USMCAs fine print giving U.S. the right to veto Canada-China trade deal is a major setback

COMMENTARY

by Hugh Stephens

The Globe and Mail
October 2, 2018

Amid all the commentary in the early analysis of the new NAFTA (or USMCA) about the costs for Canada of compensating dairy farmers or absorbing increased drug costs as a result of extending pharmaceutical patents, one small item buried in the fine print has been largely overlooked: Article 32.10.

Hidden in the clean-up chapter dealing with “Exceptions and General Provisions,” this article (in plain English) gives the United States a veto over any future trade agreement between Canada and China, and if the United States doesn’t like what we have negotiated, we get kicked out of the United States-Mexico-Canada Agreement. Not only that, we have to inform the Americans 90 days before we enter negotiations with China, and reveal the full text to them prior to concluding negotiations. Of all the penalties we have had to pay to get the North American free-trade agreement essentially renewed, this is the highest. We have just sacrificed our independent trade (and arguably foreign) policy on the altar of the USMCA. What were our negotiators thinking?

The reality, of course, is that in dealing with the United States, Canada’s position was almost entirely defensive. We were trying to keep what we had under NAFTA. No new market access for Canada was created by the USMCA. Rather, we fought to keep as much of what existed under NAFTA as possible. Presumably, at the last moment, the Trump administration dispensed the poison pill of Article 32.10, and Canada felt it had no choice but to accept. It was not about to fall on its China sword and lose preferred access to the U.S. market.

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