Trump moves to rip up tax code … and NAFTA?

WHITE HOUSE SAYS NAFTA UP FOR DEBATE

WASHINGTON • After a day of reports that U. S. President Donald Trump was on the verge of pulling out of t he North American Free Trade Agreement, the Whit e House announced Wednesday night t hat negotiations would proceed.

The White House made the surprise announcement in a read- out of calls Wednesday between Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau.

The White House says the president “agreed not to terminate NAFTA at this time.”

Instead, Nieto and Trudeau “agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation” of the trade deal to “the benefit of all three countries.”

Tr u mp has bla med NAFTA for American job losses.

He says he believes “that the end result will make all three countries stronger and better.”

The U. S. administration has complained lately that American lawmakers are dragging their feet on naming a trade czar and excessively slow in approving the 90- day legal notice to kick off negotiations.

Earlier Wednesday, the White House let it be known, through the Washington Post, Politico, and CNN, that Trump was considering an executive order threatening withdrawal.

Such a move might have appeared more dramatic than it actually was.

There are multiple layers between an announcement and actual withdrawal, says a veteran of Canada- U. S. free trade, including, would Congress undo the NAFTA implementing legislation if Trump asked them to?

One thing’s certain: the move would scare people.

“It would be a nothing. But it would be inflammatory,” said Jon Johnson, a negotiator in the original Canada- U. S. trade agreement, a government adviser on NAFTA and now a C. D. Howe Institute analyst.

“I suspect many in the press would freak. I would.”

He pointed out t hat NAFTA does not have an automatic-exit clause.

Its only reference to withdrawal is a single 34- word s entence, Article 2205, which says: A party may withdraw after providing six months’ written notice, which means that any president declaring a pullout would simply be allowed to do it six months later.

What a withdrawal threat could do is frighten multiple actors: Canadian and Mexican negotiators, U. S. lawmakers and markets. A Canadian official said last week t he government doesn’ t intend to be intimidated: “We have time. And we don’t freak out.”

But markets appeared slightly jolted by the latest news. The Canadian dollar lost more than a third of a cent Wednesday and the Mexican peso got hit harder: it was down more than 1.5 per cent on the day.

There were also jitters in Congress.

Pro - NAFTA senators urged Trump to be careful. The Republican majority whip, Sen. John Cornyn, warned: “I think we’d better be careful about unintended consequences.”

One trade expert said he viewed this as a negotiating tactic — a threat to Congress.

“I think he is bluffing,” said Canada- U. S. trade lawyer, Mark Warner.

“I think by threatening a nuclear option he is hoping to get Congress to speed up … ( and) stop getting in way. If there is an executive order, it’s probably more likely to be weaker than his rhetoric.”