One cornerstone promise of President Donald Trump’s candidacy was to abolish or modernize the North American Free Trade Agreement, or NAFTA. The U.S., Canada and Mexico all tend to agree the time has come to update the agreement that’s been law since 1993.
Thus far, however, talks and discussions haven’t produced much of anything, and analysts have begun to envision scenarios where NAFTA goes away entirely. The scenarios don’t seem completely unlikely at this point after a few failed rounds of negotiations. Automotive News reported last Saturday that if President Trump were to signal the country’s intent to leave the trade agreement, he’d need to give six months’ notice.
Following the notice, a couple of things would likely occur. Foremost, automakers would likely sue the U.S. government to keep NAFTA in place. Automakers would also turn to Congress to pressure a solution since NAFTA was ratified in the U.S. after congressional approval.
“You can have this weird situation where Trump makes his analysis on NAFTA, but behind the scenes there’s paralysis,” said Christopher Sands, director of the Johns Hopkins Center for Canadian Studies in Washington, D.C. Many analysts agree the U.S. leaving would make for a messy situation.
The U.S. departure would also likely birth new bilateral trade agreements with both Canada and Mexico, though they’d likely remain less ideal. A number of bilateral agreements wouldn’t sync like NAFTA currently does because rules don’t match up perfectly.
The last round of negotiations ended on December 15, 2017, and produced zero results. NAFTA negotiators from each nation will resume talks in Montreal on January 23.