A pessimistic outlook for NAFTA negotiations
U.S. Commerce Secretary Wilbur Ross said on 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 - which means NAFTA would automatically end after five years unless renewed - 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.
Canadian and Mexican ambassadors to Washington pushed back at the idea, saying such a provision would add uncertainty to a NAFTA agreement and affect long-term planning by businesses.
"I'm a believer in sunset clauses when things are set up to be temporary," said Canada's Ambassador David MacNaughton. "We can have that discussion but I really do suspect that it won't be Mexico and Canada pushing back against the secretary, it will be a lot of Americans too."
Mexico's Ambassador to the United States Gerónimo Gutiérrez Fernández said a provision "would have very detrimental consequences to the business sector of the United States, Mexico and Canada."
"Let's look at what they are thinking about in more details but certainty is the key word here," said Gutierrez.
Ross 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."
Ross and 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."