What experts expect if Trump cancels NAFTA

Alexander Panetta, The Canadian Press</span>
Published Wednesday, August 23, 2017 5:08PM EDT

WASHINGTON -- He can huff, and he can puff, but can Donald Trump really single-handedly blow NAFTA down? It's more than fairy-tale conjecture now. It's a question of practical importance as the president has now demonstrated he intends to wield it as a threat during negotiations.

The Canadian Press has gathered analysis from 10 trade-law experts in an attempt to settle that question, some via interviews and others via research papers that explored the limits of presidential power to end the trade deal.

Here's the one thing everyone agrees on: It would get messy.

That much is clear. There's widespread consensus that it would trigger a period of uncertainty, marked by court fights between the White House, industry groups, state governments and possibly federal lawmakers.

The reason it's such a legal question mark is that it has never happened before. A paper for U.S. lawmakers by the Congressional Research Service last year said the United States has never cancelled a free-trade agreement and has only suspended one, the original deal with Canada which was replaced by NAFTA.

A presidential scuttling of NAFTA would create a historic conflict.

On one side would be the powers of the presidency, which include foreign affairs, control over tariffs delegated through various laws, and the provision in NAFTA that allows him to cancel the deal on six months' notice.

On the other side is Congress, which has constitutional power over international commerce and duties; which passed a law to implement NAFTA; and which could argue that the president's withdrawal violates that 1993 law.

Tim Meyer thinks Congress would win.

"If the president were to rip up NAFTA and then sort of jack tariffs way up, I think somebody would be able to come in and say ... 'You're actually violating U.S. domestic law'," said Meyer, a Vanderbilt professor, former government lawyer, and one-time clerk for Neil Gorsuch, whom Trump appointed to the Supreme Court.

"I think courts are going to be sympathetic to the idea that the president can't ignore the legislation that implements these trade agreements. Congress has not repealed that legislation and they've given no indication they intend to."

He points to the landmark Youngstown steel case of 1952, which established the limits of presidential power -- it determined that the president cannot contradict an existing law passed by Congress.

Joel Trachtman agrees and adds several other cases to the body of jurisprudence limiting Trump's power: a 1994 Barclays Bank case, a 2003 American Insurance case and the 2005 Zivotofsky case.

The professor of international law at the Fletcher School also examined 112 cancelled treaties through history and concluded a maximum of four occurred without congressional co-operation. He wrote in a just-released paper: "It would be strange to allow a president, operating alone, to ... (terminate) trade agreements."

On the other side, Gary Hufbauer sides with the president.

He's one of Washington's foremost authorities on trade. And he counts eight laws that explictly transfer tariff powers to the president. He also points to NAFTA: the three-country agreement has a clear termination clause and, in addition, the domestic U.S. NAFTA-implementation law's section 415 says that if a country pulls out, key provisions cease being in effect.

He predicts five things would happen if Trump cancelled NAFTA:

The dispute-resolution systems would disappear quickly.
Trump would re-institute tariffs on Mexico, averaging 3.5 per cent as per the U.S's WTO standard.
He would decide whether to keep the old one-on-one agreement with Canada.
Congress would wage war on Trump, launching investigations, impeding his agenda on other fronts.
There would be lawsuits.

Hufbauer said some cases could move through the court system quickly. When a state government sues the federal government, he said, it could zoom its way to the Supreme Court within a few months.

It's unclear Trump would have public support on his side.

A recent poll by Harris for Livingston trade consultants concluded a plurality of Americans were happy to renegotiate NAFTA, but a mere six per cent wanted it ripped up entirely.

"I agree there would be great political difficulty," Hufbauer said, acknowledging a messy outcome.

"Legal (rights) is another story."

There was no perfect clarity in the study U.S. lawmakers received from their Congressional Research service last fall. The report spent 22 pages trying to answer what would happen and it's filled with nuances and arguments both sides might make.

Its conclusions: Congress would need to be consulted on new tariffs, but it's unclear what that consultation requires and, finally, if Congress refuses to pass a law withdrawing the 1993 NAFTA Implementation Act, the president could still try increasing tariffs.

One trade lawyer envisions a worst-case scenario for the economy.

It involves a legal fight that drags on. NAFTA gets ripped apart in stages. What's left is a patchwork quasi-agreement and lingering economic uncertainty. Based on the personality of the president, he's not betting against it.

"I think it's a very grey area," Dan Ujczo says of the law here.

"And as we've seen with this president, there is nothing that will stop him. If it's a grey area he's going to use the full extent of his executive power."

--With files from Joan Bryden in Ottawa

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