If the clause was added, NAFTA would automatically terminate after five years, unless Canada, the U.S., and Mexico agree to renew it for another five.
As NAFTA negotiations continue, the United States is seeking to add a 5-year termination clause to the agreement.
This would bring the issue of NAFTA up every five years, and if all three member nations did not agree to renew it, the agreement would end.
The idea was proposed by U.S. Commerce Secretary Wilbur Ross.
“The five-year thing is a real thing that would force a systematic re-examination,” said Ross. “You’d have a forum for trying to fix things.”
Both Canada and Mexico quickly announced their opposition to the termination clause. They are concerned it would cause instability and deter investment.
Canadian Ambassador to the U.S. David MacNaughton had this to say:
“One of reasons you do (a trade agreement) is to create an environment within which business can make investments. (In) many of those investments people will look to 20 years’, 25 years’ payback. If you have to do it every five years, the pricing of political risk is very high.”
The U.S. administration appears torn between Trump’s inclination to scrap NAFTA, and the opposition to such a move from large U.S. corporations – who exert massive power over the American political system.