WASHINGTON, Sept. 14, 2017 - U.S. Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer both want a drastic sunset provision to be included in a new North American Free Trade Agreement, Ross said today, but Canadian and Mexican officials say they are opposed.
“It would force a systematic re-examination,” Ross said at a Politico event in Washington. “Why that’s important is the forecasts that had been made at the initiation of NAFTA and of other trade agreements mostly have been wildly optimistic as to the results. And the results have been quite different from (what) proponents said. Therefore, 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.”
Ross warned that it was unclear if he and Lighthizer would be successful in the push for the sunset proposal as NAFTA negotiations continue. It became very clear later that there will likely be stiff opposition from Canada and Mexico.
Such a provision, which would threaten to dissolve NAFTA every five years unless the leadership in all three countries agreed to renew it, is a terrible idea because of the uncertainty it injects into the trade pact, Canadian Ambassador David McNaughton and Mexican Ambassador Geronimo Gutierrez said in response to the proposal.
McNaughton and Gutierrez spoke together in a panel separate from Ross at the event.
There is already a provision in NAFTA that allows any of the three countries to pull out of the pact after a six-month notification, the ambassadors said, and that should be enough. The type of provision Ross is talking about would throw too much uncertainty into international trade, they stressed.
McNaughton said sunset clauses should only be used in temporary measures that are not meant to linger. NAFTA, on the other hand, should be something that businesses and traders should be able to count on.
“A trade agreement like this – one of the reasons you do this is to create an environment within which businesses can make investments,” the Canadian said. “In many of these investments people look to 20 or 25 years for payback.”
Also, it won’t just be Canada and Mexico that push back, McNaughton said, predicting that there will be plenty in the U.S. business community that object.
Mexico’s opinion is the same, Gutierrez said. “It’s all about the certainty.”
“Not to make light of it,” McNaughton said before making light of the proposal, “but if every marriage had a five-year sunset clause on it, I think the divorce rate would be a heck of a lot higher than it is now.”
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