Despite President Trump’s threats to “tear up” NAFTA, he cannot unilaterally withdraw the US from the deal.
January 18, 2017 – Despite President Trump’s threats to “tear up” NAFTA, he cannot unilaterally withdraw the US from the deal, finds a new report from the C.D. Howe Institute. In “The Art of Breaking the Deal: What President Trump Can and Can’t Do About NAFTA,” author Jon Johnson notes that Congress must concur because the president and Congress have joint authority over trade agreements. However the president has the power to frustrate Canada-US trade in other ways.
In the study, the author considers five main questions:
- Can the president unilaterally withdraw the US from NAFTA?
- Can the president unilaterally raise trade duties on NAFTA partners by proclamation?
- When and how can Congress defend its powers?
- What other presidential powers could be used to frustrate NAFTA?
- The focus on Mexico – What are the implications for Canada?
“As for withdrawal, Trump can’t go it alone without congress,” states Johnson. “However, unless Congress actively resists a presidential attempt to unilaterally withdraw from NAFTA, the US courts will not intervene, underscoring the importance to Canada of working closely with Congress,” he adds.
Further, the president has the power to frustrate NAFTA by taking various executive actions. While the sole power to impose duties under the US Constitution rests with Congress, it has delegated powers to the president to act unilaterally to address national emergencies, and balance of payments and national security situations. These powers include the ability to raise tariffs and to adopt other border measures, not withstanding NAFTA. The exercise of such powers could be very costly to the US economy and would doubtless provoke retaliation from US trading partners and litigation both in the US court system and before international bodies such as the WTO.
According to the author, “while the president’s anti-NAFTA rhetoric has been directed at offshoring and balance of payments issues with Mexico, Canada is at risk of being sideswiped by aggressive anti-trade and anti-NAFTA measures that the president may adopt.”
Canada must accordingly be prepared to renegotiate NAFTA with the US administration, preferably on a trilateral basis that includes Mexico, concludes Johnson. The Canadian government must also exercise its rights under international trade agreements. The governments of Canada and Mexico need to secure support in Congress. Members of the House and Senate will be sensitive to damage to US businesses and job loss in their congressional districts and in their home states caused by the adoption of punitive trade measures.
Click here for the full report.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
For more information contact: Jon Johnson, former advisor to the Canadian Government during NAFTA negotiations; or Daniel Schwanen, V.P. Research, C.D. Howe Institute: 416-865-1904 or email: firstname.lastname@example.org.