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Canada, Mexico ‘difficult,’ Trump says in threat to kill NAFTA

In this Tuesday, Aug. 22, 2017, photo, President Donald Trump waves as he walks across the South Lawn of the White House in Washington to board Marine One for a short trip to Andrews Air Force Base, Md.

Andrew Harnik/AP

U.S. President Donald Trump is threatening to "terminate" the North American free-trade agreement for the second time in a week, blaming Canada and Mexico for being "very difficult" in renegotiation talks. The latest salvo came Sunday morning on Twitter as Mr. Trump spent the weekend at Camp David.

"We are in the NAFTA (worst trade deal ever made) renegotiation process with Mexico & Canada," the President wrote. "Both being very difficult, may have to terminate?"

The threat appeared part of his effort to pressure Mexico to pay for construction of his promised wall along the U.S.'s southern border. In another, Mr. Trump wrote that the U.S. "must have THE WALL" and Mexico would pay "through reimbursement/other."

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Read more: NAFTA, Trump and Canada: A guide to the trade file and what it could mean for you

The three sides held the opening round of NAFTA talks two weeks ago in Washington. Canada and Mexico publicly rejected two major U.S. demands: An American content requirement for manufactured goods, including cars and trucks, and the dismantling of the Chapter 19 dispute settlement system. The renegotiation, however, is still at an early stage.

Mr. Trump appears to be growing increasingly impatient to move forward his economic nationalist agenda: News website Axios on Sunday carried an account of an Oval Office meeting earlier this month at which Mr. Trump expressed frustration that none of his aides had provided him with concrete trade barriers to slap on China. "I want tariffs. And I want someone to bring me some tariffs," Axios quoted Mr. Trump as telling his staff.

Whether the threat from Mr. Trump is serious or mere negotiating bluster is an open question.

And it is not clear whether the President has the authority to kill the deal, meaning any termination attempt could lead to a court battle.

Under Article 2205 of NAFTA, any country can pull out with six months' written notice. Serving notice does not automatically lead to withdrawal: It only gives the U.S. the option to pull out after six months.

Mark Warner, a trade lawyer who practices in Ontario and New York, said one scenario is that Mr. Trump could trigger 2205 purely to crank up pressure on Canada and Mexico without actually following through on a withdrawal.

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"He would give notice under 2205 and hold a fiery press conference. It would be a way of getting a little more leverage," Mr. Warner said in an interview. "He has a bombastic style that often falls short of action."

Jorge Guajardo, a former high-level Mexican diplomat, contends Mr. Trump is sincere about wanting to get out of NAFTA. His recent fighting with business leaders over his response to white nationalist violence in Charlottesville, Va., and congressional Republicans over the party's legislative agenda has left Mr. Trump feeling unconstrained by the GOP and industry's pro-NAFTA consensus, Mr. Guajardo said.

What's more, the President has been frustrated in trying to get anything done, with his promised repeal of Obamacare collapsing in Congress last month; a NAFTA pullout would give him a box to tick.

"We see a Trump unplugged. He no longer feels he has to toe the line with the Republican Party. He is isolated within the business community, " Mr. Guajardo told The Globe and Mail. "He's doing it to prove to himself, as an egoist would do, and to prove to his base that he is doing something."

Triggering 2205 wouldn't necessarily pressure Mexico into making concessions, Mr. Guajardo said. Rather, provoking Mexico makes it more politically unpopular for the Mexican government to offer the U.S. anything at the bargaining table. "If this is a negotiating tactic, it is a tactic to have Mexico walk away," he said.

Others dismissed Mr. Trump's bluster. Robert Holleyman, a former senior U.S. trade official in the Obama administration, said Mr. Trump weakened his hand when he previously threatened to withdraw from the deal in April. In that case, the White House drew up an executive order to trigger 2205, but Mr. Trump backed down under pressure from U.S. industry – particularly the agriculture sector, which depends heavily on trade with Mexico – Congress, his cabinet, Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto.

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"Mark my words. He will not pull out of NAFTA," Mr. Holleyman tweeted. "Played card too soon w/out anything in return. Ag interests & heartland & Congress said no."

The Canadian government took a similarly sanguine approach. "Trade negotiations often have moments of heated rhetoric," Foreign Minister Chrystia Freeland's spokesman said Sunday, repeating the statement the spokesman gave last week after the President told a rally in Arizona he would "probably" terminate NAFTA.

Mexico's foreign ministry, meanwhile, reiterated the country will not pay for the wall "under any circumstances" and said it "will not negotiate NAFTA, nor any other aspect of the bilateral relationship, through social media."

The President's power to pull out of a trade deal without the agreement of Congress is a matter of debate. The U.S. Constitution makes explicit that entering treaties requires the approval of the Senate, but says nothing about withdrawing from them.

The American Law Institute holds that the President has the authority to withdraw the country from treaties or suspend them. In 1979, the Supreme Court dismissed a case brought by a group of congressmen trying to stop then-president Jimmy Carter from breaking a treaty with Taiwan. The court, however, did not specify whether it believed Mr. Carter's actions were constitutional or not; rather, it threw out the case because it decided the dispute was a political matter.

Some experts argue that trade deals are different from other treaties because they concern commerce, which the U.S. Constitution gives Congress the power to regulate. Some legal scholars – including Joel Trachtman, a Tufts University professor of international law – argue that this means Mr. Trump cannot pull out of NAFTA without Congress's approval.

The divergent views mean triggering 2205 could lead to a court fight, similar to the one in which the White House is currently embroiled, over the President's executive orders to bar people from six Muslim-majority countries from entering the U.S. That case partly turns on limits of presidential authority. Such a lawsuit could come from members of Congress, or from the many business interests that got a piece of the $1.3-trillion (U.S.) worth of NAFTA-zone trade last year.

"It's a pretty aggressive action," Mr. Warner said of any attempt to unilaterally end the deal. "There would be a firestorm."

Citing bad deals for America, President Donald Trump told a rally in Phoenix, Ariz. that he wants to terminate the North America Free Trade Agreement in order to make more favourable arrangements.
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