U.S. President Donald Trump will seek even more restrictions on Canada’s ability to sign trade agreements with China when Washington and Ottawa start renegotiations on the United States-Mexico-Canada Agreement, an international trade expert predicts.
David Collins, who specializes in international trade and investment law at City St. George’s, University of London, says he expects the United States will seek to toughen up Article 32.10 in the next United States-Mexico-Canada Agreement.
This unusual feature of the USMCA obliges Canada, the United States and Mexico to give one another three months’ notice before starting free-trade talks with a “non-market country.” The United States has refused to recognize China as a market economy even 23 years after the Asian country joined the World Trade Organization.
Prof. Collins said the United States and China are trying to force countries to pick sides in the Washington-Beijing trade war and the Trump administration can be expected to extend this to trade agreements.
“The China clause of the USMCA is going to be even stricter. That is going to be beefed up,” he said of a renegotiated deal.
Under the existing article, Canada or other partners must also disclose to other USMCA signatories “as much information as possible” on objectives for their negotiations with a country deemed to have a non-market economy. Washington argues the Chinese economy is too distorted by state subsidies to be considered a market economy. This U.S. policy makes it easier for American trade regulators to find Chinese companies guilty of dumping goods.
The article says USMCA signatories must give each other 30 days’ notice before signing a deal with a non-market economy. Finally, Washington or other partners can withdraw from the trilateral North American pact within six months of one of them inking a deal with a non-market economy.
In March, China’s ambassador to Canada told The Globe and Mail his country is open to negotiating a free-trade agreement with Ottawa and co-operating on a research station in the Arctic – extending an invitation to repair strained ties as Canada’s relations with the United States worsen.
Prime Minister Mark Carney, running as Liberal Leader in Monday’s federal election, announced last month that Mr. Trump had agreed to begin negotiations on a new economic and security relationship after the federal election with whoever is prime minster. Mr. Carney said his preference would be a renegotiation of the USMCA.
The United States, currently in a trade war with China, is conducting trade negotiations with allies such as Japan, South Korea and India as these countries seek to resolve tariff threats from Washington. The U.S. is looking for allies in its dispute over what it considers China’s unfair trading practices, and is seeking to isolate Beijing. “Everyone is coming to the table, and basically, China, is surrounded,” Treasury Secretary Scott Bessent told Fox News earlier this month.
China, separately, has been warning other countries it will retaliate against them if they align with the United States against Chinese interests.
“The U.S. and China are jockeying to bring countries in their sphere of influence by intimidating countries not to deal with the other party - so the world is cleaving down the middle,” Prof. Collins said.
Lawrence Herman, a Toronto-based international trade lawyer, said he expects Canadian negotiations with Mr. Trump’s administration will be difficult. He said Ottawa cannot agree to any U.S. request to restrict Canada’s future trading relationships with a third country.
“The U.S. is going to demand certain things from its trading partners, including Canada. They’re going to put on the table what we could call a diktat: ‘Here’s what we want, and we expect you to agree to it,’” Mr. Herman predicted.
“Frankly, any demand that we cannot negotiate trade agreements with any other country is unacceptable to Canada.”
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