On January 23, 2017, President Trump formally announced the removal of the United States from participation in the Trans-Pacific Partnership (TPP). The TPP is a trade deal which was being negotiated under the Obama administration. It involved twelve nations including Japan and Canada. Now, only a few months later, the President is making moves on renegotiating and/or completely terminating U.S. involvement in another trade deal – the twenty-four year old North American Free Trade Agreement (NAFTA).
In a series of tweets made on April 27, President Trump stated:
“I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed…subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good-deal very possible!”
The White House also stated:
“President Trump agreed not to terminate NAFTA at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries…”
Even so, the White House website maintains it’s stance on NAFTA of renegotiate or terminate.
So what does this all mean? Can the President really terminate NAFTA? It’s entirely too soon to say.
An American Shipper article further clarifies what may be going on with all this confusion surrounding NAFTA and how any termination or renegotiation of the deal would proceed:
“Under NAFTA rules, any nation that wishes to withdraw from the accord must provide six months’ notice to the other parties, and Congress. The ability of a president to unilaterally withdraw from a congressional-executive agreement such as NAFTA has never been tested, and if attempted, would likely result in a court review.
The back-and-forth about whether Trump would exit or renegotiate NAFTA is likely a function of the tug-of-war in the White House between nationalists such as Chief Strategist Steve Bannon and Peter Navarro, head of the National Trade Council, and centrists such as Gary Cohn, who heads the Council of Economic Advisors, and son-in-law Jared Kushner. Business leaders have also let the White House know that maintaining and improving NAFTA is important to their enterprises.”
This type of analysis should provide some reprieve to those of us concerned about a termination of the deal. That said, it remains critical that international importers and exporters continue to pay attention to the President’s rhetoric and actions when it comes to the North American Free Trade Agreement (NAFTA) – and to all trade deals for that matter.
The CPH Group is determined to bring you the latest news on any actions made towards the trade agreement along with an analysis of how this could affect your free-trade business in North America.
For any questions or concerns, contact your CPH Group trade compliance specialist.