Eurasia Group | NAFTA Is On Life Support. Will Trump Be the One to Pull the Plug?

NAFTA is on life support. Will Trump be the one to pull the plug?

17 May 2018
Main Employees work on the assembly line on the Jetta Bicentennial at the Volkswagen automobile manufacturing factory in Puebla, Mexico. REUTERS/Imelda Medina.
The Iran Nuclear deal isn't the only major agreement that President Trump promised voters he would either rewrite or tear up. After nine months of talks, US, Mexican and Canadian negotiators remain deadlocked on how to rework, and save, the North American Free Trade Agreement (NAFTA). There's now a renewed sense of urgency, because time is running out to reach a deal to spare NAFTA, the pact that has governed cross-border trade since 1994. If no agreement is reached in May, things will become much more complicated. Here's why:

Even if the three sides come to an agreement this month, Trump can't just sign it into law. The US Constitution gives Congress, and not the President, power to regulate commerce with foreign nations. Under trade promotion rules, Trump must notify Congress 90 days before he intends to sign it. Then the US International Trade Commission must report to Congress on the likely impact of the deal before lawmakers can vote on it. That will take more time. Then Congress has 90 session days before voting yes or no on the deal. House Speaker Paul Ryan calculated that lawmakers would need to see a deal by May 17 in order to be able to vote on it this year.

Why the hurry? Because the political headwinds aren't in the deal's favor–and not just in the US Canada's federal elections aren't due to be held until 2019, and in any case, both the Liberal and Conservative parties support NAFTA. But the situation in Mexico is more complicated. Mexicans will choose a new President on July 1. The clear front runner in that election is the veteran leftist Andrés Manuel López Obrador. He doesn't oppose a NAFTA renegotiation on principle, because he knows the loss would harm Mexico's economy far more than that of the US or Canada. But if he wins and no deal has been agreed upon by the time he takes office in December, he will certainly replace virtually the entire Mexican negotiating team, throwing the entire process back to an earlier stage.

Then there is the complex political calculus in the US, where many of the members of Congress who are facing re-election on Nov. 6 are less than enthusiastic about casting a vote on a controversial trade deal. Pro-trade Republican lawmakers may find themselves in a tough spot if Trump presents them with a union-friendly deal that prevents investors from being able to sue foreign governments in tribunals, or requires more automobile production in the US, or includes a sunset clause that could automatically kill the deal after five years. These are the sorts of changes that some Democrats will like and that Republicans and the business community won't want.

Yet the midterm elections might come directly into play if Democrats take control of Congress and decide that, even if they like many of the agreement's new terms, they don't want to hand Trump a political victory. They might push for yet more changes to the deal, which would also give Mexico's López Obrador a chance to push for some amendments of his own.

But the US President's notoriously mercurial temperament is the X factor in all of this. The longer a deal is delayed and the more it becomes an agreement that Democrats and López Obrador can get behind, the more likely that, as with the Iran nuclear deal, Trump will decide to simply walk away from NAFTA altogether.

This article originally appeared on
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Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm. He is a prolific thought leader and author, regularly expressing his views on political issues in public speeches, television appearances, and top publications, including Time magazine, where he is the foreign affairs columnist and editor-at-large. His latest book "Us vs. Them: The Failure of Globalism" is a New York Times bestseller.