U.S. proposes termination clause inside new NAFTA
WASHINGTON — The United States is seeking to insert a so-called sunset clause into a new NAFTA, a controversial proposal that would automatically terminate the agreement after five years unless all three member countries agree to extend it.
That proposal has prompted swift resistance. Canadian and Mexican officials brushed it off almost as soon as it was proposed Thursday, calling it a bad idea that would create economic instability and scare businesses away from long-term investments.
The priority was announced earlier in the day by Donald Trump’s commerce secretary. Wilbur Ross confirmed the U.S. will seek some automatic-termination clause to ensure the agreement can be regularly re-evaluated and improved.
“(It) would force a systematic re-examination,” Ross told a forum organized by the website Politico. “You’d have a forum for trying to fix things.”
Ross said U.S. trade czar Robert Lighthizer agrees it’s a good idea, but conceded that it’s unclear whether Canada and Mexico, the other NAFTA countries, would accept the proposal.
He said he wants a deal by the end of the year and would rather not terminate the agreement — as Trump has threatened to do.
Ross said it will become harder to get a deal after this year for four reasons: Next year, the U.S. fast-track law needs to be re-affirmed in Congress, the U.S. has congressional elections, Mexico has presidential elections and Canada has provincial elections.
The president is serious when he threatens to cancel NAFTA, he added.
“It’s a very real thing,” Ross said. “But it is not the preferred option.”
The U.S. ambassadors of Canada and Mexico both appeared on the same stage shortly after Ross exited Thursday. Both rejected the idea, saying the business community in all three countries would never accept it.
Canada’s David MacNaughton said sunset clauses are usually associated with things you intend to end — not with something like a trade agreement whose inherent point is to project long-term predictability.
If the same five-year sunset idea were applied to marriages, the divorce rate would be far higher, MacNaughton joked.