Steel Products

Leibowitz on Trade: Can Trump Terminate NAFTA?

August 30, 2018

Lewis Leibowitz, trade attorney and contributor to Steel Market Update, offers the following commentary on the latest developments in Washington:

A reader asked recently about the ability of the president to withdraw the United States from the NAFTA agreement, should negotiations for a new agreement with Canada and Mexico falter. While the U.S. and Mexico have announced a tentative agreement, Canada has not gone along as yet. So, the question of what the president might do if an agreement is not reached is a real one. The answer to this question also has potential impact on other presidential prerogatives, including “national security” tariffs and quotas, and Section 301 remedies.

There is disagreement about the ability of the president to terminate trade agreements without the consent of Congress. Some commentators argue that the president has the authority to terminate an international agreement in furtherance of his constitutional authority to conduct foreign affairs. The D.C. Circuit, in Goldwater v. Carter (a 1979 case), decided that President Carter had the authority to terminate a mutual defense treaty with Taiwan without obtaining the approval of Congress. However, the Supreme Court ruled that the issue was a non-justiciable “political question,” so the issue has not truly been resolved.

In the trade area, the president’s power is at a low ebb, because the Constitution expressly gives Congress, not the president, the power to “regulate Commerce with foreign nations.” While the line between international trade and international relations is blurry, the ability of the president to terminate a trade agreement such as NAFTA without congressional involvement is doubtful.

One would be wise to look for some statute conferring that authority on the president. I have looked, in response to the question, and have not found it yet.

NAFTA does not contain any explicit authority to terminate the NAFTA agreement. It does permit the United States to terminate involvement in NAFTA by stating its intent to do so not less than six months before the termination takes place. However, the NAFTA agreement is silent, as is the NAFTA implementation legislation passed in 1993, as to the authority actually to terminate the agreement. This is still very much an open question.

Another possible source is Trade Promotion Authority legislation. The most recent version of TPA was passed in 2015, and gives the president authority to negotiate agreements under “fast track” rules. Another provision of TPA legislation, going back at least to 1962 (the same bill that contains the now-famous Section 232), requires that all trade agreements entered into have a three-year period during which the United States has the ability to terminate or withdraw from the agreement, and thereafter terminate with not more than six months’ notice. Article 2205 of the NAFTA agreement seems to comport with this “fast track” requirement. But the statute does not provide the president with authority to terminate the agreement without the involvement of Congress.

So, as mentioned earlier, I don’t see any legislative provision authorizing the president to terminate NAFTA unilaterally and without congressional involvement. I will keep looking, because the issue might just come up.

Lewis Leibowitz

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