Trump administration weighing order to withdraw from NAFTA

The Trump administration is weighing an executive order on withdrawing from the North American Free Trade Agreement (NAFTA), according to a source familiar with the plans. 

The measure is in draft form and has been submitted to the White House staff secretary for the final stages of review, the source said. The order could be unveiled later this week or early next week, and changes could be made during the review process. 

If the administration follows through with the order, it could signal its intent to pull out of the major trade pact with Canada and Mexico.

President Trump does not need an executive order to withdraw from the trade agreement. Under NAFTA, any parties are allowed to leave six months after providing written notice to the other countries.

{mosads}But an order declaring that intent could be used as leverage by the Trump administration against Canada and Mexico to broker better trade terms, short of leaving the deal entirely.

The move received a chilly reception from some Republicans on Capitol Hill. 

“Withdrawing from #NAFTA would be a disaster for #Arizona jobs & economy – @POTUS shouldn’t abandon this vital trade agreement,” tweeted Sen. John McCain (Ariz.).

His Arizona colleague, Sen. Jeff Flake, echoed those comments, tweeting, “strengthen #NAFTA, don’t abandon it.”

The development comes after Trump took aggressive action against Canada on trade this week by slapping a new tariff on softwood lumber imports and threatening to retaliate against Canadian taxes on U.S. dairy exports.

Experts believe the moves signaled Trump plans to pursue a more sweeping renegotiation of the landmark 1994 trade deal.

The order was drafted by senior adviser Stephen Miller and Peter Navarro, head of the newly formed White House Trade Council, the source said. Commerce Secretary Wilbur Ross and chief counselor Stephen Bannon provided input. All are part of a cadre of White House aides who have advocated a tougher approach on trade. 

Trump has long railed against NAFTA, calling it a “disaster for our country” that has gutted the nation’s manufacturing sector. But after meeting with Canadian Prime Minister Justin Trudeau earlier this year, Trump said he wanted to only pursue “tweaks” to Canada’s side of the deal.

The U.S. Trade Representative circulated a draft memo to lawmakers last month laying out more modest changes to NAFTA. But the White House quickly distanced itself from the document.

“That is not a statement of administration policy at this point,” top Trump spokesman Sean Spicer told reporters in late March. “That is not an accurate assessment of where we are at this time.”

Proponents of free trade have warned Trump against a sweeping renegotiation of NAFTA, arguing the deal has been beneficial and that job loss has more to do with automation and other economic headwinds.

Withdrawing from NAFTA would likely encounter fierce opposition from the business community, which over the years has created supply chains that span the three countries. 

Agriculture groups, in particular, fear the impact of the White House’s possible decision.

The National Corn Growers Association and U.S. Grains Council expressed grave concern Wednesday about the U.S. pulling out of the NAFTA. 

“Withdrawing from NAFTA would be disastrous for American agriculture,” said NCGA President Wesley Spurlock, who argued his trade group supported Trump’s election. 

“We cannot disrupt trade with two of our top trade partners and allies. This decision will cost America’s farmers and ranchers markets that we will never recover.”

U.S. Grains Council President and CEO Tom Sleight said the group is “shocked and distressed to see news reports that the Trump administration is considering an executive order to withdraw the United States from the NAFTA.”

“An executive order as reported will have an immediate effect on sales to Mexico, market prices and the profitability of U.S. farmers, who are already facing below cost of production prices. Our top grain market is not a negotiating tactic,” Sleight said.

Politico first reported that the NAFTA order was being considered.

– Updated at 6:16 p.m. Vicki Needham contributed.