The Best Way Trump Can Squeeze China on Trade
Wringing concessions would be much easier if the U.S. lined up allies with a revived Trans-Pacific Partnership.
Notice something missing?
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Beyond the name change, President Donald Trump’s new U.S.-Mexico-Canada Agreement isn't that different from the North American Free Trade Agreement that it replaced. But hidden in the bowels of the new trade deal is a clause, Article 32.10, that could have a far-reaching impact. The new agreement requires member states to get approval from the other members if they initiate trade negotiations with a so-called non-market economy. In practice, “non-market” almost certainly means China. If, for example, Canada begins trade talks with China, it has to show the full text of the proposed agreement to the U.S. and Mexico -- and if either the U.S. or Mexico doesn’t like what it sees, it can unilaterally kick Canada out of the USMCA.
Although it seems unlikely that the clause would be invoked, it will almost certainly exert a chilling effect on Canada and Mexico’s trade relations with China. Forced to choose between a gargantuan economy across the Pacific and another one next door, both of the U.S.’s neighbors are almost certain to pick the latter.