ratification

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday December 4, 2018

Donald Trump threatens to kill NAFTA in push for Congress to approve new trade deal

U.S. President Donald Trump says he will withdraw the United States from NAFTA “in the not-too-distant future” in a hardball attempt to pressure Congress into voting to approve his new agreement with Canada and Mexico. 

The original North American Free Trade Agreement would otherwise remain in place if Congress rejected or delayed the new agreement, which Trump calls the USMCA and Canada calls CUSMA or “the new NAFTA.” A Trump withdrawal would give Congress a take-it-or-leave-it choice between the new agreement — which is highly similar to the original — and no agreement at all.

The new agreement has been criticized on various grounds by both Democrats and Republicans, leaving its prospects for passage uncertain. The Democrats, who will take control of the House of Representatives in January, have made clear that they do not plan to approve the deal any time soon.

Trump’s announcement late Saturday introduced new uncertainty into the continental trading relationship just a day after the leaders of the three countries held a signing ceremony for the new agreement, at which Prime Minister Justin Trudeau said the agreement “lifts the risks of serious economic uncertainty” that hovered over the negotiations themselves. Trump’s words suggested the state of bilateral trade will remain uncertain as long as the president is in office.

Advocates of free trade say a withdrawal would be a foolish gamble with the American economy. Trump has said he doesn’t see it that way, since he believes the economy was stronger without NAFTA than it is with it.

“Congress will have a choice of the USMCA or pre-NAFTA, which worked very well,”  Trump told reporters on the flight back from the G20 summit in Argentina.

“Congress will have a choice of approving the USMCA, which is a phenomenal deal. Much, much better than NAFTA. A great deal, ” he said. He again described NAFTA as a “disaster,” although the new deal he calls “incredible” retains almost all of NAFTA’ s central features while making a smattering of substantial changes.

The Canadian government declined to comment on the record. An official said on condition of anonymity, “ We are focused on our domestic ratification process and not a process that is internal to the U.S.” 

Trump’s announcement is likely to displease businesses across the continent, which have hailed the new agreement for preserving tariff-free North American trade and for allowing them to make investment plans with some degree of confidence that the rules will not soon change.

It is unclear whether Trump has the power to actually withdraw the U.S. from NAFTA. Some experts say he does, some say he doesn’t. The move would undoubtedly be challenged in U.S. courts, which have not yet weighed in on the question.

A Canadian government official told the Star last year that they have concluded “there’s a pretty good chance that he could just do this.” The official said the government also believed the old Canada-U.S. Free Trade Agreement, which preceded NAFTA, would snap back into force if he did.

Others say it would not be so simple.

It is also unclear whether Trump will indeed proceed. Trump has repeatedly delivered trade threats he has not carried out, and his aides — joined by Trudeau — have talked him out of withdrawing from NAFTA before. He has sometimes appeared to use harsh trade rhetoric primarily to appeal to parts of his political base, and his tough talk on Saturday came immediately after he announced that he had taken a conciliatory stance in a trade meeting with Chinese President Xi Jinping, postponing a plan to increase tariffs on Chinese products. (Source: Toronto Star)