U.S. President Donald Trump (Photographer: Zach Gibson/Bloomberg)

Trump Says He'll Give Notice of Nafta Exit in Bid to Pass USMCA

(Bloomberg) -- President Donald Trump said he would soon tell Congress of plans to terminate the existing North American Free Trade Agreement, a move that would give lawmakers a six-month window to ratify a new regional trade pact signed on Friday between the U.S., Canada and Mexico.

“I will be formally terminating Nafta shortly,” Trump told reporters late Saturday aboard Air Force One as he returned from the Group of 20 summit in Argentina. “So Congress will have a choice” between the new deal, known as the U.S.M.C.A, or potentially no continental trade deal at all.

Trump Says He'll Give Notice of Nafta Exit in Bid to Pass USMCA

The threat, if enacted, would effectively remove a safety net from under the new trade pact’s journey through Congress. Even though it was signed by leaders, the deal still needs to be ratified by lawmakers in the three countries. In the U.S., it will almost certainly be taken up by the next Congress, where Democrats will have a majority in the House starting in January. Some Democrats are warning they may not be satisfied by the terms.

Speaking Sunday on CNN’s “State of the Union,” Democratic Senator Sherrod Brown of Ohio, a fierce Nafta critic who has said he worked with the administration in re-negotiating the deal, didn’t answer how he’d vote on it but said “the work’s not done yet” and there’s still an opportunity to ask Mexico to strengthen labor requirements.

Not Far Enough

The deal doesn’t go far enough to protect the “dignity” of jobs and labor conditions and “doesn’t live up to the promise the president said of a renegotiated Nafta,” he said.

Democratic Senator Mark Warner of Virginia said the process will be more complicated than a simple approval of the new deal to replace Nafta.

“Congress has a right to come in and review, whether it’s labor, whether it’s environmental, whether the deal is actually better,” Warner said on CBS’s “Face the Nation.” “These are all open questions, and I think you’ve already seen pushback from folks on both sides of the aisle.”

Warner said he was “not ready at all at this point” to say how he’d vote on the pact.

Trump’s statement may also be a bluff -- or prove harder than he thinks. Under terms of the existing 1994 Nafta pact, the president can give six-months’ notice of withdrawal, though it’s not binding. U.S. lawmakers have, however, said Congress would still need to repeal Nafta’s legislation to fully kill it.

Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto signed an authorization for the deal on Friday morning in Argentina on the sidelines of the G-20, with their ministers signing it shortly after.

Trump announced his intentions on Nafta hours after meeting with Chinese President Xi Jinping for dinner in Buenos Aires and reaching a truce in their escalating trade war.

“We get rid of Nafta,” Trump said. “It’s been a disaster for the United States. It’s caused us tremendous amounts of unemployment and loss and company loss and everything else.”

Some U.S. lawmakers, both Democrats and Republicans, have called for changes to the new regional pact inked on Friday, though Trump’s trade czar has expressed confidence it will pass.

Pelosi View

“The negotiations are not going to be reopened, right? The agreement’s been signed. We still have to put together an implementing bill, so there are things that we can do,” U.S. Trade Representative Robert Lighthizer told reporters Friday in Buenos Aires. He said he was in talks already with Democrats, and appeared unfazed. “We’ll get the support of a lot of Democrats, a very high number of Democrats. Absolutely, just no doubt about it.”

On Friday, Trump expressed optimism about getting the deal blessed by U.S. lawmakers. “I look forward to working with members of Congress,” he said. “It’s been so well reviewed I don’t expect to have much of a problem.”

Nancy Pelosi, the Democratic leader in the House, called the agreement “a work in progress” in a statement released on Friday evening. “We are waiting to see enforcement provisions relating to workers and the environment,” she said.

Andres Manuel Lopez Obrador took office as Mexico’s president on Saturday; his Morena party, which with its allies holds a majority in Mexico’s Senate, could also seek revisions. Incoming Mexican Foreign Minister Marcelo Ebrard, hosting a dinner for American visitors at Lopez Obrador’s inauguration, declined to comment on the news Saturday night.

Trudeau has a majority in Canada’s House of Commons, leaving a clear path to pass a deal, but faces an election in October.

©2018 Bloomberg L.P.