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MONDAY, AUGUST 13, 2018
Click HERE for last Friday's quote on Tennessee and the 232 Tariffs.
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RED FLAG FOR A NAFTA PROPOSAL - THE SUNSET CLAUSE
"There are a substantial number of Republicans, including me, who are not likely to vote for any new NAFTA agreement that includes a sunset clause ... ."
July 26, 2018
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As we noted last week, Senator Lamar Alexander of Tennessee is a member of the Senate Committee on Appropriations and, more to the point, he is also a member of that committee's Subcommittee on Commerce, Justice, Science, and Related Agencies, which is chaired by Senator Jerry Moran of Kansas and which held a lengthy hearing with USTR Robert Lighthizer on Thursday, July 26.
In the first round of questioning, Senator Alexander focused on the Section 232 or national security tariffs on steel and their adverse effects on a number of Tennessee companies . (See Friday's TTALK for more.) In the second round, Senator Alexander homed in on the question of whether it makes any sense at all to have a Section 232 tariff on aluminum. We'll come to that in a later entry. Our focus here is on the very short question - and pointed warning - the Senator directed to the U.S. Trade Representative at the end of his allotted time and just about the end of the hearing.
Senator Alexander said:
I would assume that what we're going through right now is a substantial review of NAFTA. Then why do we need a sunset clause? I mean, you're reviewing NAFTA today. ...
There are a substantial number of Republicans, including me, who are not likely to vote for any new NAFTA agreement that includes a sunset clause because we don't think it's worth anything.
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The end of the NAFTA negotiations is either very near or very far away. In his comments about NAFTA last month, Ambassador Lighthizer was as upbeat as a negotiator can be about the prospect for success in a still very open negotiation. In response to a question from Senator Shelley Moore Capito (R-WV) at the July 26 hearing, he explained the rationale for believing NAFTA might get done sooner rather than later.
Ambassador Lighthizer said:
If you assume that you are going to have President Peña Nieto sign an agreement, a new agreement with the United States, which is to say the current president of Mexico, there has to be 90-days notice before that can be signed under TPA. So, he's going to lose office on December 1. If you go back 90 days, that takes you to around the end of August. So, if we're going to have him sign it, with the consent, of course, of the newly elected President, and the President of the United States sign it and hopefully the Canadians, you're probably looking at having some kind of conclusion during the course of August. And my sense is that that's not an unreasonable time frame if everybody wants to get it done. That's what our hope is, Senator.
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We won't know for a few weeks at the earliest whether NAFTA will be wrapped up this year. We are optimistic enough to believe that sooner or later there will be a new NAFTA deal, and that brings us to the question, will there be a sunset clause?
If by a sunset clause one means a provision that would, in effect, suspend the agreement pending a reaffirmation by the three countries -- the U.S., Mexico, and Canada - we hope the administration will reconsider that objective or at the very least limit the scope for further negotiations. Today's dramatic disruptions in trade - from the 232 tariffs, to the 301 tariffs, to the uncertainties about NAFTA - are costly and painful. They may be necessary. But to plan for a repetition seems madness.
Not all of issues raised by possible sunset clause have to do with USTR's negotiations with Mexico and Canada. It also brings to fore the question, what will the implementing bill say? Will Congress use the opportunity to insert itself into whatever processes might govern any future withdrawal from a NAFTA 2.0? The range of options would seem to be broad indeed. At one end of the spectrum, Congress might reserve for itself the ability to change whatever tariff rates are agreed upon for products from Canada and Mexico. That might be a hard sell, but Article I, Section 8, of the U.S. Constitution would hardly seem to preclude it.
A more benign option is suggested by the Uruguay Round Trade Agreements Act, which President Clinton signed into law on December 8, 1994. It contains a provision that gives special standing - admittedly only once every five years - to a bill that would withdraw Congress's support from U.S. participation in the World Trade Organization. We are not sure how many such bills have been introduced over the years. A quick Google search turned up this effort from 2005: H. J. Res. 27, introduced in the House on March 2, 2005 by then-Rep. Bernie Sanders of Vermont. The text of the bill is easily quoted. It read:
Resolved by the Senate and the House of Representatives of the United States of America in Congress assembled, That the Congress withdraws its approval, provided under Section 101(a) of the Uruguay Round Agreements Act, of the WTO Agreement as defined in Section 2(9) of that Act.
The vote came on June 9, 2005. The measure was defeated in the House by a vote of 338 against to 86 in favor. It was never considered in the Senate.
One might ask, what meaning does this history have for today's dilemma? Possibly none. And yet, and yet, a highly esteemed colleague suggested not long ago that this history may contain the seed of the solution to the sunset clause conundrum for the new NAFTA. At the very least, Congress should have a say in the matter.
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At Senate Appropriations is a link to the page video recording of the hearing held on July 26 by the Subcommittee on Commerce, Justice, Science, and Related Agencies, which is chaired by Senator Jerry Moran (R-KS). This was the source for today's featured quote.
A Joint Resolution takes you to the Library of Congress page on the 2005 Joint Resolution mentioned above.
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R. K. Morris, Editor
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