Hal Shapiro Talks to Bloomberg BNA on NAFTA Under Trump

Akin Gump regulatory practice steering committee chair Hal Shapiro was quoted by Bloomberg BNA for the feature “OUTLOOK 2017: NAFTA Redo Gaining Support, Likely in New Year,” which discusses the possibility that the North American Free Trade Agreement could be revised or discarded once Donald Trump assumes the presidency.

Regarding the fact that withdrawal from NAFTA is controlled by a clause in the treaty requiring the President to provide six months’ notice to Canada and Mexico, while U.S. law requires the same length of notice to Congress, Shapiro said, “Together, these provisions appear to have the effect of terminating the application of the agreement and the [NAFTA  Implementation] Act to the affected governments.” He noted that this would have the effect of giving Congress six months to react and, perhaps, signal a different direction.

He added that, were Trump to terminate the U.S.’ agreement on NAFTA with Mexico, then the U.S. and Canada could revive the bilateral trade agreement suspended once the broader treaty took effect.

Shapiro also said that, in that case, U.S. tariffs on Mexican imports would revert to the World Trade Organization rate, rather than the 35 percent that Trump had touted while campaigning for the presidency. He added, “For most products it would not be a big jump, but for some it would be quite large,” pointing at agricultural products, autos and their parts, textiles and steel among imports that could face much higher tariffs without NAFTA.

Looking at the Trans-Pacific Partnership, which faces an uncertain future, Shapiro said that any of its provisions could improve NAFTA, but the looming question is that of NAFTA’s survival rather than its modernization.