NAFTA Renegotiation: The Process

What it’ll take to renegotiate NAFTA

The “worst trade deal” in U.S. history, as President Trump refers to the North American Free Trade Agreement, may get a shake-up soon.

The Trump administration wants to renegotiate the 23-year-old trade deal, the first of many steps standing between Trump’s promises and actual changes to the document.

The process won’t be easy. Negotiators will have to consider the wildly different political environments in Canada, the United States and Mexico. And by extension, they’ll have to navigate the myriad business interests that will lobby for favorable tweaks. Throw in the 2018 midterm elections in the United States and the presidential election in Mexico, and experts think the process could take years.

Here’s what lies ahead

The process begins

in the U.S.

Meanwhile, Canada

begins their plans

… and so does Mexico

President Trump will send Congress formal notice of his intent to renegotiate NAFTA. This will set a start date for the negotiations and list specific changes he wants to make to the trade deal.

Canada’s process is less formal. The negotiating team will consult with the provinces — which have a good deal of power in Canada and may have to eventually implement some of the agreement’s provisions — and relevant industry leaders.

 

Mexico’s setting of priorities largely occurs behind closed doors. The negotiating team traditionally confers with private-sector leaders, most notably the Consejo Coordinador Empresarial — similar to a Chamber of Commerce — though this is not legally required.

 

Congress then has at least 90 days to review the president’s memo and offer suggestions. The bulk of this review occurs within trade negotiation subcommittees in the House and the Senate, but other committees that cover trade-sensitive products will weigh in, too.

Its Parliament is largely looped out of the process. Because it’s controlled by the same party as the prime minister, Parliament’s approval of the final deal is all but ensured.

 

The negotiators will also confer with members of Congress, especially those whose constituents rely heavily on exports to the United States.

Finally, all three countries meet for negotiations

Representatives from the three governments — probably the U.S. trade representative for the United States, the minister of foreign affairs for Canada and the secretary of foreign affairs for Mexico — will begin negotiations.

This process could take months or even years, and the representatives will continually be consulting with their home country’s political leaders to adjust priorities and check in about concessions. Once they come to an agreement, the deal will go back to the countries’ legislatures for implementation.

Congress votes

Parliament votes

Congress votes

Both houses of Congress will give an up-or-down vote on the new trade agreement. No amendments are allowed.

Both houses of Parliament will give an up-or-down vote on the new trade agreement. No amendments are allowed.

 

The Congress will vote on the agreement if it contains substantial changes. If the changes are more superficial, the president alone has the authority to implement the new agreement.

If necessary, state, province and local governments will then pass laws that implement the agreement. This is most likely to occur in Canada, where power is much less centralized than in the United States and Mexico.

What happens if negotiations fail?

It is possible, though experts think it’s unlikely, that this process will fail — that the countries will be unable to reach a deal and NAFTA will fall apart.

“Canada is so dependent on the U.S., they simply have to have a deal,” said Philip Cross, a trade researcher at the Canadian nonpartisan Fraser Institute. And Mexico is in a similar economic position.

The United States has a wider variety of trading partners and is therefore less dependent on NAFTA, but for many U.S. industries, such as agriculture, the trade agreement is still vital to staying afloat.

But if negotiations fall apart, countries could withdraw from NAFTA with a simple six-month warning, the same process Trump came a few meetings and a U.S. map away from triggering.

Correction May 4, 2017: A previous version of this article misstated that there is a 60-day warning before a country can withdraw from NAFTA. It is, in fact, six months.

Sources

Mexican process informed by Alvaro Santos, a law professor at Georgetown University, and Fausto Hernandez Trillo, an economics professor at Centro de Investigación y Docencia Económicas. Canadian process informed by Philip Cross, a trade researcher at the Fraser Institute; Colin Robertson, a former Canadian diplomat and vice president at the Canadian Global Affairs Institute; and Andrea Kay Bjorklund, a law professor at McGill University. U.S. process informed by Monica de Bolle and Gary Hufbauer, fellows at the Peterson Institute for International Economics. Noun project icons from H. Alberto Gongora, Illarion Gordon, Antoine Dieulesaint, Shashank Singh, Chelsea Carlson and Gregor Cresnar.

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