Thread: White House considering order to withdraw from NAFTA

White House considering order to withdraw from NAFTA

By Jeremy Diamond and Patrick Gillespie, CNN
Updated 2:01 PM ET, Wed April 26, 2017

Story highlights

Trump's 100th day in office falls Saturday
He has pledged to renegotiate the trade pact

Washington (CNN)The White House is considering withdrawing from NAFTA in the coming days, though President Donald Trump has not yet decided how to proceed, two senior administration officials confirmed to CNN Wednesday.

The White House is currently mulling an executive order declaring the US' intent to withdraw from NAFTA, a move that could trigger a renegotiation of the trade pact rather than outright withdrawal, the officials said.

But Trump could also simply launch the US into re-negotiations of the trade pact with Canada and Mexico rather than making a bold move declaring the US' intent to withdraw.

Politico first reported Wednesday that the White House is mulling an executive order on withdrawing the US from NAFTA.

One senior administration official stressed that this is something Trump has "always been considering" and while the White House is currently considering an executive order, the official stressed a lot could change in the coming days. Trump has not made any decisions and a range of options are still on the table, the official said.

'Shot across the bow'

The potential move comes after Trump imposed a 20% tariff on softwood lumber imports from Canada, which a second senior administration official described as only a "first shot across the bow."

Trump has repeatedly railed against the NAFTA trade pact and said he plans to renegotiate the trade deal or withdraw from it altogether, though his administration has yet to formally announce those plans.

Trump must give 90-days notice before formally entering negotiations to reform the trade deal.

Trump is also under pressure to take action on NAFTA before Saturday, the 100th day of his presidency, by which point he pledged to make good on a slew of campaign promises. Trump has signed several executive actions on trade -- the most significant of which was withdrawing from the Trans-Pacific Partnership -- but movement on NAFTA has been scarce, despite Trump's ongoing criticism of the deal.

Trump in recent months has labeled NAFTA as a "one-sided deal," called it a "disaster" for the US and has argued that the deal has led to the loss of millions of US manufacturing jobs.

But many Republicans on Capitol Hill have expressed concerns about Trump's hardline on free trade deals.

Sen. John McCain on Wednesday urged Trump not to pull the US from NAFTA.

"It will devastate the economy in my state," McCain said. "I hope he doesn't do that."

90-day trigger

As for finishing negotiations, trade experts say it's unlikely Trump could get a renegotiated NAFTA done this year.

"Getting a deal done by early 2018 or the end of this year was wishful thinking," said Gary Clyde Hufbauer, a trade expert at the Peterson Institute for International Economics.

Trump's trade team, led by Commerce Secretary Wilbur Ross, was expected to begin the negotiating process for NAFTA soon and must trigger a 90-day consultation period before diving into trade talks with Canada and Mexico.

Ross said Tuesday at the White House that he hasn't triggered the 90-day consultation because US Trade Representative nominee Robert Lighthizer, a longtime trade expert and former Reagan adviser, hasn't been confirmed by a full Senate vote yet. Lighthizer did get approved by the Senate Finance Committee this week and a full vote could come within a few weeks.

But Mexican leaders are eager to finalize NAFTA negotiations this year before the country's presidential campaign heats up ahead of July 2018 election.

President Enrique Peña Nieto can't run because of term limits, and there's no telling whether the next Mexican president will cooperate with Trump on trade.

"It will be in the best advantage of the countries involved that we finish this negotiation within the context of this year," Mexico's economy secretary Ildefonso Guajardo told CNN on April 6.

Jobs

Nonpartisan congressional research found in 2015 that NAFTA isn't responsible for an exodus of jobs south of the border, nor for a big jobs boom in the US. Researchers concluded the deal has had a minor impact on the US economy.

Still, about 14 million US jobs depend on trade with Mexico and Canada, according to the US Chamber of Commerce.

Canadian and Mexican officials say they are already ready to renegotiate. They're waiting on the US to come to the table.

"We are ready to come to the table anytime, but the United States, in fact, has yet to actually initiate the negotiating process," Canada's Foreign Minister Chrystia Freeland told CNN on Tuesday.

The Mexican economic ministry declined to comment.

CNN's Manu Raju contributed to this report.

http://www.cnn.com/2017/04/26/politi...d-trump-nafta/

I would give notice of intent to withdraw and then use the notice period time to renegotiate or complete the withdrawal and start over with bi-lateral negotiations. NAFTA is rotten to the core and while the biggest single trade deficit is with China, Trump's got them on the run under the threat of being called a currency manipulator.

Good, the sooner the better.

White House Is Said to Draft Plan for U.S. Break From Nafta

By MARK LANDLER and BINYAMIN APPELBAUM
APRIL 26, 2017

WASHINGTON — President Trump is likely to sign an executive action that would begin the process of withdrawing the United States from the North American Free Trade Agreement, a senior administration official said Wednesday. The move is intended to increase pressure on Congress to authorize new negotiations, and on Canada and Mexico to accede to American demands.

Mr. Trump has repeatedly derided Nafta, describing it last week as “very, very bad” for the country, companies and workers, and he promised during his campaign that he would remove the United States if he could not negotiate improvements.

The White House wants Congress to approve those negotiations under legislation that would allow expedited approval of the reworked agreement, but talks between administration officials and congressional Republicans have moved slowly. The order would give Mr. Trump a credible alternative.

The United States must give six months’ notice before exiting the trade agreement, which came into force in 1994; the order would start the clock.

Mr. Trump could change his mind. While some of his senior advisers, notably Stephen K. Bannon and the economist Peter Navarro, are eager to take strong steps on trade policy, another group, which includes Gary D. Cohn, the head of the National Economic Council, has argued for a more cautious approach, concerned that larger steps could cause economic disruptions.

Lately, Mr. Trump has taken the stronger line, moving to reshape America’s economic relationships with foreign nations. The Nafta order would come on the heels of an announcement of new tariffs on imports of Canadian lumber, and of reviews of whether imports of steel and aluminum are undermining national security.

“Nafta’s been very, very bad for our country,” Mr. Trump said last week. “It’s been very, very bad for our companies and for our workers, and we’re going to make some very big changes, or we are going to get rid of Nafta once and for all.”

Canada’s prime minister, Justin Trudeau, called Mr. Trump on Wednesday evening. The two men also spoke Tuesday. Mr. Trudeau’s office said he had reinforced “the importance of stability and job growth in our trade relations.”

The re-emergence of the Nafta issue added to a frenzied pace of announcements and disclosures on trade, taxes and other matters as the 100-day mark of Mr. Trump’s term approaches.

Walking away from Nafta would disrupt the economies of the United States and its nearest neighbors, Canada and Mexico, and strain broader relations among the countries. Over the last two decades, their economies have become increasingly intertwined. The volume of trade has multiplied, and the manufacture of many goods, notably cars, involves multiple border crossings and factories in all three.

If the United States actually pulled out of the deal, experts said, trade with Canada would probably still be subject to a similar agreement between the two countries that took effect in the late 1980s and that served as a model for Nafta. The Trump administration, however, could seek to withdraw from that agreement as well.

While trade has contributed to the growth of the American economy, the changing dynamics have also prompted concerns about lost jobs and the rising trade deficit. But when something is manufactured in the United States, the product is typically made up of parts and pieces from around the world.

The shift in the rules governing trade with Mexico would be more significant. The two countries both take part in the World Trade Organization, but that agreement allows much higher tariffs. Mexico, for instance, could impose a 37 percent tariff on American corn. The disruptions to manufacturing could also come at a hefty cost to consumers. Caroline Freund, a fellow at the Peterson Institute for International Economics, has estimated that the cost of a pickup truck might increase by $3,000.

Monica de Bolle, a senior fellow at the Peterson Institute, said: “It would be a very disruptive shock that would impact everybody. It would impact growth; it would impact companies and supply chains; it would impact workers; it would impact voters in Trump states. It’s just crazy to imagine that they would go that route.”

Even the suggestion of withdrawal, first reported by Politico, heightened anxieties in financial markets. The peso fell more than 2 percent against the dollar, and the Canadian dollar fell about 0.3 percent. As it happens, those declines make Mexican and Canadian imports cheaper for American customers while increasing the costs of American goods in those countries, working against Mr. Trump’s stated intentions.

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Some Republicans were also quick to raise red flags. “Scrapping Nafta would be a disastrously bad idea,” Senator Ben Sasse, Republican of Nebraska, said in a statement. “Yes, there are places where our agreements could be modernized, but here’s the bottom line: Trade lowers prices for American consumers, and it expands markets for American goods. Risking trade wars is reckless, not wise.”

Both Mexican and Canadian officials have said repeatedly that they are ready to negotiate changes to the trade agreement. Written in the early 1990s, it is outdated in key respects: Its drafters, for example, did not foresee the rise of the internet.

“Canada is ready to come to the table at any time,” Alex Lawrence, a spokesman for the Canadian foreign minister, Chrystia Freeland, told Reuters on Wednesday.

Indeed, the Obama administration negotiated changes to the deal as part of the Trans-Pacific Partnership, a broader agreement that would have supplanted Nafta. Mr. Trump withdrew from that agreement as one of his first official acts.

The Trump administration provided an indication of its own priorities in a letter circulated among members of Congress last month. While proposing some significant changes, such as strengthening the available penalties for breaches of the rules, it suggested that the administration was not seeking to alter the basic structure of the agreement, prompting relief both north and south of the United States.

The administration must send a final version of that letter to Congress to start another clock: a 90-day waiting period before negotiations.

Starting both clocks would allow the White House to begin negotiations with Mexico and Canada while holding in hand the threat of walking away from the table.

It is not clear whom that would hurt most. Mr. Trump has repeatedly decried trade deficits as a major contributor to what he sees as the nation’s broken economy.

But trade among the three North American nations is relatively balanced, particularly in comparison with trade between the United States and China.

The United States actually ran a trade surplus with Canada in 2015 and during the first three quarters of 2016, according to the most recent data available from the Commerce Department. American sales of goods and services to Canada exceeded purchases of goods and services from Canada, on average, by $1 billion a month.

The United States does run a monthly deficit of about $4 billion with Mexico, but even that is a small fraction of the roughly $28 billion monthly deficit with China.

https://www.nytimes.com/2017/04/26/u...der-trump.html

White House Says Trump Won't Terminate Nafta at This Time

Bloomberg News
April 26, 2017, 10:37 PM EDT

President Donald Trump spoke with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto today to discuss Nafta, the White House said in statement.

The president "agreed not to terminate Nafta at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries."

https://www.bloomberg.com/news/artic...a-at-this-time

Republicans tell Trump to hold up on NAFTA withdrawal

By Tara Palmeri , Adam Behsudi and Seung Min Kim
04/26/17 11:32 AM EDT
Updated 04/26/17 06:01 PM EDT

The Trump administration alarmed Republicans on Wednesday with its consideration of an executive order that could lead to the United States' withdrawal from NAFTA — with some lawmakers warning that such a move would be a "disaster."

A draft order has been submitted for final stages of review and could be unveiled late this week or early next, two White House officials told POLITICO. The effort, which still could change in coming days as more officials weigh in, would indicate the administration’s intent to withdraw from the sweeping Clinton-era pact by triggering the timeline set forth in the deal.

The approach appears designed to extract better terms from Canada and Mexico. But it raises the possibility the Trump administration could walk away from one of the largest trade deals on the planet after having already pulled the U.S. out of the proposed Trans-Pacific Partnership, a 12-nation deal that the Obama administration saw as a way to cement American influence over Asia-Pacific trade.

“I think we’d better be careful about unintended consequences,” said Senate Majority Whip John Cornyn.

President Donald Trump pledged on the campaign trail to renegotiate or otherwise withdraw from NAFTA, a trade deal signed in 1994 by former President Bill Clinton that removes tariffs and allows for free flow of goods and supplies between the North American triumvirate. Trump in recent weeks has stepped up his rhetoric against the trading partners, returning to threats he had shied away from since taking office and once again vowing to terminate the agreement all together.

“NAFTA’s been very, very bad for our country,” he said in a speech last week in Kenosha, Wis. “It’s been very, very bad for our companies and for our workers, and we’re going to make some very big changes or we are going to get rid of NAFTA once and for all.”

Peter Navarro, head of Trump’s National Trade Council, drafted the executive order in close cooperation with chief White House strategist Steve Bannon. The order was submitted this week to the staff secretary for the final stages of review, according to one of the White House officials.

The draft executive order could be a hardball negotiating tactic intended to pressure Mexico and Canada to come to the table to renegotiate NAFTA and make concessions that are more to Trump’s liking. But once Trump sets the withdrawal process in motion, the prospects of the U.S. turning its back on two of its most important trade partners suddenly become real.

Early returns from Capitol Hill lawmakers on both sides of the aisle were not encouraging and suggested that a go-it-alone move from the White House without Congress’ backing could cause trouble down the road, as the administration looks to strike a series of nation-to-nation “America First” trade deals.

No fewer than four influential Republicans said the White House should hold up, with GOP Sen. John McCain of Arizona saying that such a move would have “the worst possible impact” on his state.

“I’d be glad to have renegotiation of some of the terms of it, because a lot of time has passed,” McCain said, arguing that a withdrawal would “be disgraceful and a disaster.”

Cornyn speculated about whether the draft order was a negotiating tactic. But a withdrawal from the deal, he added, wouldn’t jive with what Commerce Secretary Wilbur Ross told him personally.

“It’s inconsistent with what Wilbur Ross had told me previously about their intention, which was to update NAFTA, not to withdraw from it,” the Texas lawmaker said, adding that he would want to “reconcile” that with the news coming out of the White House today.

Sen. Jeff Flake, another Republican from Arizona, said a withdrawal would be devastating to the country as well as to his state. “It’s not a zero-sum game,” he said.

Sen. Lindsey Graham admitted to being skeptical of NAFTA initially, but the South Carolina Republican said the pact has brought benefits to the economy. “Trying to negotiate NAFTA makes sense, withdrawing from it doesn’t,” he said.

Senate Finance Chairman Orrin Hatch, who oversees trade in the upper chamber, said he would “have to look at what they’re trying to do” before he could offer an opinion.
Treasury Secretary Steven Mnuchin said that the Trump administration's tax plan “would pay for itself” through economic growth.

Rep. Ron Kind, a pro-trade Democrat who serves as chairman emeritus of the moderate New Democrat coalition, said a NAFTA pullout would be especially painful for American farmers, for whom the deal has proven to be a boon.

“Dairy is exported a lot into Mexico right now, so if we lose that market ... it would wipe out perhaps half of our milk producers overnight,” said Kind, whose home state of Wisconsin is known for its dairy. “And we are selling a lot of agriculture products into the Mexican market, so a NAFTA withdrawal would, I think, be devastating for production agriculture, just to start with — not to mention manufacturing products that we have going down there as well.”

House Agriculture Chairman Mike Conaway hesitated to criticize the administration’s planned move. “NAFTA needs to be renegotiated, at a minimum,” the Texas Republican told POLITICO, noting that much has changed since the deal was struck. “All three economies are dramatically different than they were in the 90s when that was done, so it is an appropriate time to renegotiate.”

“The way I see it, the president is always negotiating,” he added.

Trump’s apparent strategy to gain leverage over Canada and Mexico has put the business lobby on edge. A withdrawal could undo complex supply chains that have been built up over the deal’s 26-year history and negatively impact companies that have developed major export interests in Canada and Mexico.

In Mexico City on Monday, U.S. Chamber of Commerce President and CEO Tom Donohue told business leaders that any NAFTA redo must “first and foremost, do no harm.” He stressed the deal should be amended rather than ended.

“We must not disrupt the $1.3 trillion in annual trade that crosses our borders,” he said. “Under NAFTA, Mexico and Canada are the top two U.S. export markets in the world — by a long shot. The jobs of 14 million Americans depend on the agreement.”

There’s also the question of how this could all play out legally. The role of Congress in the withdrawal process may be a source of debate among some legal experts, but it’s been widely assumed among most trade lawyers that the president has the authority to withdraw from trade agreements under Section 125 of the Trade Act of 1974 and does not need congressional approval to do it, said Warren Maruyama, a partner at Hogan Lovells who served as USTR general counsel under President George W. Bush.

“But this would be breaking new ground, so no one knows for sure, and it’s something that could end up in the courts,” he added.

A provision of NAFTA, Article 2205, allows a party to withdraw from the deal six months after providing written notice to the other participants. But the six-month period is not necessarily a hard deadline, and the president could take more time to provide a final notice to finally leave the deal — which would give the White House some leverage in negotiations.

“It would be starting a game of chicken,” Maruyama said.

The overarching law that provides the president the authority to terminate trade deals — Section 125 of the Trade Act of 1974 — also requires a public hearing on the matter, unless the president determines a hearing to be “contrary to the public interest.”

Even if the process of withdrawal were to be completed, the trade act still allows for the reduced or eliminated tariffs under NAFTA to remain in place for a year in order to allow trade to adjust.

In political terms, the executive order could allow the administration to seize the advantage. Trump hasn't been able to launch a renegotiation because of political realities on Capitol Hill that center on his still-unconfirmed nomination of Robert Lighthizer, his pick to be U.S. trade representative. The administration can't start talks until it gives Congress 90 days notice, and it can't give Congress that notice until it meets with certain congressional oversight committees — and Democrats on one of those committees have been refusing to meet until Lighthizer is confirmed.

Amid the impasse over Lighthizer’s nomination, which has been caught up in an unrelated bill over benefits for miners, Trump has repeatedly taken the offensive in his campaign against NAFTA, which he's called a “job killer” and the “single worst trade deal ever."

Earlier this week, the U.S. imposed a new tariff on softwood lumber coming from Canada. The relationship between Canada and the U.S. has been tense in recent weeks as the Canadian dairy industry prepares to implement a new pricing policy on certain products that could make it harder for American dairy farmers to compete.

The United States’ relationship with Mexico has also been marked by increasing tension, since Trump has pledged to make Mexico pay for the wall he wants to build along the border between the two countries.

Some within the White House see drafting of the executive order as a win for the administration’s “nationalist” faction, led by Bannon, who has been sidelined in the weeks since he was removed from the National Security Council. A White House spokesperson did not respond to a request for comment.

Doug Palmer, Megan Cassella, Catherine Boudreau and Brent Griffiths contributed to this report.

http://www.politico.com/story/2017/0...w-trump-237632

Game On.

If the US passes the corporate and business tax cuts, passes the new health care bill, continues domestic energy development A to Z, all forms, ramps up increased border security, immigration enforcement and deportations, and stands firm on unfair foreign trade practices, Trump and the US will have an unquestionable upper-hand in renegotiating NAFTA to our advantage.

Trump agrees to renegotiate NAFTA with Canada, Mexico leaders
Published April 27, 2017 Fox News

President Trump and the leaders of Mexico and Canada agreed Wednesday to renegotiate the North American Free Trade Agreement (NAFTA), the White House said Wednesday night.

"it is my privilege to bring NAFTA up to date through renegotiation," Trump said in a statement. "It is an honor to deal with both [Mexican] President [Enrique] Peña Nieto and [Canadian] Prime Minister [Justin] Trudeau, and I believe that the end result will make all three countries stronger and better."

The White House added that Trump "agreed not to terminate NAFTA at this time" and that all three leaders ""agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation" of the trade deal to "the benefit of all three countries."

Trump repeatedly railed against the two-decade-old trade agreement on the campaign trail, describing it repeatedly as a "disaster."

Earlier Wednesday, sources told Fox News that the White House had drafted a notification signaling the United States' intention to withdraw from NAFTA. The document would have given the leaders of Canada and Mexico six months' notice of the administration's decision to exit from the agreement.

On Monday, the administration announced it would slap hefty tariffs on softwood lumber being imported from Canada. Trump has also been railing against changes in Canadian milk product pricing that he says are hurting the American dairy industry.

Trump told The Associated Press in an interview last week that he plans to either renegotiate or terminate NAFTA, which he and other critics blame for wiping out U.S. manufacturing jobs because it allowed companies to move factories to Mexico to take advantage of low-wage labor.

"I am very upset with NAFTA. I think NAFTA has been a catastrophic trade deal for the United States, trading agreement for the United States. It hurts us with Canada, and it hurts us with Mexico," he said.

The Trump administration last month submitted a vague set of guidelines to Congress for renegotiating NAFTA, disappointing those who were expecting Trump to demand a major overhaul.

In an eight-page draft letter to Congress, acting U.S. Trade Representative Stephen Vaughn wrote that the administration intended to start talking with Mexico and Canada about making changes to the pact, which took effect in 1994.

The letter spelled out few details and stuck with broad principles. But it appeared to keep much of the existing agreement in place, including private tribunals that allow companies to challenge national laws on the grounds that they inhibit trade — a provision that critics say allows companies to get around environmental and labor laws.

Reports Wednesday of the possible move drew objections from some in Congress, including Sen. John McCain, R-Ariz.

"Withdrawing from #NAFTA would be a disaster for #Arizona jobs & economy," he tweeted. "@POTUS shouldn't abandon this vital trade agreement."

Fox News' John Roberts and The Associated Press contributed to this report.

http://www.foxnews.com/politics/2017...o-leaders.html

Trump plans to renegotiate NAFTA, but may scrap it if 'fair deal' not reached

By Katherine Faulders
Alexander Mallin
David Caplan

Apr 27, 2017, 1:23 PM ET

President Donald Trump has decided that the U.S. is looking to renegotiate the North American Free Trade Agreement with Mexico and Canada, but is still considering scrapping the pact if a "fair deal" is not met between the three countries.

“I was going to terminate NAFTA as of two or three days from now,” Trump said during a meeting at the White House with Argentinian President Mauricio Macri today.

According to Trump, the threat of ending the trade deal led to calls from Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto yesterday.

“They said, ‘Rather than terminate NAFTA, could you please renegotiate?’" Trump recalled. “I said, I will hold on the termination. Let's see if we can make it a fair deal."

Trump added, "I like them very much. I respect their countries very much. Their relationship is very special.”

The president reminded reporters that renegotiating NAFTA was a key campaign promise, and added that if he’s “unable to make a fair deal...I will terminate NAFTA.”

“We have to make a deal that's fair for the United States. They understand that,” Trump said. “So I've decided rather than terminating NAFTA, which would be a pretty big, you know, shock to the system, we will renegotiate."

Later asked during a working luncheon in the Cabinet Room when the renegotiation of NAFTA would begin, Trump said, “It'll start very soon. It's actually starting today.”

White House press secretary Sean Spicer elaborated some more on Trump's position on NAFTA.

"The president also made it clear if they are unable to agree on a deal that is fair to American workers and companies, after giving renegotiation a good shot, he will move forward with termination," Spicer said.

Earlier Wednesday, an administration official told ABC News that the White House would not comment on rumors that a NAFTA executive order was in the works.

"I would say that NAFTA has obviously been a top priority for the President from day one and it's safe to say we've been working on addressing the issues with it since the beginning," the official said.

Trump picks fight with Canada over dairy products and trade

While campaigning for president, Trump slammed NAFTA as a "disaster" and the "worst trade deal in history."

As president, he has continued to speak out against the trade deal, last week calling it "very, very bad" for American companies and workers.

"We're going to make some very big changes or we're going to get rid of NAFTA once and for all," he said during a separate speech in Kenosha, Wisconsin, earlier this month. "It cannot continue like this, believe me."

The trade agreement was signed by President Bill Clinton in 1993 and implemented in 1994. NAFTA expanded trade between the U.S., Canada and Mexico, eliminating tariffs on most goods traded among the three countries.

"President Trump agreed not to terminate NAFTA at this time and the leaders agreed to proceed swiftly, according to their required internal procedures to enable the renegotiation of the NAFTA deal to the benefit of all three countries," a White House readout of calls Wednesday between the leaders said.

In the readout, Trump said, "it is my privilege to bring NAFTA up to date through renegotiation. It is an honor to deal with both President Pena Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better."

A summary from the office of Pena Nieto echoed the White House readout. "The leaders agreed on the benefit of maintaining the North American Free Trade Agreement and work together with Canada to carry out a successful renegotiation for the benefit of the three countries," it said.

A readout released by Prime Minister Trudeau's office several hours before was more sparse, saying that Trudeau and Trump "continued their dialogue on Canada-U.S. trade relations, with the Prime Minister reinforcing the importance of stability and job growth in our trade relations."

ABC News' Veronica Stracqualursi and Tom Kutsch contributed to this report.

http://abcnews.go.com/Politics/presi...ry?id=47046286