Trump Says He'll Give Notice of NAFTA Exit in Bid to Pass USMCA

December 1, 2018 10:31 PM
 
President Donald Trump said he would soon tell Congress of plans to terminate the existing North American Free Trade Agreement, a move that would give lawmakers a six-month window to ratify a new regional trade pact.

(Bloomberg) -- President Donald Trump said he would soon tell Congress of plans to terminate the existing North American Free Trade Agreement, a move that would give lawmakers a six-month window to ratify a new regional trade pact signed on Friday between the U.S., Canada and Mexico.

“I will be formally terminating NAFTA shortly,” Trump told reporters late Saturday aboard Air Force One as he returned from the Group of 20 summit in Argentina. “So Congress will have a choice” between the new deal, known as the U.S.M.C.A, or potentially no continental trade deal at all.

The threat, if enacted, would effectively remove a safety net from under the new trade pact’s journey through Congress. It needs to be ratified by lawmakers in the three countries, and in the U.S., it will almost certainly be taken up by the next Congress, where Democrats will have a majority in the House starting in January. Some Democrats are warning they may not be satisfied by the terms.

Trump’s statement may also be a bluff -- or prove harder than he thinks. Under terms of the existing 1994 NAFTA pact, the president can give six-months’ notice of withdrawal, though it’s not binding. U.S. lawmakers have, however, said Congress would still need to repeal NAFTA’s legislation to fully kill it.

Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto signed an authorization for the deal on Friday morning in Argentina on the sidelines of the G-20, with their ministers signing it shortly after.

Trump announced his intentions on NAFTA hours after meeting with Chinese President Xi Jinping for dinner in Buenos Aires and reaching a truce in their escalating trade war.

Some U.S. lawmakers, both Democrats and Republicans, have called for changes to the pact, though Trump’s trade czar has expressed confidence it will pass.

“The negotiations are not going to be reopened, right? The agreement’s been signed. We still have to put together an implementing bill, so there are things that we can do,” U.S. Trade Representative Robert Lighthizer told reporters Friday in Buenos Aires. He said he was in talks already with Democrats, and appeared unfazed. “We’ll get the support of a lot of Democrats, a very high number of Democrats. Absolutely, just no doubt about it.”

Pelosi View

On Friday, Trump expressed optimism about getting the deal blessed by U.S. lawmakers. “I look forward to working with members of Congress,” he said. “It’s been so well reviewed I don’t expect to have much of a problem.”

Nancy Pelosi, the Democratic leader in the House, called the agreement “a work in progress” in a statement released on Friday evening. “We are waiting to see enforcement provisions relating to workers and the environment,” she said.

Andres Manuel Lopez Obrador took office as Mexico’s president on Saturday; his Morena party, which with its allies holds a majority in Mexico’s Senate, could also seek revisions. Incoming Mexican Foreign Minister Marcelo Ebrard, hosting a dinner for American visitors at Lopez Obrador’s inauguration, declined to comment on the news Saturday night.

Trudeau has a majority in Canada’s House of Commons, leaving a clear path to pass a deal, but faces an election in October.

 

©2018 Bloomberg L.P.

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