The North American Free Trade Agreement and Its Fate

Alexander H. Risman, KLJ Staff Editor[1]

“A party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties. If a Party withdraws, the Agreement shall remain in force for the remaining Parties.”[2]

Throughout President Donald Trump’s campaign in the last year, he stated that he believed that the North American Free Trade Agreement (NAFTA) was “probably the worst trade deal ever agreed to, signed, in the history of the world.”[3] The President was very harsh on the trade agreement among the United States, Mexico, and Canada, and campaigned on the position that the deal needed to be renegotiated, or the United States would step away from NAFTA and start from scratch.[4] The intent of this piece is not to determine whether President Trump is correct in his beliefs over the North American Free Trade Agreement (“NAFTA”), but to determine whether he truly has the power as President to unilaterally terminate the agreement that has been in effect since 1994, and has virtually eliminated tariffs between the United States and Mexico.[5]

A person threatening to withdraw from an agreement has no leverage if the person making the threat doesn’t have the power to make that decision. The issue of exiting a trade agreement is very much an issue concerning the balance of constitutional authority. The question is whether exiting the agreement requires Congressional approval, or whether the President has the ability to enact executive action unilaterally. The question has gone unanswered. It is my belief that President Trump will be able to withdraw from NAFTA without issue due to the Republican-controlled House of Representatives and Senate, but that does not necessarily make the action permissible. Through this article, the process by which NAFTA was enacted, and the process by which a party may withdraw, will be explored.  It will also be determined who has the authority to make the decision to withdraw from the North American Free Trade Agreement.

The North American Free Trade Agreement is a comprehensive trade agreement among Canada, Mexico, and the United States.[6] The agreement sets the rules of trade and investment among the countries, and has systematically eliminated most tariff and non-tariff barriers to free trade and investment.[7] President George H. W. Bush signed the agreement on December 17, 1992, and Congress approved it on November 20, 1993.[8] In Canada and Mexico, the head of state can commit his country to negotiate a trade agreement; but in the United States, the President is required to obtain permission from Congress to negotiate.[9] President Bush was granted fast-track negotiating status in 1991.[10] Fast-track authority expedites the negotiation of trade agreements by permitting the President to negotiate the international trade treaties and submit them to Congress without congressional amendments.[11] Congress then approved NAFTA through a re-election that saw President Bill Clinton come into office, and led to much debate from interest groups and within the Democratic Party.[12] After an extreme eleven and a half hour debate, the House of Representatives approved NAFTA by a vote of 234-200, and the Senate approved the treaty by a vote of 61-38.[13]

The quote seen at the beginning of this post is Article 2205 of NAFTA, and it lays out the process by which a party to the agreement could withdraw from the agreement. The document is one-and-a-half inches thick, consisting of more than one thousand pages of text; thirty-four words are all that is required to end an agreement that has been in place for over twenty years.[14] A thirty-four-word statement to describe leaving an incredibly complex agreement leaves extreme uncertainty about who has the authority to withdraw.

To determine whether the President will have the ability to unilaterally withdraw from NAFTA, it must be explored how international law-making came to be in the United States. There are two separate methods in the United States for making international law.[15] The first is the Treaty Clause, which states that “[T]he President ‘shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur.’”[16] One of the goals of creating the Treaty Clause was that it would be expected that the Senate would be directly involved in negotiating treaties and would serve as the President’s “council of advisors.”[17] The other method of making international law is the Congressional-Executive Agreement, which requires approval by Congress, but only after the agreement has already been negotiated (“ex-post congressional-executive agreements”).[18] NAFTA is one of the most important agreements implemented under a Congressional-Executive Agreement.[19]

The area of withdrawal from treaties and Congressional-Executive Agreements is unsettled.[20] The Constitution is silent on the issue of withdrawal,[21] and the Supreme Court has decided not to answer the issue. Congress can attach conditions to an agreement’s approval, including conditions under which the President may withdraw.[22] Though Congress can place limitations on the agreement, Congress cannot prevent the President from communicating with foreign governments about the termination, as long as the termination is consistent with the terms of the agreement.[23] It is important to note here that the agreement only states that a notice of withdrawal be given to the other parties when terminating NAFTA.[24] Therefore, the President has the ability to unilaterally withdraw the United States from a Congressional-Executive Agreement, through his role of representing the United States, by communicating the withdrawal to the foreign parties (Mexico and Canada).[25] The withdrawal from an international agreement does not undo the statute on which the agreement rests, which cannot be undone without the cooperation of Congress.[26] Because of the inter-branch cooperation that is required to create the Congressional-Executive Agreement, the President is more likely to find it difficult to withdraw from the agreement unilaterally.[27] The difficulty is because Congress, as part of the legislation authorizing the agreement, commits the country to a certain course of action, even without a formalized international commitment.[28]

It is my belief that it was Congress’ intention to have a hand in the decision-making process in which NAFTA was created. The Omnibus Trade and Competiveness Act of 1988 (“OTCA”) provided the President with the authority to negotiate and enter into tariff and non-tariff trade barrier agreements.[29] OTCA also stated that the agreements negotiated under the statute could not enter into force for the United States, unless, among other things, the agreements were submitted along with an implementing bill, and the bill was enacted into law.[30] Congress made it clear that they were granting the President negotiating power on condition of their approval of the agreement. By this reading of the statute, I believe that Congress strongly intended to be part of the implementation of agreements formed under this statute, and would also want to be a part of the decision making process for withdrawal. Because the agreement acts as law and the President does not have the unilateral ability to “eliminate” a law that has been passed by Congress,[31] it is unlikely that the agreement could be withdrawn from completely by the unilateral decision of the President.

President Trump will likely be able to, as the representative in foreign matters for the United States, withdraw from NAFTA without upsetting the majority in Congress because he has a Republican-backed Congress; but constitutionally, he may not have the unilateral authority to withdraw from NAFTA. It would take an undoing of the underlying statute that grants the President negotiating power and the backing of Congress to fully withdraw from the agreement. If withdrawal were to occur, and if Congress chose to fight to remain in the agreement, it would “create the appearance that the U.S. was incapable of pursuing coherent political objective.”[32] The withdrawal from NAFTA goes well beyond just ending the long-standing trade agreement, and has deeper implications. If President Trump chooses to withdraw from NAFTA, it is important that he have the support of Congress, and a plan in place for the future of the United States’ trade policy.

[1] J.D. expected May, 2018.
[2] North American Free Trade Agreement, NAFTA Secretariat, https://www.nafta-sec-alena.org/Home/Legal-Texts/North-American-Free-Trade-Agreement?mvid=1&secid=d5a8ba07-1fb2-4f28-88d0-a8eac08611a2.
[3] Erik Sherman, NAFTA Is Here To Stay, Even Under Trump, Forbes.com (Dec. 6, 2016, 5:00 AM), http://www.forbes.com/sites/eriksherman/2016/12/06/nafta-is-here-to-stay-even-under-trump/#6e272abe560f.
[4] Id.
[5] Tami Luhby, Yes, ‘President Trump’ really could kill NAFTA – but it wouldn’t be pretty, CNN Money (July 6, 2016, 8:42 AM), http://money.cnn.com/2016/07/06/news/economy/trump-nafta/.
[6] Frequently Asked Questions, NAFTAnow.org, http://www.naftanow.org/faq_en.asp#faq-1.
[7] Id.
[8] M. Angeles Villarreal & Ian F. Fergusson, The North American Free Trade Agreement (NAFTA), Congressional Research Service (Apr. 16, 2015), at 2, https://fas.org/sgp/crs/row/R42965.pdf.
[9] Lt. Col. Chris D. McMenomy, Clinton and the Process to Pass NAFTA: Making Sausage, National War College (2002), at 2, www.dtic.mil/get-tr-doc/pdf?AD=ADA442950.
[10] Id.
[11] Id.
[12] Id. at 2-11.
[13] Id. at 11.
[14] Id. at 1.
[15] Oona A. Hathaway, Treaties’ End: The Past, Present, and Future of International Lawmaking in the United States, 117 Yale L.J. 1236, 1274 (2008) (discussing the creation and withdraw of treaties and congressional-executive agreements).
[16] Id. at 1276.
[17] Id. at 1278.
[18] Id. at 1256.
[19] Id. at 1305.
[20] Id. at 1323.
[21] Id.
[22] Id. at 1332.
[23] Id. at 1334.
[24] North American Free Trade Agreement, NAFTA Secretariat, https://www.nafta-sec-alena.org/Home/Legal-Texts/North-American-Free-Trade-Agreement?mvid=1&secid=d5a8ba07-1fb2-4f28-88d0-a8eac08611a2.
[25] Oona A. Hathawat, Treaties’ End, 117 Yale L.J. 1236, at 1334 (2008).
[26] Id. at 1334
[27] Id. at 1336.
[28] Id. at 1336.
[29] Jane M. Smith & Daniel T. Shedd & Brandon J. Murrill, Why Certain Trade Agreements Are Approved as Congressional-Executive Agreements Rather Than Treaties, Congressional Research Service (Apr. 15, 2013), at 4, https://fas.org/sgp/crs/misc/97-896.pdf.
[30] Id.
[31] Lyle Denniston, Constitution Check: Does a president have the power to repeal a federal law?, Constitution Daily (July 12, 2012), http://blog.constitutioncenter.org/2012/07/constitution-check-does-a-president-have-the-power-to-repeal-a-federal-law/.
[32] Jacob L. Shapiro, The American President’s Power over NAFTA, Geopolitical Futures (Sept. 9, 2016), https://geopoliticalfutures.com/the-american-presidents-power-over-nafta/.
*Featured Image by Jim Winstead, licensed under CC BY 2.0.