Memo: Presidential Authority to Terminate NAFTA Without Congressional Approval

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A U.S. president has authority to notify other signatories that the United States is withdrawing from a trade agreement. Doing so, for instance by triggering the Article 2205 six-month notice to withdraw from the North American Free Trade Agreement (NAFTA), would end U.S. international law obligations under the pact. That alone would terminate some terms, such as U.S. consent to investor-state dispute settlement (ISDS), which are not covered in NAFTA’s implementing legislation. However, withdrawing from NAFTA would also terminate Congress’ approval of the pact and elements of its implementation. The NAFTA Implementation Act Article 109(b) cancels Congress’ approval of NAFTA and terminates five key provisions implementing aspects of it with respect to any country that withdraws. A president also has authority to switch terms of trade with Mexico and Canada without further congressional action. The Trade Act of 1974 Section 125
automatically terminates trade agreement tariff concessions in one year, but also provides presidents proclamation authority to revert tariff rates to World Trade Organization (WTO) Most Favored Nation (MFN) levels immediately with respect to any trade partner and any agreement if the United States withdraws or the pact terminates. With respect to Canada, the president could choose to extend duty free treatment by reversing the suspension of the 1988 U.S.-Canada Free Trade Agreement (FTA). In sum, absent congressional action to alter the NAFTA implementing bill’s automatic sunset terms and the two existing congressional delegations of tariff authority to the president, not only can a president end U.S. international law obligations under NAFTA, but doing so would cancel Congress’ approval of the agreement and key elements of the implementing bill.