The recently concluded replacement for the North American Free Trade Agreement (NAFTA), the United States, Mexico, Canada agreement (USMCA) does a number of new things, but one of the most interesting is the clause that requires consultation among USMCA parties if one party intends to conclude a trade agreement with country that is considered a “non-market economy”.
A U.S. idea that clearly seeks to isolate China on trade by constraining the ability of other countries to conclude agreements with that country, the clause is not viewed consistently among analysts.
It is has been described variously as an assault on Canada’s sovereignty; not a significant factor vis a vis a future Canada-China deal; and a welcome constraint on Canada’s attempts to conclude a trade agreement with a non-democratic, state-trading country.
Canada’s new trade agreement with U.S. and Mexico contains one clause that could have a big impact on national sovereignty and puts the agreement itself at risk in the long run…the Asia Pacific Foundation of Canada, called the clause “unprecedented in any trade agreement that any other country has ever signed.”
USMCA Contains ‘Unprecedented’ Clause Giving U.S. Influence Over Canadian Trade Deals HuffPost, Oct. 4, 2018
Justin Trudeau dreams of closer Canadian ties with China. The deal he just made with Donald Trump makes it harder for that to happen…“The U.S. is going to get all its partners to gang up on China, but it’s clear that Canada did this because there was a gun to its head,” said Mary Lovely, an economics professor at Syracuse University who studies trade issues. “Now Canada has its hands tied.”
NAFTA’s China clause is latest blow to Trudeau’s Asia ambitions Bloomberg, Oct. 4, 2018
There are four reasons why Canadians should have reservations about the Trudeau government’s enduring desire for a free-trade agreement with China – and one reason to be thankful for U.S. President Donald Trump, who has inadvertently given Ottawa the perfect excuse for cooling its ardour…Thanks to Mr. Trump, Ottawa has the freedom to go slow on free trade and investment negotiations with China, armed with an ironclad alibi.
How Donald Trump gave Canada a Chinese gift Globe and Mail, Oct 14, 2018
In sorting all this out, the fact that the Government of Canada appears still not to have a consolidated view on a trade agreement with China is not particularly helpful.
Canada still wants a sweeping comprehensive free-trade agreement with China as a long-term goal, but it will also focus on achieving “sector by sector” trade improvements with Beijing, two senior federal ministers say.
Sector-specific discussions do not preclude the possibility of a full trade agreement, International Trade Diversification Minister Jim Carr said Monday in Beijing, after high-level economic talks between the two countries…
Contradictory signals on free trade with China reflect complications Globe and Mail, Nov. 12, 2018
Given that the U.S. Congress, and the newly minted Democratic Party majority in the House, must still approve the deal, the jury on all this will be out for a while. And if they ultimately block the USMCA, then this particular issue may well go away insofar as Canada is concerned.
Although it is certain that the impulse in the U.S. for constraining and isolating China will continue.
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