National Post (National Edition)
Trump reignites debate over trade powers
President Donald Trump has reignited his threat to withdraw from the North American Free Trade Agreement and with it, a well-worn debate among scholars about the limits of presidential power when it comes to trade.
The U.S. president made his latest pledge to terminate the 24-year-old trilateral pact as he was preparing to leave the G20 summit in Buenos Aires, an event that included the ceremonial signing of the new United States Mexico Canada Agreement (USMCA).
“I’ll be terminating it within a relatively short period of time,” Trump told reporters aboard Air Force One.
“That’ll be terminated so Congress will have a choice of the USMCA or preNAFTA, which worked very well.”
In a sense the comments were nothing new. Canada and Mexico were both on the receiving end of Trump’s pledges to scrap NAFTA during the difficult 15 months of negotiations to revamp the deal. But this time, Trump’s take-it or leave-it scenario was directed at the newlyelected Democratic Congress: Approve the USMCA or have no deal at all.
Indeed, the USMCA is facing resistance from Congressional Democrats who have criticized the strength and enforceability of the new deal’s labour and environmental standards.
“What Trump’s obviously trying to do is start a clock,” said Curtis Bradley, a Duke University law professor and editor of the international-law journal of the American Law Institute. “I think he strategically believes this makes it more likely the new NAFTA will simply be approved.
“The question is, can he use this threat as leverage? My guess is he can.”
Under the Commerce clause of the U.S. Constitution, the president has the power to make trade deals — that is, act as spokesperson and negotiator for the country, with the final deal requiring the approval of Congress.
However, when it comes to the president’s power to terminate deals, the clause is “silent.”
That gap has prompted a longstanding debate among legal scholars.
While some argue a withdrawal must be approved by Congress, others point to a pattern of historical practice in which presidents have unilaterally withdrawn from treaties “for most of the 20th century,” said Bradley.
“As a matter of practice it is established,” he said. “Trump has done it already on a number of treaties.”
Not everyone agrees. The U.S. Constitution specifically deprives the president of the power to regulate commerce, argues Joel Trachtman, a trade expert and professor of international law at the Fletcher School at Tufts University. And while there are some instances in which the president has acted unilaterally to terminate commercial treaties, far more cases have involved the participation of Congress, he said.
While acknowledging his is a “minority view” Trachtman says the commerce clause has been “interpreted by the Supreme Court as depriving the president of power to regulate commerce. The withdrawal from NAFTA would be the regulation of commerce and so, in my view, he doesn’t have the power to do that.”
While the legal interpretation may be uncertain, the likely fallout if Trump triggers a U.S. withdrawal from NAFTA is not. “There would definitely be litigation,” Trachtman said.
Under Article 2205 of NAFTA, any country can withdraw from the deal with six months notice. Ending the arrangement would likely require a second notification and a lawsuit would probably seek an injunction on that action, Trachtman said. That could kick-start a long process of legal wrangling, during which the original NAFTA would remain in force. Indeed, if the case were to be appealed up to the Supreme Court, “it could take years,” Trachtman said.
What if Trump were ultimately successful in terminating the deal? Here again, opinions are divided.
When the original NAFTA was brought into force, its predecessor, the 1988 Canada-u.s. Free Trade Agreement (CUSFTA), was suspended. Though the CUSFTA did not include rules on intellectual property nor the specific commitments on investment and services contained in NAFTA, it did allow for tariff-free access to the U.S. market.
“We had an exchange of notes with the Americans that said if something happens with the NAFTA, the FTA would come back into being,” said John Weekes, Canada’s chief negotiator on the original deal.
But while those letters may have set out a clear intention “it’s hard to say they’d be legally enforceable now,” Weekes said.
“I think it would require some kind of administrative action in order to bring the FTA back into being and whether the United States would be inclined to do that I don’t know.
Were the deal to be torn up, it’s unclear whether Trump would have the authority to manipulate the tariffs on which the system is built. That might mean being left with a “zombie NAFTA” in which the tariffs remain but little else, said international trade lawyer Mark Warner.
“Dispute settlement would remain, but I don’t think anything else within the shell of NAFTA would,” he said.
Ultimately, Canada-u.s. trade could be governed by the rule book of the World Trade Organization, Weekes said. Indeed, some aspects of the Canada-u.s. relationship, including rules on antidumping and countervailing duties remain governed by the multilateral treaty.
But that would spell the end of tariff-free access to the U.S. and though the average tariff rates under the WTO are below three per cent, the rates of duty on certain items can be quite high. Light trucks for instance would be subject to a 25 per cent tariff and some textile products are above 20 per cent, he said.
“It just shows you we’re not out of the woods yet,” said Weekes.
“This is going to be a very interesting period as the U.S. works through this process.”