Canada’s attitude toward USMCA will be test case for its sincerity to promote free trade with China

By Hu Weijia Source:Global Times Published: 2018/11/15 22:55:03

Despite a clause in the US-Mexico-Canada Agreement (USMCA) that may restrict its signatories from signing certain trade deals with Beijing, free trade agreements between China and USMCA members are still possible.

China and Canada announced Thursday they will continue pursuing negotiations on a free trade deal. Although the USMCA provision has cast  uncertainty over the outcome of the talks, it seems that the utmost efforts will be made to promote free trade and oppose unilateralism.

The USMCA specifies that if one of its signatories enters a free trade deal with a "non-market" economy, the others can quit in six months and form their own bilateral trade pact. The clause fits in with US efforts to unseat China from its position on the global industrial chain, but making the idea a reality will not be an easy thing.

Although the clause has been written into the USMCA, no one is sure how the rule will be implemented. It seems Washington is pressuring other countries to take sides between China and the US, but its trade partners - Canada included - won't automatically obey US orders, because doing so would go against their national interests.

Canada is likely to strike a balance between China and the US, two of its most important economic partners, and strive to gain more flexibility in the clause.

Canada's free trade talks with China will be a test case for USMCA signatories in how to implement the rule and how to specify what a non-market economy is. At the very least, Canada will not allow the US to violate its economic sovereignty and intervene in its internal economic policies. As a developed country, Canada has sufficient bargaining power in negotiations with the US, promoting further evolution of the clause.

While the US follows its "America First" policy as a means of putting pressure on Canada, China is showing sincerity in strengthening mutually beneficial cooperation with Canada and further promoting free trade.

We think Canada has the wisdom and ability to make the best choice for itself and deal with the clause in the USMCA.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn

Posted in: EYE ON ECONOMY

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