Trump Can Destroy NAFTA Alone But Cannot Replace It Without Congressional Help

Posted in: Constitutional Law

After agreeing in principle with Mexico on modifications to some provisions of the North American Free Trade Agreement or NAFTA, last week US negotiators failed to find common ground with Canada. President Trump has threatened to leave Canada out in the cold and scrap NAFTA in favor of a bilateral agreement with Mexico. Because Canada is the world’s largest US export market, many observers rightly regard that threat as hollow or, if carried out, extremely dangerous. Regardless of how the negotiations end, readers may be wondering whether a president can singlehandedly determine the fate of NAFTA.

The short answer is that President Trump has considerable tools at his disposal to unilaterally undermine NAFTA but cannot act to replace it without the cooperation of Congress.

NAFTA Is Not a Treaty

Article II of the Constitution authorizes the president to make treaties with foreign countries, so long as the Senate, by a 2/3 vote, gives its consent. One might therefore think that the only way for the US to bind itself to international agreements is by treaty. However, since the very earliest days of the Republic, other mechanisms have been used. For relatively unimportant matters—a lease for an embassy on foreign soil, say—the executive branch acting alone can bind the US to an agreement. But in recent decades, even major agreements have sometimes been entered without using the treaty mechanism.

NAFTA is a leading example. It is not a treaty but a “a congressional-executive agreement”—so-named to reflect the fact that Congress authorizes it and the president enters into it. Like a treaty, such an agreement binds the US as a matter of international law. It differs from a treaty chiefly in how it is adopted. Both houses of Congress enact it as ordinary legislation, so that only a simple majority is required in the Senate, while the concurrence of a majority of the House, which is not required for a treaty, is also needed.

In addition, a treaty creates binding obligations under international law but typically will not be effective domestically without additional implementing legislation, because under Supreme Court case law, treaties are presumed not to be “self-executing.” By contrast, as ordinary legislation, a congressional-executive agreement becomes effective domestically upon congressional approval.

But if a congressional-executive agreement largely duplicates the impact of a treaty without needing to satisfy the 2/3 requirement in the Senate, why is it permissible? Shouldn’t the Constitution’s specification of the treaty power as the only mechanism for making international agreements preclude congressional-executive agreements, at least for major undertakings? Why isn’t the very idea of a congressional-executive agreement an impermissible end run around the 2/3 Senate threshold for treaties?

Those are excellent questions. They are not new. In dueling Harvard Law Review articles in 1995, Professor Laurence Tribe debated these issues with Professors Bruce Ackerman and David Golove. Ackerman and Golove argued that practices developed since the 1930s have vindicated congressional-executive agreements, effectively creating an unofficial constitutional amendment. Tribe disagreed, arguing that the written constitutional structure was too clear to be overcome by the examples Ackerman and Golove cited.

I shall not attempt to resolve that debate here, but I do want to make an observation. Even if Tribe is right, the upshot might be only that NAFTA is invalid as a matter of international law. NAFTA would still be valid domestically. Congress has the power under Section 8 of Article I to regulate foreign commerce, and thus most of the provisions of the NAFTA Implementation Act—by which Congress authorized the president to enter into NAFTA and changed the domestic law of the US with respect to trade with Mexico and Canada—would remain in effect.

Can the President Unilaterally Withdraw From or Change NAFTA?

Putting aside the Tribe-versus-Ackerman-and-Golove debate, we now can see a fundamental difficulty: If the NAFTA Implementation Act is just a statute, how can the president withdraw from or cancel any of it? After all, statutes remain on the books until repealed.

That’s true, but the NAFTA Implementation Act expressly states that it does not “limit any authority conferred under . . . section 301 of the Trade Act of 1974.” That statute, in turn, delegates to the US Trade Representative (USTR) broad power to suspend trade agreements upon a determination that a foreign country has engaged in “unjustifiable” or “unreasonable” actions, even if those actions do not violate any provisions of a trade pact. Accordingly, USTR Robert Lighthizer, who serves at the pleasure of the president, could, consistent with the NAFTA Implementation Act, effectively terminate the provisions of NAFTA with respect to Canada (or Mexico or both), even if Congress disapproves.

Yet while President Trump can start a trade war with Canada without congressional approval, he cannot unilaterally replace NAFTA.

Consider NAFTA itself, which is the international agreement that currently binds the US, Canada, and Mexico, rather than the Implementation Act that Congress passed. Article 2205 of NAFTA allows a party to withdraw after giving the other parties six months’ notice. Under the US domestic law of international relations, the president, acting alone, can terminate a treaty, and so we can assume that even though NAFTA does not specify who makes the withdrawal decision for each party, in the case of the US it is the president. But even so, that allows Trump to withdraw from NAFTA only on an all-or-nothing basis. There is nothing in NAFTA that permits one party to withdraw from NAFTA with respect to one but not the other NAFTA party. Hence, if Trump were to invoke Article 2205, NAFTA would be off with respect to Mexico as well.

So much for NAFTA withdrawal. Can the president replace or modify NAFTA? At the end of last week, USTR Lighthizer notified Congress of the president’s “intent to sign a trade agreement with Mexico—and Canada, if it is willing—90 days from now.” That notification invoked a 2015 statute. Another provision of the same law requires the president to publish the text of the agreement 60 days before entering into it. Thus, the US and Canada have less than a month to come to terms. That same deadline applies to the deal reached with Mexico, which reportedly has not yet been reduced to specific language.

Let us assume that negotiators for the US, Canada, and Mexico work diligently and expeditiously to arrive at a new agreement. Even so, if that agreement differs in any substantial way from NAFTA, it can only become effective upon the passage of new legislation by Congress, as the 2015 statute itself contemplates.

In short, as befits his personality and style, Trump acting alone can only destroy NAFTA; he needs Congress to replace it with a better deal or even just a different one.