The U.S. introduced the proposal amid a growing consensus that Donald Trump’s protectionism could lead to the collapse of NAFTA negotiations. “This thing is going into the toilet,” the president of the Canadian autoworkers’ union said of the talks.
WASHINGTON—Adding to the gloom surrounding negotiations on the North American Free Trade Agreement, U.S. President Donald Trump’s administration began the latest round of talks by making a proposal loathed by Canada and Mexico: a “sunset clause” that would automatically terminate the agreement in five years if all three countries did not approve it again.
Trade experts say the U.S. may simply be issuing aggressive demands as a negotiating tactic. If the sunset clause proposal is not eventually withdrawn, however, it could well lead to the collapse of talks.
Canadian and Mexican officials have both slammed the idea in the last month. And it is fiercely opposed by business groups in all three countries, who say it would deny companies the certainty they need to make investments.
“What manufacturers want more than anything is certainly and predictability. And it’s rather hard to make long-term capital decisions or sourcing decisions if there’s an automatic sunset of five years,” said Dennis Darby, chief executive of the Canadian Manufacturers and Exporters. “With a five-year potential sword hanging over your head, I think what it’s going to do is cause manufacturers to not invest and be really, really risk-averse.”
“I think this will be one of the most difficult for the business community to accept,” said Dan Ujczo, a trade lawyer and president of the Ohio-Canada Business Association.
Jerry Dias, president of the Unifor union that represents Canadian autoworkers, said he would support a sunset clause on a bad final deal, oppose it on a good final deal. Regardless, though, he said the proposal is a “schoolyard bully” tactic that conveys “they don’t want a deal in the first place.”
The proposal comes amid a growing consensus around the continent that the talks might fail because of Trump’s protectionism. Prime Minister Justin Trudeau said Wednesday he was “ready for anything,” and Dias said Thursday that “this thing is going into the toilet.”
“They want to hold this weapon over people’s heads to get them to surrender more, surrender more, more concessions, more concessions. But they’re not fooling anybody,” Dias said.