White House considering order to withdraw from NAFTA

Closeup of the flags of the North American Free Trade Agreement NAFTA members on textile texture. NAFTA is the world's largest trade bloc and the member countries are Canada, United States and Mexico. 3D rendering with detailed textured grunge effect on closeup.

WASHINGTON — The White House is considering withdrawing from NAFTA in the coming days, though President Donald Trump has not yet decided how to proceed, two senior administration officials confirmed to CNN Wednesday.

The White House is currently mulling an executive order declaring the US’ intent to withdraw from NAFTA, a move that could trigger a renegotiation of the trade pact rather than outright withdrawal, the officials said.

But Trump could also simply launch the US into re-negotiations of the trade pact with Canada and Mexico rather than making a bold move declaring the US’ intent to withdraw.

Politico first reported Wednesday that the White House is mulling an executive order on withdrawing the US from NAFTA.

One senior administration official stressed that this is something Trump has “always been considering” and while the White House is currently considering an executive order, the official stressed a lot could change in the coming days. Trump has not made any decisions and a range of options are still on the table, the official said.

‘Shot across the bow’

The potential move comes after Trump imposed a 20% tariff on softwood lumber imports from Canada, which a second senior administration official described as only a “first shot across the bow.”

Trump has repeatedly railed against the NAFTA trade pact and said he plans to renegotiate the trade deal or withdraw from it altogether, though his administration has yet to formally announce those plans.

Trump must give 90-days notice before formally entering negotiations to reform the trade deal.

Trump is also under pressure to take action on NAFTA before Saturday, the 100th day of his presidency, by which point he pledged to make good on a slew of campaign promises. Trump has signed several executive actions on trade — the most significant of which was withdrawing from the Trans-Pacific Partnership — but movement on NAFTA has been scarce, despite Trump’s ongoing criticism of the deal.

Trump in recent months has labeled NAFTA as a “one-sided deal,” called it a “disaster” for the US and has argued that the deal has led to the loss of millions of US manufacturing jobs.

But many Republicans on Capitol Hill have expressed concerns about Trump’s hardline on free trade deals.

Sen. John McCain on Wednesday urged Trump not to pull the US from NAFTA.

“It will devastate the economy in my state,” McCain said. “I hope he doesn’t do that.”

90-day trigger

As for finishing negotiations, trade experts say it’s unlikely Trump could get a renegotiated NAFTA done this year.

“Getting a deal done by early 2018 or the end of this year was wishful thinking,” said Gary Clyde Hufbauer, a trade expert at the Peterson Institute for International Economics.

Trump’s trade team, led by Commerce Secretary Wilbur Ross, was expected to begin the negotiating process for NAFTA soon and must trigger a 90-day consultation period before diving into trade talks with Canada and Mexico.

Ross said Tuesday at the White House that he hasn’t triggered the 90-day consultation because US Trade Representative nominee Robert Lighthizer, a longtime trade expert and former Reagan adviser, hasn’t been confirmed by a full Senate vote yet. Lighthizer did get approved by the Senate Finance Committee this week and a full vote could come within a few weeks.

But Mexican leaders are eager to finalize NAFTA negotiations this year before the country’s presidential campaign heats up ahead of July 2018 election.

President Enrique Peña Nieto can’t run because of term limits, and there’s no telling whether the next Mexican president will cooperate with Trump on trade.

“It will be in the best advantage of the countries involved that we finish this negotiation within the context of this year,” Mexico’s economy secretary Ildefonso Guajardo told CNN on April 6.

Jobs

Nonpartisan congressional research found in 2015 that NAFTA isn’t responsible for an exodus of jobs south of the border, nor for a big jobs boom in the US. Researchers concluded the deal has had a minor impact on the US economy.

Still, about 14 million US jobs depend on trade with Mexico and Canada, according to the US Chamber of Commerce.

Canadian and Mexican officials say they are already ready to renegotiate. They’re waiting on the US to come to the table.

“We are ready to come to the table anytime, but the United States, in fact, has yet to actually initiate the negotiating process,” Canada’s Foreign Minister Chrystia Freeland told CNN on Tuesday.

The Mexican economic ministry declined to comment.