dChan - Q Origins Project Archive

US-Mexico-Canada deal targets China with 'poison pill' provision

The Trump administration has found a new tool in its trade battle with China: Using deals like the recent U.S.-Mexico-Canada Agreement to try to freeze China out of creating its own deals with trading partners. Tucked away at the very end of the USMCA deal, under “exceptions and general provisions,” is a section dubbed “Non-Market Country FTA.” It effectively nullifies the deal should any of the three member countries strike a trade deal with a country that “at least one Party has determined to be a non-market economy for purposes of its trade remedy laws.” A country like, say, China. In other words, the U.S. has pre-empted Mexico and Canada from entering into any kind of trade agreements with China. If they do, then the White House can break the USMCA into two separate bilateral deals, something President Trump has said was his policy preference all along. “It’s logical, it’s a kind of a poison pill,” Commerce Secretary Wilbur Ross told Reuters Friday.

Trade policy experts say they have never seen anything like this before, even as a concept for policy. “This is completely novel in a trade agreement,” said Gary Hufbauer, nonresident senior fellow at the Peterson Institute for International Economics, calling it the “latest strand in the Cold War that the administration has launched against China.” That it is directed at China is unmistakable. The term nonmarket economy is used in U.S. anti-dumping laws to refer to China. “There wasn’t a deal imminent with either Canada or Mexico, but it was something that was being talked about,” said Dan Griswold, director of trade and immigration policy at George Mason University’s Mercatus Center. He said Trump used Canada and Mexico’s need to maintain their relationships with the U.S. as leverage to prevent them from a trade alliance with China. Griswold added: “It is hard to see how this clause benefits average American consumers, but maybe these kind of agreements could end up benefiting the United States if enough other countries could exert enough pressure on China to reform its internal policies.” The administration is now expected to try to add similar language to potential future trade deals with countries that do business with China, such as Japan. In a speech Wednesday at the Hudson Institute, a conservative Washington think tank, Vice President Mike Pence said: “To advance our vision of a free and open Indo-Pacific, we’re building new and stronger bonds with nations that share our values across the region, from India to Samoa.” Should the ploy succeed, it would frustrate China’s ability to circumvent the tariffs that the Trump administration has already placed on it.

https://www.washingtonexaminer.com/policy/economy/us-mexico-canada-deal-targets-china-with-poison-pill-provision