Under some of the most recent terms brought up in the NAFTA negotiation, the United States is apparently seeking a provision whereby NAFTA would expire in five years, unless all countries agreed to renew it. Yet as one Canadian news outlet reported, the opposition has been swift:
“That idea has been quietly floated for months by U.S. officials who finally made it public Thursday.
It prompted swift resistance.
Canadian and Mexican officials brushed it off almost as soon as it was publicly revealed, calling it a bad idea that would create economic instability and scare businesses away from long-term investments.”
They have a point. Creating a focal point for politicians to consider every handful of years whether or not to continue an economic arrangement like NAFTA seems sure insert a calendar-based political, and ultimately economic volatility into trade relations that would be unhelpful for deepening economic relations. Just think about all the fun the annual US debt ceiling debate creates.
But it also seems like a solution looking for a problem—and creating plenty along the way. Under NAFTA’s own provisions, any country can exit the agreement after just 6 months notice. Admittedly, it does seem to get the United States President a little more leverage than is the case now since there is some debate as to whether the President can unilaterally pull out of NAFTA without Congress’s approval. But at the same time, the converse problem could, I suppose, arise—namely that the decision to continue NAFTA would require not only Executive, but also Congressional approval. Hoping that the Congress, the United States President, Canada and Mexico all agree on a trade agreement (and have the political courage to affirmatively extend it, even if the merits point to it), at the same point in time, seems a bit far-fetched in today’s world, and a recipe for economic pandemonium.