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  October 11th, 2017 | Written by

Trump May Yet Dump NAFTA

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  • Trump's withdrawal from NAFTA may depend on what happens with the collusion investigations.
  • Congress can make it painful for the administration to ditch NAFTA.
  • Trump’s core belief on bilateral trade deficits “is economic nonsense.”

There is still a strong likelihood that US President Donald Trump will withdraw the United States from the North American Free Trade Agreement (NAFTA).

That’s the view of Robert Zoellick, a former US trade representative, who spoke at the Atlantic Council in Washington October 5.

This, despite the fact that the US, Mexico, and Canada are currently renegotiating NAFTA. Negotiators are meeting in Washington this week for a fourth round of discussions.

“There is a very serious risk [of Trump withdrawing from NAFTA],” said Zoellick, “depending on what happens with Trump’s popularity and the investigations” into collusion between the Trump campaign and Russia. “I think we are headed to a fundamental crackup here. It partly depends on whether the Congress makes it painful for the administration to go in this direction.”

Zoellick quoted former secretary of state Henry Kissinger as saying presidents want to be successful and that Trump will eventually move toward the norm.

“If you define success the way Kissinger or I would, that would be true,” said Zoellick. “If you define success as responding to applause or political realignment then look at where Trump tends: it will be anti-immigrant, it will be war with Mexico, it will be protectionist on trade. These impulses are not going to go away.”

Since Trump’s economic advisers agree with the president on NAFTA, Zoellick said Congress has to step up and to push back if Trump attempts to withdraw from the agreement.

Trump’s “hostility toward NAFTA is premised on a core belief that bilateral trade deficits are like negative net income,” said Zoellick. “The problem about this core belief is that it is economic nonsense.”

Zoellick suggested that instead of using bilateral trade deficits to guide US policy, Trump should focus on growth, productivity, employment, incomes, and inflation. “But that’s not the administration’s approach,” he said.

With regard to the current round of talks in Washington, “The US wants other countries to open up their markets,” said Zoellick, “but we don’t want to be constrained by rules.”