Lawyers Begin Sketching Legal Strategy to Challenge Possible Nafta Withdrawal

By William Mauldin Features Dow Jones Newswires

Congressional trade lawyers and attorneys from private firms in Washington have begun meeting informally to come up with ways to challenge any decision by President Donald Trump to pull out of the North American Free Trade Agreement.

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The private attorneys and congressional aides say the contingency planning is in the early stages, and most don't want to discuss the matter publicly while the talks are continuing. But with Nafta negotiations having hit their most difficult stage so far in the round that ended this week, and Mr. Trump repeatedly warning that he will pull out of the pact if trading partners can't agree to U.S. demands for "America First" provisions, the talks over how to respond to a withdrawal have taken on a new urgency, according to those involved.

The preparations to challenge the president, should he decide the U.S. should withdraw from Nafta, point to an unanswered question looming over the recent rounds of trade discussions: How much authority does the president actually have to scuttle an existing trade agreement? "This is sort of uncharted territory where no one really knows," said Warren Maruyama, a former trade official in the Reagan and two Bush administrations.

The president would almost certainly face legal challenges if he took steps to negate the 23-year-old pact with Canada and Mexico, lawyers say, particularly from industries, such as the automotive business, which have become dependent on free trade across the continent.

"You will see the auto industry in court the day after that notice is sent, seeking an injunction," said Tim Meyer, professor of law at Vanderbilt University. "You will definitely see industry groups in court with the full support of the U.S. Chamber of Commerce the day after that notice is sent."

Political resistance to a withdrawal has already developed on Capitol Hill and within business groups. In Congress, a swath of centrist, business-backed members in both parties would likely oppose pullout. The Chamber has called the administration's proposals for Nafta "highly dangerous" and could be expected to challenge any unilateral withdrawal.

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The U.S. trade representative, Robert Lighthizer, declined to comment through a spokesman. His predecessor, Michael Froman, now a fellow at the Council on Foreign Relations, said there is a vigorous debate about what would happen if Congress opposed a withdrawal but that he believed "a lot could be done by executive action."

Mr. Maruyama agreed that the president probably has the power to cancel or gut Nafta, but he expects challenges -- with a chance of success -- if Mr. Trump attempts to kill the deal unilaterally. "There are people who are desperately scouring [key provisions of trade law] on Capitol Hill and law firms and at the U.S. Chamber of Commerce right now to try to create some kind of argument that Trump can't do this," said Mr. Maruyama, now partner at Hogan Lovells LLP in Washington.

While the Constitution gives Congress broad powers to regulate international commerce, when it comes to trade agreements Capitol Hill has delegated to the executive big pieces of that authority -- in a 1974 law, in repeated laws designed to expedite the passage of trade pacts and in the 1993 law that implemented Nafta.

Legal experts see two main avenues for challenging a withdrawal: Opponents could challenge the president's ability to exit an international commercial deal as unconstitutional, or challenge his ability to reverse a law passed by Congress -- in this case, parts of the Nafta implementing legislation -- without congressional consent.

In the first case, the challenge would begin if Mr. Trump formally informs Mexico and Canada of plans to withdraw from Nafta, launching the process by which countries are allowed to exit from the deal under the 1992 treaty. Countries can inform trading partners of actual withdrawal six months or more after sending notice.

Lawyers involved in the discussions say it would be difficult to stop Mr. Trump from sending the initial notice of withdrawal, since the executive branch enjoys a special ability to communicate official policy decisions to foreign governments.

But after the notice, lawmakers or companies that stand to be injured by the withdrawal could seek an injunction in federal court to prevent it.

"Congress or General Motors might send an injunction to prevent that second notice to actually withdraw," said Joel Trachtman, professor of international law at Tufts University, citing a hypothetical example. "I think any member or Congress can sue and frankly any business that could be harmed could sue."

Or they could seek to reverse the withdrawal after it occurs, arguing that Congress needs to be consulted since it regulates international commerce and because the 1974 law is vague on who has the power to exit trade agreements.

The Congressional Research Service said in a 2016 report that a final notice of withdrawal from the president "appears sufficient" to release the U.S. from its international obligations under Nafta, but that Congress might wield a variety of powers to dissuade a president from canceling the deal, including through its control over the budget. Congress in theory could also pass a law reinstating Nafta or a similar agreement, but lawmakers are divided on the issue and unlikely to advance legislation protecting a trade agreement, especially if they don't have a veto-proof majority.

Many trade experts, including Lori Wallach, trade chief at consumer watchdog group Public Citizen, say a president would prevail if he opted to withdraw from a trade agreement, with courts declining to get in the way. "Their legal case is beyond weak," Ms. Wallach said of the lawyers who have questioned Mr. Trump's authority.

The second avenue for challenge questions whether Congress improperly delegated authority to the president in previous trade laws. In the 1974 act, supported by subsequent updates granting "trade promotion authority, " Congress specifically gave the president the ability to reinstate the tariffs that were eliminated when a trade agreement entered into force.

The 1993 Nafta implementing law also has a clause aimed at invalidating the major legal codifications of the pact if the U.S. withdraws. If the Trump administration sought to end Nafta, it could point to this language, which appears to cancel major provisions of Nafta.

But courts have ruled that there are limits to laws that shift constitutional powers among the branches. For example, the Supreme Court struck down the line-item veto during the Clinton administration because it allows a president to cancel a law passed by Congress.

Ironically, one of Mr. Trump's own nominees for the Supreme Court -- Justice Neil Gorsuch -- has questioned the ability of Congress to delegate key powers to the executive branch except under certain strict conditions, said Mr. Meyer, the Vanderbilt professor, who previously clerked for Justice Gorsuch.

Write to William Mauldin at william.mauldin@wsj.com

(END) Dow Jones Newswires

October 20, 2017 05:44 ET (09:44 GMT)