Canadian Trade Experts Troubled by Trump Veto

By: Alejandra Rocha

The United States, Canada, and Mexico reached the United States-Mexico-Canada Agreement (USMCA) on September 30. USMCA’s Article 32 has been a source of controversy in Canada, as it aims to prevent the country from engaging in free trade talks with China. Given the current U.S. administration’s efforts to thwart China’s rise in trade, international trade experts are referring to the Article as the Trump veto.

Article 32 says that “a Party shall inform the other Parties of its intentions to commence free trade agreement negotiations with a non-market country.” this provision will require Ottawa to consult with other USMCA partners if it intends to pursue a trade deal with a non-market economy.

Even if it is not spelled out, there is no doubt that the reference to non-market economies was made regarding China. According to CBC News, Larry Kudlow, Director of the United States National Economic Council, said that “the continent as a whole now stands united against what [he’s] going to call unfair trading practices by you-know-who – starts with a C, and ends with an A.”

Trudeau, who traveled to Beijing last December in a futile attempt to open up free trade negotiations, has faced a wave of criticisms from trade experts who have expressed their concern that Ottawa might have signed away an integral element of its sovereignty to Washington, CBC News reports.

“Those efforts are not dead,” Trudeau told reporters in British Columbia. “Despite the provision, we as always will look for ways to engage, deepen, and improve our trading relationship with [China].”

Trade experts are not yet convinced – it troubles them that the sovereign right to classify free market economies will no longer abide by international standards or remain within a country’s own jurisdiction. According to CBC News, they are extremely worried that the hindering of their relationship with their second-largest trading partner will severely compromise Canadian national interests.

Wenran Jiang, a Senior Fellow at the University of British Columbia, wrote about the agreement in the Globe and Mail, saying, “If you are looking for a twenty-first-century version of the nineteenth-century colonial-era unequal treaty between nations, look no further than the recently announced United States-Mexico-Canada Agreement.”

The provision  “sent a very strong signal to the rest of the world that you’re either with us versus China, or you’re against us,” said Jorge Guajardo, a former Mexican ambassador, to BBC. “Beijing should be very concerned,” he added.

China – currently celebrating The Golden Week, a seven-day national holiday – has not yet commented on the USMCA.

The new trilateral trade came as a consensus fourteen months in the making which replaced the nearly twenty-five-year-old North American Free Trade Agreement (NAFTA). The USMCA’s provisions will not start until 2020. The U.S. Congress, Mexico’s Chamber of Deputies, and Canada’s Parliament have yet to ratify the agreement, and the leaders of all three countries must sign it before it goes into effect.