Prepare For Nafta, The Zombie Edition

[dropcap]D[/dropcap]iscussions of the North American Free Trade Agreement tend to be binary these days. Will it live or will it die?

But here’s a thought: What if, as a result of Donald Trump, what more than a quarter of the global economy ends up with, is a zombie NAFTA? One that is neither dead nor alive. A walking corpse of a trade deal that continues to live in an unhealthy limbo until someone either finds a cure for what ails it or blows it to smithereens with a “Made in the USA” zombie annihilator.

That, of course, sounds preposterous. But there is already plenty of precedent in the Trump administration.

Never mind trade policy, where almost every major initiative ordered up by President Trump has ended up in policy purgatory thanks to incessant internal battles in the White House. During his campaign, the president promised bold moves to withdraw from both the Paris Agreement and the Iran nuclear deal. Yet his real decision in both cases has left the US in messy halfway houses.

The same holds true for his decision on the “Dreamers”, those undocumented immigrants brought to the US as minors who were granted the right to live and work in the country by the Obama administration. Mr Trump has both cancelled the programme that allowed them to stay and promised them another.

So why would NAFTA be any different?

Mr Trump and those around him have made clear that he is more than ready to withdraw from NAFTA. That could turn out to be an ill-judged move that would force the collapse of the 23-year-old deal. The president and his aides have also indicated both that they consider giving notice of withdrawal a legitimate negotiating ploy and that they aren’t that worried about the consequences.

“If we do end up not having [NAFTA], my guess is all three countries will do just fine. There’s plenty of trade, and plenty of reasons to trade,” Robert Lighthizer, Mr Trump’s US trade representative, told reporters last week.

But the domestic politics of that are awkward. And there are at least three reasons why they may lead to a zombie NAFTA.

The first is that the Republican leadership in Congress doesn’t like the idea of pulling out of NAFTA. That may not be a concern to former White House adviser Steve Bannon, or fit with his vision of a nativist and protectionist Republican party. Yet it matters.

There is a legal debate under way over the president’s constitutional power to terminate any trade deal, given the way the US constitution clearly assigns powers over international commerce to Congress. The last time a president did so was in 1866, when Andrew Johnson pulled the US out of a trade deal with the British colonies in what is now Canada. But Mr Johnson withdrew with congressional approval.

There is also the small matter of US law. No one doubts that in international law Mr Trump has the power to exit NAFTA. But beyond the relevant constitutional questions, trade deals are implemented with domestic legislation. And legal scholars who have dived into the implementing bill for NAFTA say actually repealing the pact may be more complicated legislatively than the White House thinks.

The second force is the US constitution. Come April 2018 Mr Trump will have to request an extension of the Trade Promotion Authority, under which Congress hands the president power to negotiate trade deals. That authority, which Congress granted Barack Obama by a narrow margin in 2015, expires in July 2018 and even if the president requests its renewal, either chamber of Congress could block it.

This matters because the US, Canada and Mexico last week extended their talks to renegotiate NAFTA through March 2018. If Mr Trump chooses to leave NAFTA at the same time as he requests a renewal of the TPA, he would set up another conflict with Republicans in Congress. Such a battle may end up suiting the president politically. But it would neuter his trade powers and plans for trade deals with a post-Brexit UK and other countries.

The third force is the formidable opposition building to Mr Trump’s plans for NAFTA. US business is almost unanimous in rejecting both the president’s withdrawal threat and the demands he has made at the negotiating table. So, too, is the powerful US agricultural lobby.

Most Republicans in Congress don’t like the idea of losing NAFTA. But neither do most Republican governors. The Democratic party is usually the one to which trade sceptics pledge their allegiance. Yet many Democrats who don’t like NAFTA in its current form also see a withdrawal as too extreme.

Taken together, all of this suggests one shouldn’t dismiss the possibility of a messy compromise. It might start with negotiations extending deeper into next year and beyond July’s Mexican national elections into a six-month period when there will be a caretaker government in Mexico City. That seems improbable now. But never say never.

Perhaps more likely is that NAFTA gets caught in a legal and legislative limbo in the US. It’s not hard to envision a scenario in which Mr Trump proclaims his withdrawal from NAFTA and ends up being sued by businesses or others questioning his power to do so. Equally, however, the block could come from a Congress that simply refuses to amend legislation and do the president’s bidding.

Moreover, lawyers point out that there is an important difference between the provision in NAFTA that allows countries to withdraw and the EU Article 50 provision that the UK has triggered. The NAFTA provision calls only for a minimum notice period of six months, or one that could easily be extended into perpetuity. Article 50, meanwhile, sets a hard two-year deadline.

Mr Trump has turned the presidency into a high-paced reality television show that is daily testing viewers’ credulity. NAFTA is an intriguing subplot. But it is one that could easily soon feature a zombie.