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First details emerge of probable NAFTA and Border Tax legislation – but where’s China?

US Congressional Republican leaders made their pitch on February 1 and 2 for handling NAFTA renegotiation and border taxes. Trump’s earlier China commitments seem to have disappeared.

NAFTA renegotiation

Donald Trump promised in late October that he would announce his intention to renegotiate NAFTA on his first day in office. He made the announcement three days after his inauguration on January 23, but gave no indication of the renegotiation’s planned objectives.

On January 26, the independent Congressional Review Service issued its opinion on the legal position of this renegotiation. It said that, though the White House might claim the President’s right to renegotiate foreign treaties without recourse to Congress, any new or amended laws a renegotiation might require would likely need Congressional approval. This, of course, means any President would be foolish to start a treaty renegotiation without some certainty about what Congress was likely to endorse.

By February 2, Congressional Republicans had moved on to making a stronger claim. America’s Trade Promotion Act (TPA) sets out that the President:

“shall provide, at least 90 calendar days before initiating negotiations with a country, written notice to Congress of the President’s intention to enter into the negotiations with that country and set forth in the notice the date on which the President intends to initiate those negotiations, the specific United States objectives for the negotiations with that country, and whether the President intends to seek an agreement, or changes to an existing agreement.”

Senior members of both parties in the US House of Representatives made it clear that Trump must conform to the TPA and that his January 23 announcement did not provide the necessary notice to Congress.  Trump’s response to this was less than clear:

“We are working very hard, and will be very soon, as soon as we get the go-ahead, we have the 90-day period that we have to think about but we want get that whole thing kick-started and going. We have some statutory limits, and we don’t have to have those statutory limits so it’s very important. All of the statutory guidelines we’re adhering to I would like to speed it up if possible.”

No translation of Trump’s remarks into any known language was available. But members of Congress repeated that NAFTA negotiations could not start until at least 90 days after Trump submitted his objectives to Congress. Trump’s White House team gave no indication of when they would prepare a set of objectives.

Trump is clearly unhappy about having laws to obey – but seems grudgingly tolerant of his need to obey US law.

Border Taxes

The Senate Finance Committee’s Republican Chairman, Orrin Hatch, told a US Chamber of Commerce meeting on February 1 that both Houses of Congress would probably consider legislation for border taxes separately – indicating a lengthy period of Congressional debate before US importers can have any clear idea of the direction US laws are likely to take.

Other Republican commitments – including China

Donald Trump committed on October 22 that on his first day in office he would:

  • Announce America’s withdrawal from the Trans-Pacific Partnership.

He announced withdrawal  – from a deal that wouldn’t have been fully effective for apparel until 2027 at the earliest anyway – on January 24. Later that day, EU Trade Commissioner Cecilia Malmström said about the Transatlantic Trade and Investment Partnership “The election of Donald Trump seems likely to put our EU–US negotiations firmly in the freezer at least for a while”

  • Direct the Secretary of the Treasury to label China a currency manipulator.

This commitment has disappeared from all recent Trump team announcements. His Treasury nominee, Steven Mnuchin, has consistently avoided committing to this position – or to answering questions about the consequences of his apparently continuing to disagree with Trump.

  • Direct his team to identify all foreign trading abuses that unfairly impact American workers.

This appears to remain as a commitment on the White House website, though he has yet to get his nominees for Secretary of Commerce and U.S. Trade Representative (whom he’d said in October would be responsible for this) confirmed.

Overall job repatriation objectives.

His website now contains a commitment that “the President’s policies will unleash economic growth, create 25 million new jobs” The US economy had a 150.5 million people employed in its civilian labour force in January 2017: he is targeting a 16.6% increase.