Donald Trump Threatens NAFTA
Donald Trump wants to renegotiate the North American Free Trade Agreement (NAFTA). This could be bad news for Canadian business.
Watching Donald Trump’s acceptance speech at the Republican convention was rather like sitting through a gruesome horror movie. To hear the candidate tell it, fire and brimstone (and maybe zombies) are about to rain down on the United States. Only he, the self-proclaimed “law and order candidate,” can stop it.
The speech was a summation of all the fears and fantasies he has been feeding the American people since the primaries got under way. Fear of ISIS. Fear of Mexican immigrants. Fear of Muslims. Fear of rising crime rates. He has found the wellspring of mid-American discontent and is exploiting it to the fullest.
Back in January, it may have been possible to dismiss these as the rants of a fringe candidate with no hope of winning the White House. No longer. Trump has struck a responsive chord with a wide range of voters who feel traditional politicians and their policies have let them down. They strongly believe that Trump will restore lost manufacturing jobs, raise their income levels, defeat terrorism, and “make America great again.”
One of the ways he plans to do that—and this should make all Canadians cringe—is tearing up the North American Free Trade Agreement (NAFTA). In his acceptance speech, he described it as “one of the worst economic deals ever made by our country. Or frankly, any other country. Never, ever again.”
But before we get too depressed, let’s flash back eight years to the Presidential campaign of 2008. Barack Obama and Hillary Clinton were locked in a tight battle for the Democratic nomination and both were trying to attract primary votes by being harshly critical of NAFTA. (The Democrats have always been more skeptical of free trade than the Republicans because of their strong trade union support.)
Writing at the time for Opinio Juris, an Internet forum for discussion and debate on international law, Julian Ku, Professor of Law and Associate Dean for Faculty Development at Hofstra University School of Law, noted that both candidates had essentially threatened to withdraw from NAFTA to force Canada and Mexico to renegotiate its terms. Those are exactly the same words we’re now hearing from Mr. Trump.
Ku assumed that Obama would win the election. He then explained that any country can withdraw from NAFTA with six months’ notice under Article 2205. However, he raised the issue of whether a President could act unilaterally or would need support from Congress, which had approved the agreement initially.
“It seems like this is solely the President’s call, since NAFTA is an executive agreement and not a treaty,” he wrote. “But it does seem odd that the President has such broad unilateral authority on a matter on which Congress has spoken with such excruciating detail. Will critics of executive power protest such unilateral executive actions by President Obama?”
Of course, Obama never followed through on NAFTA so the issue was never tested at the time (although he did come under fire for other executive orders.) However, if Trump is elected, it will likely be a much different scenario. He has made free trade generally, and NAFTA in particular, one of his central targets. It is hard to imagine him backing away if he wins the White House.
Most probably, he would demand a renegotiation of the agreement within the first few months of taking office. He may not necessarily trigger Article 2205. Just the threat of doing so would force Canada and Mexico to the bargaining table.