December 3, 2018

With the New USMCA, What Will Happen To NAFTA?

 |  By: Mike Opperman

When you buy a shiny new car, you still have to figure out what to do with the old one. That’s the case with the North American Free Trade Agreement (NAFTA) now that the new U.S. Mexico Canada Agreement (USMCA) was signed by the participating world leaders last week.

President Trump would like to terminate NAFTA to allow Congress to consider and ratify USMCA. Terminating NAFTA would start a six-month withdrawal and, according to Jim Wiesemeyer, ProFarmer Washington analyst, give lawmakers a deadline to choose between the new deal or nothing. That would apply pressure on Congress to approve the USMCA. 

The debate centers on who has the authority to pull the U.S. out of NAFTA.

“The president needs to take a look at the Constitution – it gives Congress the authority over trade,” says Senator Ron Wyden (D-Ore) as reported by Wiesemeyer. “The president cannot pull America out of NAFTA without Congress’s permission.” Still Wiesemeyer says some observers argue that Congress ceded authority to the executive branch long ago that would allow Trump to terminate trade deals. 

According to Politico, House Democrats, who will effectively decide the fate of Trump's landmark trade achievement, have questioned whether labor and environmental provisions in the USMCA are enforceable or tough enough. 

Many agricultural groups have shown their support of the USMCA agreement. Dairy is one of the ag groups that stands to benefit, with greater access to the Canadian market and restrictions on Canadian dairy pricing mechanisms.