U.S. Withdrawal from Free Trade Agreements: Frequently Asked Legal Questions

Summary

The United States is party to 14 international free trade agreements (FTAs) with 20 countries. These agreements impose a wide variety of international obligations on the United States and its trading partners. Such obligations address import tariffs, as well as potential nontariff trade barriers. A country that is party to an FTA and that maintains laws, regulations, or practices that violate one of these obligations may be subject to trade retaliation (e.g., other FTA parties may increase tariffs on the country’s exports) or may have to pay a fine or monetary compensation to an FTA partner or injured investor. During the past decade, some have suggested that the United States should attempt to renegotiate—and possibly withdraw from—the North American Free Trade Agreement (NAFTA). Such statements have prompted congressional interest in domestic and international legal issues pertaining to U.S. termination of, or withdrawal from, an FTA.

U.S. FTAs have historically been approved as congressional-executive agreements by a majority vote of each house of Congress rather than as treaties ratified by the President after Senate approval by a two-thirds majority vote. FTAs are not self-executing agreements. Thus, legislation is required to provide U.S. bodies with domestic legal authority necessary to enforce and comply with the agreements’ provisions. FTAs are legally binding agreements under international law.

All U.S. FTAs that have entered into force as of the date of this report contain provisions allowing for a party’s withdrawal from, or termination of, the FTA upon advance notice to the other parties. Questions have arisen regarding whether the President can unilaterally withdraw the United States from such agreements without the consent of Congress. The Constitution does not specifically address withdrawal from treaties or congressional-executive agreements. In some cases, the United States has withdrawn from international legal agreements pursuant to the joint action of the political branches. However, the weight of judicial and scholarly opinion suggests that the President possesses the exclusive constitutional authority to communicate with foreign powers, and such authority might provide the President with a constitutional basis for withdrawing from at least some types of international agreements. The agreement’s subject matter, however, might be relevant to a legal analysis. As a practical matter, the President’s communication of a notice of withdrawal from an FTA to trade partners in accordance with the FTA’s terms would likely release the United States from its international obligations from the effective date of withdrawal onward as provided in the Vienna Convention on the Law of Treaties, which the United States has not ratified but considers to reflect, in many aspects, customary international law. Congress may thus find it difficult to prevent the President from terminating or withdrawing from an FTA. On the other hand, if Congress wanted to pressure the President to withdraw, it could enact a statute (over any presidential veto) that would repeal its approval and implementation in domestic law of an FTA.

Even in the event that the President could properly withdraw from an FTA unilaterally, the President cannot make laws, and thus repeal of federal statutory provisions implementing U.S. FTA obligations requires congressional action. Congress has enacted provisions that appear to delegate to the President authority to repeal some provisions of federal statutory law implementing FTA obligations upon termination of, or U.S. withdrawal from, the agreement. However, the President might not be able to exercise this authority if a court struck down such provisions as unconstitutional or Congress amended or repealed them. Although the President cannot repeal other statutory provisions implementing FTA obligations without further congressional action, if the President identified a federal regulation, order, or practice that implemented FTA obligations, the President may be able to rely on constitutional or statutory authority to repeal or limit the effect of the measure. Such actions by the President may be subject to judicial review.