U.S. negotiators officially offered the “sunset clause” proposal on Wednesday during the North American Free Trade Agreement negotiations.
The sunset clause would bring NAFTA to an end after five years unless the three countries involved agree to extend it. Two people familiar with the talks told Bloomberg that the proposal was made to a smaller group of negotiators.
The White House declined to comment on NAFTA talks and the U.S. Trade Representative’s Office didn’t respond to a Bloomberg request for a comment. Canada and Mexico both rejected the idea when Commerce Secretary Wilbur Ross brought it up a month ago. Both countries say it would create so much uncertainty for business that it would hurt long-term investments. The trade pact already has an exit provision.
A country can leave NAFTA simply by giving a six-month notice to the other two parties. The U.S. Chamber of Commerce is warning against “poison-pill” proposals, saying they could doom the entire agreement. Secretary Ross was asked about the sunset clause during an event on Wednesday and said, “that’s our proposal.”