In this file:
· Trump has threatened to withdraw from NAFTA. What’s next?
· Factbox: What happens if the U.S. terminates NAFTA
Trump has threatened to withdraw from NAFTA. What’s next?
The president is trying to pressure Congress to pass his USMCA deal.
By Jen Kirbyjen, Vox
Dec 4, 2018
President Donald Trump says he’s finally going to do what he’s long threatened: tear up NAFTA.
Trump’s warning came as he left the G20 meeting in Buenos Aires, Argentina, this weekend. There, Trump, along with former Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau, signed the replacement for NAFTA — called the United States-Mexico-Canada-Agreement, or USMCA, as Trump has rebranded it stateside.
“I’ll be terminating it within a relatively short period of time,” Trump said Saturday of the original NAFTA. “We get rid of NAFTA. It’s been a disaster for the United States.”
Trump’s threat is intended for Congress — especially Democrats, who have objected to elements of the renegotiated trilateral trade pact with Mexico and Canada. The House of Representatives and the Senate must approve the USMCA, and both parties have voiced reservations. Democrats don’t think it does enough to protect American jobs and workers, and some Republicans see the new deal as too protectionist.
The withdrawal threat is a Trumpian ultimatum: Take my trade deal, or there’s no deal at all.
Trump loathes NAFTA. He has called it the “worst trade deal ever signed.” He has threatened to tear up the trade pact in the past, but was ultimately persuaded to renegotiate the agreement, leading to the USMCA.
Trump has touted the USMCA as a historic trade deal, even though it’s really an updated and revised version of NAFTA — which itself is a nearly 25-year-old agreement negotiated by George H.W. Bush.
So Trump got a new deal and declared victory. And now he’s wielding NAFTA as a political cudgel.
The president’s threat is serious, but it faces a few potential pitfalls...
So can Trump really do this? ...
Congress (and Nancy Pelosi) has some leverage ...
more, including links
Factbox: What happens if the U.S. terminates NAFTA
Reporting by Allison Martell; Additional reporting by Matt Scuffham; Editing by Denny Thomas and Nick Zieminski, Reuters
December 5, 2018
TORONTO (Reuters) - U.S. President Donald Trump said on Saturday he would soon give formal notice to the U.S. Congress to terminate the North American Free Trade Agreement (NAFTA), giving lawmakers six months to approve a new trade deal between the United States, Mexico and Canada to replace it.
Trump said that if U.S. lawmakers don’t approve the new agreement, then the three countries would revert to the rules of trade that existed before NAFTA came into effect in 1994.
It is unclear if Trump has the legal power to terminate NAFTA in the way he has threatened. The opposition Democratic party will soon have a majority in the lower house of Congress and has said it wants changes to the new trade deal, known as the USMCA.
Trump’s threat raised fears that trade flows across North America could be disrupted if Congress fails to agree on the new deal before NAFTA expires.
WITH CANADA, TARIFF UNCERTAINTY
Under the 1987 Canada-United States Free Trade Agreement, the two countries agreed to phase out most tariffs, a process that accelerated under NAFTA. The deal excluded dairy, poultry, eggs and sugar, but virtually all other tariffs were phased out by 2008. That means terminating NAFTA could have a limited impact on the movement of goods between the two countries. But some trade experts have argued that because the agreement was formally suspended when NAFTA went into effect, both governments would have to take steps to put it back into force. If the old deal is not reinstated, a vast array of goods made in the United States and Canada would be subject to tariffs and cost more.
HIGHER DUTIES IN U.S.-MEXICO TRADE
If NAFTA is terminated, goods traded between Mexico and the United States would attract “most-favored-nation” or MFN tariffs, levied under World Trade Organization rules. That would raise prices of goods traded across the two countries. While average MFN tariffs are relatively low, there is great variation between sectors. In the United States, duties are highest for clothing, according to the Pew Research Center, averaging 18.7 percent or 15.8 percent depending on whether the garment is knitted or crocheted. Vegetables face an 8.4 percent duty.
Mexico’s highest average MFN tariffs are on agricultural products - 21.4 percent on dairy products, and 16.7 percent on animal products, WTO data show. That could hurt U.S. farmers who export to Mexico. The U.S. poultry sector, which exports products worth more than $1 billion a year to Mexico, has warned that it could be hit hard.
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