the power “to regulate commerce with foreign nations.” (Point: Congress.) It also gives the president various powers over foreign affairs more generally. (Point: Trump.) Section 125 of the 1974 Trade Act, in which Congress grants various trade powers to the president, says “every trade agreement … shall be subject to termination” — but that sentence, unlike others, does not specifically identify the president as the person who can do the terminating. (Point: who knows.)
The only thing that seems certain in the event Trump begins the six-month notice period is the kind of uncertainty businesses hate.
“Companies are going to become much more conservative in their business planning. And we’ll see those impacts all the way down the supply chains,” said Dan Ujczo, an Ohio trade lawyer with Dickinson Wright. “Uncertainty equals conservative business planning.”