WASHINGTON: China’s hopes of negotiating a free trade pact with Canada or Mexico were dealt a sharp setback by a provision deep in the new U.S.-Mexico-Canada trade agreement that aims to forbid such deals with “non-market” countries, trade experts said on Tuesday. The provision specifies that if one of the current North American Free Trade Agreement partners enters a free trade deal with a “non-market” country such as China, the others can quit in six months and form their own bilateral trade pact. The clause, which has stirred controversy in Canada, fits in with U.S. President Donald Trump’s efforts to isolate China economically and prevent Chinese companies from using Canada or Mexico as a “back door” to ship products tariff-free to the United States. The United States and China are locked in a spiraling trade war that has seen them level increasingly severe rounds of tariffs on each other’s imports. Under the clause, the countries in the updated NAFTA, renamed the U.S.-Mexico-Canada Agreement (USMCA), must notify the others three months before entering into such negotiations. Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said the provision gave the Trump administration an effective veto over any China trade deal by Canada or Mexico. If repeated in other U.S. negotiations with the European Union and Japan, it could help isolate Beijing in the global trading system. “For both Canada and Mexico, we have a reason to think an FTA with China is a possibility. It’s not imminent, but… [Read full story]
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