U.S. wants NAFTA five-year sunset provision

(Video screengrab from CBSA-asfc.gc.ca)

Washington | Reuters — U.S. Commerce Secretary Wilbur Ross said Thursday that the United States was seeking to add a five-year sunset provision to the North American Free Trade Agreement to provide a regular, “systematic re-examination” of the trade pact.

Ross told a forum hosted by Politico that both he and U.S. Trade Representative Robert Lighthizer had agreed on the need for such a sunset provision for quite a while and would “put it forward” in the NAFTA modernization talks, but it was unclear whether Canada and Mexico would back it.

U.S., Canadian and Mexican negotiators are set to reconvene for a third round of talks in Ottawa on Sept. 23-27.

Ross said a sunset provision was needed because forecasts for U.S. export and job growth when NAFTA took effect in 1994 were “wildly optimistic” and failed to live up to expectations.

He said the termination clause currently in NAFTA that allows a country to exit after a six-month notice period has never been triggered, and “it’s the kind of thing that probably wouldn’t be.”

But Ross and U.S. President Donald Trump have both talked about quitting NAFTA if it can’t be renegotiated to reduce U.S. trade deficits with Mexico and Canada.

“The five-year thing is a real thing, would force a systematic re-examination,” Ross said. “If there were a systematic re-examination after a little experience period, you’d have a forum for trying to fix things that didn’t work out the way you thought they would.”

Politico first reported that USTR had circulated the sunset proposal with other federal agencies.

— David Lawder is a Reuters correspondent covering international trade issues from Washington, D.C.

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