Trump Says Canada Doesn't Need to Be in NAFTA; Congress Disagrees

President Donald Trump tweeted over the weekend that Canada doesn't need to be in a new NAFTA. "There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off..." Trump's leaked boasts about Canada only being able to rejoin NAFTA on his terms may have momentarily derailed negotiations (see 1808310030).

Congress must approve any free trade deal, whether it's U.S.-Mexico or Mexico-Canada-U.S., and Sen. Pat Toomey, R-Pa., asserted that Trump cannot withdraw from NAFTA without congressional majorities backing him. Oregon Democrat Sen. Ron Wyden, the ranking member on the Senate Finance Committee, also issued a statement Sept. 4 that said the president "doesn’t even have the power to follow through on his empty threats. The president needs to take a look at the Constitution -- it gives Congress authority over trade. The president cannot pull America out of NAFTA without Congress’s permission. Trump is relying on bluster and bullying in a desperate attempt to get Congress to swallow his half-baked deal."

But Wyden's statement also took a fairly hard line on Canada, saying that Chapter 19 must be eliminated, that Canada's de minimis level needs to be raised, and barriers to U.S. dairy and wine exports must be fixed. The U.S. has a complaint at the World Trade Organization on barriers to selling foreign wine at grocery stores in some provinces (see 1805250026).

A senior White House official, speaking to reporters on a background briefing call Aug. 31, tried to knock down the argument that the fast-track procedure will not apply to a U.S.-Mexico deal, if Canada does not accept a deal this month, while also saying it's the administration's intention to get Canada on board. "We believe that everything we have done is consistent with the Trade Promotion Authority, and that while the final decision, obviously, belongs to the Hill, we are making every effort we can to comply with all the provisions of the act," he said. He also said that "there would be risks in interpreting the TPA statute to require that, if USTR were to begin, say, with two or three countries, then USTR is required to sign an agreement with all of those countries, no matter what any of the countries were asking for."

Toomey disagrees. "To use Trade Promotion Authority's ‘fast-track' procedures, the administration must also reach an agreement with Canada," Toomey said in a statement issued Aug. 28. "NAFTA was a tri-party agreement only made operative with legislation enacted by Congress. Conversion into a bilateral agreement would not qualify for TPA's ‘fast track' procedures and would therefore require 60 votes in the Senate."

The Chamber of Commerce reacted coolly to the official notification Aug. 31 to Congress of a U.S.-Mexico deal. CEO Thomas Donohue said, "Anything other than a trilateral agreement won’t win Congressional approval and would lose business support. We appreciate the hard work of the negotiators from all three countries, and urge them to stay at the table and remain focused on concluding a deal that includes the U.S., Mexico, and Canada." The U.S. Council for International Business said of the congressional notification that "the indication that Canada is an optional participant is extremely discouraging."

Rep. Rosa DeLauro, D-Conn., one of the most prominent trade critics in Congress, also said Canada must be in a revised NAFTA, though she agrees with Trump's view that the original NAFTA has harmed American workers. "A deal between the United States and Mexico is not good enough," she said. On Twitter, Trump also confirmed the inflammatory statements he'd made off the record about how he'd force Canada to accept his terms. The comments were leaked to the Toronto Star. He said, "At least Canada knows where I stand!"

Canada's Foreign Minister Chrystia Freeland, speaking at press conference at the end of the day Aug. 31, emphasized that Canada will only accept a deal that's good for Canadians, but also expressed optimism. "We know that a win-win-win agreement is within reach," she said. "With good will, and flexibility on all sides, I know we can get there."

Freeland was asked how she could negotiate with Trump, since he said he won't make any compromises with Canada. "My negotiating counter party is Ambassador Lighthizer. He has brought good faith and good will to the table," she said. But she reiterated that there will need to be "flexibility."