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Full Termination of NAFTA Likely to Require Congressional Action, Report Says

Wednesday, March 13, 2019
Sandler, Travis & Rosenberg Trade Report

The president’s authority to unilaterally withdraw the U.S. from NAFTA under U.S. law is unclear, according to a new report from the Congressional Research Service, but it does appear that the president would need congressional approval to terminate the U.S. law implementing NAFTA. The report’s conclusions could embolden lawmakers pushing back against President Trump’s threats to withdraw from NAFTA unless Congress approves the new U.S.-Mexico-Canada Agreement designed to replace it.

The report states that the U.S. approved NAFTA as a congressional-executive agreement by a majority vote of each house of Congress rather than as a treaty ratified by the president after Senate approval by a two-thirds majority vote. NAFTA was not a self-executing agreement; instead, Congress approved and implemented the agreement through the NAFTA Implementation Act, which provided domestic legal authorities with the power to enforce and comply with the agreement’s provisions.

President Trump has repeatedly suggested that he may unilaterally withdraw the U.S. from NAFTA in an effort to prompt Congress to approve the USMCA. However, the report calls into question what the effect of any such action would be.

According to CRS, it does not appear that any U.S. statute expressly gives the president authority to terminate NAFTA on his/her own. The most recent congressional grant of trade promotion authority does not speak to this issue, the report states, and in fact the nature of this law could prompt a court to find that congressional action is needed to before the U.S. may withdraw from an agreement negotiated under TPA, including NAFTA. In addition, neither section 125 nor section 301 of the Trade Act of 1974 appears to authorize the president to terminate U.S. international obligations under NAFTA. These sections may provide the president with broad authority to suspend individual trade concessions granted to NAFTA countries and thereby establish barriers to trade with Canada and Mexico, the report notes, but the president’s use of such authority would likely be subject to review on various grounds by domestic or international tribunals.

Further, the report states, given that Supreme Court precedent generally requires the repeal of laws to conform to the same bicameral process used to enact them, it would appear that the president lacks authority to terminate the domestic effect of the NAFTA Implementation Act without going through the full legislative process for repeal.

For more information on NAFTA and the USMCA, including specific provisions that may affect your business as well as the process for securing congressional approval, please contact Nicole Bivens Collinson at (202) 730-4956.

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