Canada: Renegotiation Of NAFTA: A Look At The Process


The North American Free Trade Agreement ("NAFTA") is a trade deal between the U.S., Mexico and Canada, which works to eliminate both tariff and non-tariff barriers to free trade and investment among the three countries and thereby encourage economic integration. It was signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas and U.S. President George H.W. Bush and became effective on January 1, 1994.

Throughout his presidential campaign, President Trump disparaged NAFTA as the "worst trade deal maybe ever signed anywhere, but certainly ever signed in this country".1 On January 23, 2017, President Trump signed a presidential memorandum directing the withdrawal of the U.S. as a signatory to the Trans-Pacific Partnership, and included a vague direction to "begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages".2 Some interpreted this as an intention to renegotiate NAFTA, although no such executive order has been signed.

On February 2, 2017, President Trump met with congressional lawmakers urging them to make a new deal happen. Perhaps as a result of the $11.9 billion trade surplus the U.S. enjoys with Canada3, the President's tone softened when meeting with Prime Minister Trudeau on February 13, 2017; with the President commenting he would only be "tweaking" NAFTA in relation to Canada.

In light of the possibility that NAFTA will be replaced, or at least renegotiated in part, this article will discuss the legal process which would govern if NAFTA were to be reopened.

U.S. Withdrawal from NAFTA

Article 2205 of NAFTA permits the U.S. to withdraw from the agreement on six months' notice to Canada and Mexico. NAFTA cannot be terminated unilaterally by President Trump, however, as it would remain in force between Canada and Mexico. From a domestic U.S. legal perspective, it is unclear whether Trump has the authority to withdraw from NAFTA through executive action, without congressional approval. In two prior instances, U.S. Courts declined to rule on whether the power to withdraw from international treaties resides within the executive powers of the administration or the legislative powers of Congress.4 In both cases, the applicable courts declined to interfere with then President Carter and President Bush's decisions to terminate international treaties through executive action, although the constitutionality of their actions was not affirmed by the courts.

Should President Trump order the withdrawal from NAFTA through executive action, it will be interesting to consider: (i) whether the political will to challenge the constitutionality of the President's move exists; and (ii) the potential merit of such a constitutional challenge.

U.S. Process to Renegotiate

Presuming that the U.S. successfully withdraws from NAFTA and wishes to negotiate a new free trade agreement with Canada and Mexico, U.S. domestic law informs how the negotiation process. The U.S. Constitution gives Congress sole authority over the regulation of foreign commerce, including powers to impose and collect tariffs and duties and to regulate international commerce. However, to expedite the negotiation of international trade agreements, Congress has empowered the U.S. President by way of the Trade Promotion Authority since 1974.5

Trade Promotion Authority is a legislative procedure pursuant to which Congress provides details on negotiating objectives and a consultation process for trade negotiations, in advance of negotiations. Trade Promotion Authority helps expedite the implementation and enactment of trade treaties once an administration concludes negotiations. Nevertheless, under the Trade Promotion Authority, Congress must still provide its final approval for any proposed U.S. trade agreement before it can be enacted.

Before Trade Promotion Authority can be granted, U.S. Congress must receive formal notification from the White House 90 days before renegotiations can start. President Trump provided a draft letter (not formal notification) to Congress on March 30, 2017, indicating the Trump Administration's intent to renegotiate NAFTA. The letter, while still calling for changes, dramatically toned down the rhetoric used throughout the campaign.

Canadian Process to Renegotiate

In Canada, the authority to negotiate, sign and ratify international conventions and treaties is vested in the executive branch of the government. Canada does not have a similar requirement that Cabinet be informed of renegotiations of NAFTA (as exists in the US), nor does Canada have any "fast track legislation" aimed at expediting the implementation of treaties negotiated by the executive branch.

Once the international treaty is signed, implementing legislation must be drafted and approved by Parliament. As a result of divided authority between federal and provincial bodies in Canada, implementation may require both provincial and federal legislation passed through the appropriate legislative processes. This is again different from the U.S., where once a treaty is approved by Congress, it is enforceable under U.S. law (without implementing legislation).


Presuming that renegotiations are opened, and the respective legislative processes followed, it appears that renegotiations are likely to centre around two main issues — the dispute settlement process and rules of origin. In respect of the dispute settlement process, the United States has expressed particular concern over the independent NAFTA panel that rules on anti-dumping duties.6 In respect of the rules of origin (the rule that a product must contain a minimum percentage of content from Canada, the US or Mexico), it is suspected that President Trump will want to increase these minimums, in particular with respect to U.S. content. Additionally, it is speculated that tariff rates generally as well as immigration and border security will be on the table for discussion and used as bargaining chips.


1 Donald Trump at the Presidential Debate on September 26, 2016.


3 Trade with Canada totaled an estimated $662.7 billion in 2015, according to the U.S. Trade Representative. The United States exported $337.3 billion and imported $325.4 billion worth of goods and services.

4 See Goldwater v. Carter, 444 U.S. 996 (1979) and Kucinich v. Bush 236 F.Supp.2d 1 (2002).


6 Anti-dumping duties are duties an importing country applies when they believe a product is being "dumped" (i.e. introduced at a predatory price (below what it is priced in its home jurisdiction)).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.